The U.S. Postal Service (USPS) is a major business enterprise operated by the federal government. It has a legal monopoly over first‐class mail, which prevents entrepreneurs from competing to improve quality and reduce costs.
I describe the postal system’s inefficiencies here, and discuss how European countries have privatized their systems and/or opened them to competition.
In this country, privatization is needed more than ever because the USPS is increasingly distorting the booming package delivery business. My study discusses USPS cross‐subsidies between its mail and package activities, and a recent article in the Wall Street Journal explored the problem further.
Josh Sandbulte argued that the USPS gives Amazon an unfair advantage over brick‐and‐mortar firms:
The U.S. Postal Service delivers [Amazon’s] boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.
… The 2006 Postal Accountability and Enhancement Act made it illegal for the Postal Service to price parcel delivery below its cost. But with a networked business using shared buildings and employees, calculating cost can be devilishly subjective.
… An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.
In a response to Sandbulte here, the USPS claims that they do not cross‐subsidize. The solution for this dispute? Privatize the USPS, repeal the monopoly, and let competitive markets decide on product pricing.