5/10/2011

"U.S. Postal Service reports $2.2 billion loss"

The post office has a government guaranteed monopoly on first class mail, but even with a monopoly it can't make money.

The U.S. Postal Service continues to hemorrhage money, with a loss of $2.2 billion in the most recent quarter.
The national mail service said Tuesday that it expects to have a cash shortfall and reach its statutory borrowing limit by the time its fiscal year ends in September. That means the agency could be forced to default on some of its payments to the federal government. . . .


Here is an article that suggests privatization.

The U.S. Postal Service is losing money so quickly you'd think it somehow got mixed up in the subprime mortgage business. It's on track this year for an operating loss of between $6 billion and $12 billion, debt surpassing $10 billion, and a $1 billion cash shortfall. For any business, those are some ugly numbers. . . .

But here's how the USPS is not treated like everyone else: It's exempt from taxes and antitrust law. No one else is allowed to deliver first-class mail. Those are advantages, but on the other hand USPS is subjected to constant meddling from Congress -- for instance, the postmaster general Jack Potter has to ask Congress for permission to reduce a six-day delivery schedule to five in order to save money. And these same politicians get an earful from constituents anytime a local post-office branch, no matter how unprofitable for the USPS, is threatened with closure. . . .

Germany's Deutsche Post, which runs the DHL brand, has been private since 2000 and is now the world's largest logistics group. The European Union is in the midst of privatizing the postal services of all its member nations. And in 2005, Japan approved the privatization of its postal service, Japan Post. . . .

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3 Comments:

Blogger chris said...

It wasn't that many years ago I heard about how the post office was such a great example of a public entity going private and becoming profitable. Ha.

5/11/2011 1:36 AM  
Blogger TooMuchTime said...

Privatization will be good. One reason is that costs can be reduced by adding advertising to the stamps. That should also have an effect of cutting down on the cost of postage. Or keep postage the same and use the advertising revenue to get solvent.

Either way, it's a win-win.

5/12/2011 1:36 PM  
Blogger John Lott said...

Dear Chris:
Sorry, but the US Postal Service is a government entity. It does not have private shareholders.

5/13/2011 9:39 PM  

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