Yesterday evening my wife asked me when the U. S. Postal Service would be abolished. That was in reaction to this story:
WASHINGTON (AP) — Unprecedented cuts by the cash-strapped U.S. Postal Service will slow first-class delivery next spring and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day.
The estimated $3 billion in reductions, to be announced in broader detail later Monday, are part of a wide-ranging effort by the Postal Service to quickly trim costs and avert bankruptcy. They could slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.
My answer to her was “never as long as it’s the only institution that provides a necessary service”. Since it remains the only way of delivering physical mail and packages anywhere in the United States, that means the USPS is likely to remain around in some form for the foreseeable future.
My immediate reaction to this story was that the move was sure to gain the USPS new customers. The USPS has several problems including declining demand for its services due to email, text messaging, and social networking; too high a cost basis; rising costs. Slowing first-class delivery is apparently a move aimed at reducing the cost basis but it is pretty likely to come at the expense of volume of first-class mail. I can’t help but wonder if the USPS wouldn’t accomplish more by abolishing standard mail. First-class mail is what supports the Postal Service. Standard mail is a money-loser. According to the Lexington Institute the USPS would require $1.65 of additional standard mail to compensate for a loss of $1 of first-class mail.
That sounds to me very much as though the Post Office is acknowledging defeat.
It used to be that if you read the federal express fine print on their next-day service, they expressly disclaimed a legal obligation to deliver the envelope by the next day. I don’t know if that is still true today, but I expect the deadlines remain aspirational, but largely met.
I don’t think you can get eliminate the postal service unless you address the commercial and regulatory underpinnings. For the physical stuff, the alternatives to postal delivery would need to be regulated so that there is the same assurance that placing an item for delivery with “Bob the Delivery Guy” is comparable to the post service. For internet communications, you need more people on the internet with reliable connections and fairly stable addresses.