Rational rules don’t apply when the state gives itself a monopoly

By David McElroy · July 21, 2011

For years, pretty much everything about the U.S. Postal Service has been a political nightmare. Decisions at the failing service are made because different political players demand things, not because they’re in line with market reality.

Earlier this week, the postmaster general — which is a fancy state title for CEO — said that continuing losses are going to doom Saturday delivery and cut service to three days per week.

I don’t have an opinion about whether there’s a market for mail that’s delivered six days a week. I doubt anyone else has a realistic assessment, either, because the market for mail services has never been submitted to private competition in this country to see what people want and are willing to pay for.

Maybe there’s a market for six-day-a-week mail. Maybe there’s a market for companies to deliver just once a week. Maybe it’s something else entirely. I don’t have a clue. Neither do you. It’s only through the operation of the market that we find out answers to questions such as this one.

Think about all the things that Congress dictates about the postal service (either directly or through a commission that it can control):

Postal prices (determined by a postal rate commission)
Mail delivery (mandated at six days per week now)
Office locations (in the form of post offices that lose money)
Labor agreements (because of the congressional clout of unions)

Ted DeHaven wrote an excellent paper for the Cato Institute late last year about how and why the USPS should be privatized. It’s time to quit worrying about half measures such as cutting out a day of delivery or trying to find a few random post offices to close. It’s time to let the market decide what makes sense — by letting it figure out what you and I are willing to pay for.

This story comes via a link at the “Oh, My!” blog.

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