Privatizing Mail Will be Ugly

Of course, the entire concept of privatizing the United States Postal Service is insane: the USPS is one of the few governmental agencies that liberals and constitutionalists should be able to agree on at its very core. Because it’s in the f*cking Constitution (Postal Clause — Article 1, Section 8, Clause 7).

“to establish post offices and post roads”

But, I guess we’ve moved past that, and it’s time to discuss what’s likely to occur if this approaching trainwreck transpires.

Deregulation and Privatization Are Always Sold as “Good for the Consumer” — It’s a Lie

Undoubtedly there’s examples of both deregulation and privatization benefitting the consumer, but most examples in recent history have proven the opposite, especially in America. The first example, is airlines.

Airlines

In the 1970s there was a wide-scale push to deregulate the airline industry in America. The reasoning was rather simple: the Civil Aeronautics Board had become a slow, arbitrary, and relatively useless governmental agency that obstructed the ability of airlines to accommodate customers. With new laws, the CAB would be absorbed through several other agencies, but the National Transportation Safety Board would remain in tact. The hope was that carriers would be less constrained by cluttered and antiquated regulatory procedures, but safety would remain a top priority. There were other stated goals:

• increase competition between carriers
• discouragement of monopolistic tendencies of carriers to claim routes and destinations
• encouragement of new carriers to enter the markets
• lowering of fares

One of these goals was accomplished. Only one.

Fares have significantly decreased since the 1978 Airline Deregulation Act. But other metrics have gotten comparatively nasty. For instance, the number of airline carriers, both major and domestic, has diminished.

Customer satisfaction with airlines, while no longer at all time lows, is still very low — anecdotally, I can count on one hand the amount of times friends and family have told me how excellent a flight was in the last decade. Delays and cancellations are up since the ‘70s, satisfaction is down, monopolistic tendencies are rampant (+150 airlines have gone bust since deregulation), cost to entry is spectacularly difficult, and customers have pretty much zero recourse in the event of problems.

Nonetheless, it’s necessary to point out the two benefits of deregulation: the price for flying has been cut by more than half (inflation adjusted $0.33 per mile in ’78 to $0.13 in 2010) which has allowed millions and millions more Americans to fly, regardless of how satisfied they are with the journey.

Airlines, though, “deregulated,” have never been unsubsidized by the US Government. Chamath Palihapitiya was roundly applauded for his recent proclamation that the US Government shouldn’t bailout the airlines this go around (after being bailed out during the last financial crisis and after 9/11):

This is a reasonable statement, considering that most major carriers have gone through bankruptcy at least once, and are likely to do so again — the bailouts failed to keep the airlines from laying off tens of thousands of employees last time and still didn’t stop them from restructuring.

At it’s core, however, this speaks to a broken industry: most of these airlines will continue to spend freely during boom years, saving little, and preparing for global disasters almost never. Bankruptcy plagues the airline industry, and now, so does a general feeling of poor ethics (see: United, Delta, or Boeing for recent examples) and stagnating progress.

Robert Crandall, former CEO of American Airlines, has put it bluntly numerous times:

TeleCom

The deregulation of TeleCom began in 1984 when an antitrust suit broke up AT&T into what were colloquially coined “The Baby Bells,” but otherwise known as the Regional Bell Operating System.

The Baby Bells included companies such as Bell South, US West, and Bell Atlantic.

This brief disruption of a monopoly didn’t last very long, and turned TeleCom into the oligopoly we currently experience in the United States:

This isn’t to state that breaking up AT&T was necessarily a poor decision, but rather that the ability to keep the market competitive failed repeatedly, and during the timeframe between the breakup of AT&T (1984) and the deregulation of the telecommunications industry in-full (1996), the market was already moving into an oligopolistic, consolidation phase, with regulatory agencies failing to keep up with technological advances and fraud.

The Telecommunications Act of 1996

Bill Clinton signed the Telecommunications Act of 1996 into law on February 8th, paving the way for what would become one of the most chaotic and disastrous attempts to properly deregulate an industry ever. The bill had very clear objectives:

• increase competition
• rapidly deregulate to advance the privatization of the industry
• remove barriers to entry

Unfortunately, it succeeds in none of its objectives.

WorldCom & the Reforming of the Oligopoly

I am, of course, unable to mention the deregulation of the telecommunications industry without bringing up WorldCom. And it’s impossible to discuss WorldCom without acknowledging the effects of 1984 and 1996 and how deregulation played a pivotal role in one of the largest corporate frauds in American history. If you have time, read my summation of what transpired:

WorldCom and The Fraud That Was

TL; DR lax regulation and a desire by both private industry and government for strong competition helped facilitate an atmosphere of unreal growth, constant mergers, and, in the end, vast amounts of fraud (at the same time that WorldCom was embroiled in disaster, so was Enron, Tyco, and numerous dot-com busts).

Even before WorldCom declared bankruptcy and the dot-com bubble burst, organizations like the Consumer Union were claiming that deregulation had failed. Indeed, the deregulation of TeleCom has continued to be criticized to this day:

• continued damage to the radio industry
• decrease in competition in telecom
• short-lived motivation for profit to appease Wall Street
• no significant price decrease for consumers

So Let’s Privatize the Mail

The mail isn’t currently operating at a profit.

Funny enough, throughout modern history the USPS hasn't made much of a profit.

That means that US tax dollars — your tax dollars — are funding your postman’s salary, the people working at sorting facilities, and the folks making sure bombs aren’t getting shipped left and right. There are likely worse far worse ways to spend your dollars, but if the government decides this is the only way to move forward… what are the ramifications?

It’s Gonna Suck

While there’s many unknowns in regard to what this would mean, ie; your local post office or neighborhood postman, if we reference the previous examples listed, perhaps we can get an idea of what is probable.

1. You will be promised a highly desirable bill of goods that will include the following: pro-competition, deregulation, better prices for consumers, lowering of taxes, and better service.
2. Most, if not all, of these goals will not be met.
3. Even if better prices for shipping would be attained, it would likely come at a cost to service.
4. There may be a brief window of increased competition, but that window will close quickly and we may end up with even less choice than now (USPS, FedEx, UPS, DHL).

While my personal bias is obvious in this article, I want to make it clear that there’s plenty of unknowns that may be beneficial. A lowering of shipping rates, national and international, may be a hugely beneficial concept, especially in the time of Covid2019 and a push for isolationism both personally and nationally.

I don’t have many horror stories courtesy of the USPS and I don’t see the institution as a net negative, despite knowing that it’s taxpayer subsidized. There’s many other industries I’d wind down before asking my postman to consider working for, like, Amazon Post West or USPS-East.

There’s better ways to move forward.