FEBRUARY 2016 ;e Costco Connection 23
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Is rent control
a good idea?
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received by January 7, 2016.
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Katherine McFate is the president and CEO of the Center for
Effective Government in Washington (
MILLIONS OF people
today are shopping online
more frequently, and the
goods they order have to
Even when you use
FedEx or UPS, it is often
the U.S. Postal Service
(USPS) that delivers those packages to your
house. Last year, the USPS delivered 1. 4 billion
packages for FedEx and UPS. It also delivered
about 64 million pieces of first-class mail. In
other words, the USPS continues to fill an
essential need that no private company can.
The Postal Service can reach every single
American household because it’s a public system that we’ve been investing in for more than
200 years. Our Constitution tasked the federal
government with creating a national postal system because our nation’s founders understood
that a universal, affordable and public postal
system helps knit us together as a nation. They
recognized that commerce and communities
require a universal communications infrastructure affordable for all.
Private carriers like UPS and FedEx don’t
serve hundreds of thousands of remote
addresses in remote communities. Through the
USPS, you can send a letter to Point Hope, in
the northwest corner of Alaska or to Key West,
Florida, for the same cost: 49 cents. If the sys-
tem were privatized, it’s likely that rural com-
munities would be either cut off from service or
charged exorbitant amounts, because private
companies are driven by profits.
Our network of local post offices could do
even more. The USPS could raise tens of billions of dollars each year by reinstating post
office savings accounts and banking services, a
task it performed efficiently for 55 years in the
first half of the 20th century.
Customers received 2 percent interest on
their savings accounts, and the post office
loaned their money to community banks,
which then made loans to local businesses. This
virtuous circle benefited the entire community.
Millions of Americans used these services.
Today, 34 million American families live in
places without traditional banking services.
High-interest payday lenders and check-cash-ing services charge low-wage working families
in those communities an average of more than
$2,400 a year. Experts estimate that low-cost
banking services could save American workers
$1 trillion a year.
Instead of selling off the assets we built
together over two centuries, let’s invest in the
U.S. Postal Service, an affordable, efficient public system that has served our nation well for
almost 250 years. C
Chris Edwards is editor of
downsizinggovernment.org at the Cato
Institute in Washington, D.C.
THE U.S. Postal Service
(USPS) is losing billions
of dollars a year. The government company that
delivers “snail mail” is losing out to email and other
types of electronic communication. First-class
mail volume fell from a peak of 104 million
pieces in 2000 to just 64 million pieces by 2014.
Congress confers on the 600,000-employee
USPS a monopoly over first-class and standard
mail. The company pays no federal, state or
local taxes; pays no vehicle fees; is immune
from many regulations imposed on other businesses; and can borrow at subsidized rates.
Despite these advantages, the USPS has lost
$52 billion since 2007, and will continue losing
money without major reforms. The problem is
that Congress is preventing the USPS from
reducing costs as its sales decline, and is blocking efforts to end Saturday service and close
unneeded post office locations.
USPS also has a costly union-dominated
workforce that impedes innovation. USPS
workers earn substantially higher compensation than comparable private-sector workers.
The answer is to privatize the USPS and
open postal markets to competition. With the
rise of the Internet, the argument that mail is a
natural monopoly that needs government pro-
tection is weaker than ever.
Other countries facing declining letter volumes have made reforms. Germany and the
Netherlands privatized their national postal
companies over a decade ago, and other
European countries have followed suit. Britain
floated shares of the Royal Mail on its stock
exchange in 2013. Some countries, such as
Sweden and New Zealand, have not privatized
their national postal companies, but they have
opened them up to competition.
These reforms have driven efficiency
improvements in all of these countries. Excess
workers have been trimmed, productivity has
risen and consumers have benefited. Also, note
that cost-cutting measures—such as closing
excess post offices—are good for both the economy and the environment.
Privatization and competition also spur
innovation. When the USPS monopoly over
“extremely urgent” mail was suspended in
1979, we saw an explosion in efficient overnight
private delivery by firms such as FedEx.
The government needs to wake up to
changing technology, study postal reforms
abroad and let entrepreneurs reinvent our antiquated postal system. C
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