On February 20, 1792, President George Washington – who had relied extensively on the postal service to carry and deliver his messages during the Revolutionary War – signed the Postal Service Act into law. This fledgling legislation formally created the federal U.S. Post Office Department and gave Congress the ability to set official mailing routes and “distance zone” postage rates. The ruling held nearly 200 years until 1970, when Nixon’s Postal Reorganization Act created the corporation-like independent United States Postal Service we know today. Since then, the USPS has undergone multiple modifying acts while establishing itself as a topic of seething debate – all the while enjoying an official, government-mandated monopoly on U.S. mail delivery.
This month, Postmaster General Megan Brennan expressed her desire for the Postal Regulatory Commission (PRC) to retire the Consumer Price Index (CPI) price cap. She’s lobbying for postal management’s complete autonomy in setting USPS rates – freedom from the checks and balances that have been an integral part of the postal process since Washington’s 1792 administration.
Anyone with a basic knowledge of history or economics understands that unchecked monopolies are never good for citizens, and “self-policing” industries tend to benefit only themselves. The PRC’s primary purpose since its 1970 establishment has been to counter-balance the USPS’ exclusive industry control and ensure affordable and fair postage for U.S. constituents. In 2007, the CPI price cap limited postal increases to reflect inflation, effectively serving as surrogate competition. By eliminating the CPI cap and encouraging postal management’s rate control, the USPS’ monopoly would most likely allow postal rates to skyrocket.
The USPS has suffered a difficult decade – unprecedented declines in postal volume due to today’s digital transformation and fallout from the Great Recession. The industry is unlikely to return to its former glory, and many difficult problems need to be analyzed and addressed. But as a $70 billion independent agency, the postal service must learn to manage its resources and eliminate inefficiencies rather than just be handed a blank check.
Without free market competition, it’s far too risky to withdraw the PRC’s oversight of postal pricing.
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