Make us your home page
Instagram

U.S. Postal Service should move toward European model

The contrast between the two headlines couldn't have been more stark. On the same day the U.S. Postal Service proposed a price increase that its chairman described as a "last resort," Britain's Royal Mail was preparing to raise as much as $5.3 billion in an initial public offering of stock.

Both venerable institutions are coping with lower mail volume. Email and online bill paying are just as popular across the pond as they are here, but Royal Mail turned a $650 million profit last year while the Postal Service was racking up a $15.9 billion loss.

The difference is more political than economic. Congress has responded to the decline of the mail by sticking its head in the sand, while British governments have forced Royal Mail to adjust to market realities.

They created a corporate structure in 2001, ended the agency's monopoly on first-class mail in 2006, and passed a privatization law in 2011. That led to the recent announcement of an IPO, which reportedly was oversubscribed within hours.

Can you imagine investors lining up to buy shares in our U.S. Postal Service as if it were the latest social media sensation?

"Right now, they're not even terribly close to being ready to be privatized," said Richard Geddes, director of Cornell University's infrastructure policy program.

That's a shame, and it's Congress' fault. Any discussion of the service's future gets hung up on issues such as pensions, rural post offices and Saturday delivery. The Postal Service effectively has a 535-member board of directors, which is a guarantee of inefficiency.

The first step to solving the Postal Service's problems, Geddes said, is to turn it into a business. It can remain a state-owned company for now, but it needs an independent board and it needs control over its pricing and services.

It also needs to lose its monopoly on first-class mail, Geddes said. Forced to compete, a postal corporation would quickly figure out what it can do well and what it should contract out to other companies. In many places, a postal counter inside a convenience store could replace a stand-alone post office.

Evidence does suggest that the old model of a government-run mail service is disappearing. Twenty-five of the European Union's 27 nations have repealed their postal monopolies and set up corporate entities to deliver the mail. Private investors own 100 percent of the Netherlands' post office and substantial stakes in its German, Belgian and Austrian counterparts.

The U.S. must make some tough decisions before it can join that crowd. The British government, for instance, assumed Royal Mail's pension liabilities before moving toward privatization. At least it now has a viable company that's designed for the 21st century rather than the 19th.

We Americans like to contrast our brand of free-market capitalism with the more socialistic European model. In the postal business, the Europeans are way ahead of us in embracing a capitalist solution.

U.S. Postal Service should move toward European model 10/03/13 [Last modified: Thursday, October 3, 2013 7:26pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. New stores coming to Tyrone Square Mall, like Bath & Body Works

    Retail

    Tyrone Square Mall will welcome a half dozen new stores, like Bath & Body Works and MidiCi's The Neapolitan Pizza Company, this summer.

  2. Target Corp. reaches $18.5 million settlement with 47 states over data breach

    Retail

    Target Corp. has agreed to pay Florida $928,963 out of a newly-announced $18.5 million settlement over a huge data breach that occurred in late 2013.

    Forty-seven states and the District of Columbia have reached an $18.5 million settlement with Target Corp. to resolve the states' probe into the discounter's massive pre-Christmas data breach in 2013. 
[Associated Press]
  3. Gov. Rick Scott's family history of alcohol abuse could decide 'liquor wall' bill

    Legislature

    TALLAHASSEE — Gov. Rick Scott must decide Wednesday whether to let Walmart and other big-box stores sell liquor, and he says a factor in his decision is the history of alcohol abuse in his family.

    Florida Governor Rick Scott is considering a veto of a bill that would allow Walmart, Target and other big box retail stores to sell liquor. [Andres Leiva | Tampa Bay Times]
  4. Tampa lands Super Bowl in 2021

    Bucs

    TAMPA — Record rainfall in Los Angeles ultimately may end Tampa Bay's drought of hosting the Super Bowl.

    Mike Tomlin celebrates with LaMarr Woodley and Troy Polamalu after the Steelers beat the Cardinals in 


Super Bowl XLIII  on February 1, 2009 at Raymond James Stadium in Tampa. [Times files (2009)
  5. As St. Petersburg's Jabil Circuit broadens its business, it shrinks its name to Jabil

    Corporate

    St. Petersburg's Fortune 500 company, Jabil Circuit, informally tossed aside the "Circuit" in its name some time ago. That's because circuit board manufacturing, the company's core business for decades, has been squeezed out by a broader business agenda ranging from consumer packaging to supply chain management.

    Jabil Circuit informally dropped "Circuit" from its marketing material and signage, like at its St. Petersburg headquarters, years ago. Now it's official.
[Times file photo]