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Will Snail Mail Survive?

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By JOHN NASH

Of Cabbages and Kings

Published: February 20, 2008

I didn't major in economics, but was repeatedly exposed to the subject during studies at several universities. One seemingly simple principle was driven home to me, while running a computer simulation in USC's Business College, in the early '60s.
What that example demonstrated was that: When a business is showing decreased gross income and/or net profit, simply raising the price of its product or services will usually exacerbate the problem. The proper course of action is to reduce costs, and/or improve the product or services without raising prices. Our endangered U.S. Postal Service seems to have been unable to understand that basic concept.
According to a recent news report, in the United States, first-class mail volume has dropped 7 percent since 2001. A 15 percent boost in bulk advertising and other discounted mailings has offset only some of the loss in revenue.
Of course that is not the first, nor the only, setback for the USPS over the past 30 years: In fact, that has been the trend since just about the first moment when the USPS was allowed to manage itself — although "manage" in this instance may be the wrong term.
As we've all surely noticed, it seems that the price of a first-class stamp has increased about 10 percent just about every year. The USPS has attempted to explain away that large jump in price as being due to "increased costs of doing business."
You can see that they have thus been routinely violating the economic law presented at the beginning of this discussion. They seemed to get away with their thoughtless and risky economic policy for a few years, but with the advent of widespread popularity of e-mail and other Internet options, the postal service came up against a formidable competitor. As an illustration of that competition, let's look at my personal case.
My business involves the production and delivery of manuscripts and photographs. It wasn't so very long ago — c.1981 — when we were at the tender mercies of the postal service when sending thick, 11-inch by 13-inch envelopes, with $4 to $6 postage outgoing, and a similar amount for the prepaid return of materials.
At that time, we sent out an average of three of those envelopes every week. In addition, we mailed hundreds of regular letter envelopes each month while trying to drum up new business, or billing clients. On a monthly basis, and adjusted for today's value of the dollar, my little business spent about $350 each year on USPS mailings — without considering the significant costs of time and stationery involved. On top of that, I had to pay several dozen monthly bills by using the USPS, so we can add another $15 in today's prices to what we paid the USPS.
Now, essentially, all of that income is lost to the postal service, because I began using computers more than 25 years ago, and soon found that they replaced 99 percent of the business we once did with the USPS.
Today, when we are forced to transmit physical materials, we usually opt for one of the several package delivery services offering services similar to the postal service. Extrapolate my experience over the entire nation, and you can see that the postal service has long needed to make serious cuts in costs, while significantly improving service. Sadly — perhaps tragically — management has apparently done little or nothing along those lines
Central government has never, as far as I know, demonstrated any ability to efficiently and effectively manage anything; the postal service is clearly not an exception to that condemnation. It's costs — driven primarily by unjustified and avoidable increases in labor — began driving away its first-class users, well before computers arrived on the general scene.
When the public began to discover the convenience and economies associated with replacing the postal service with the Internet, and/or by using independent, express package delivery services, the writing was on the wall for the mismanaged USPS.
I won't attempt to predict what the next decade holds for the postal service; I doubt that they've given it much thought. But this much I'll venture: We will see major — even traumatic — changes in their services, and, most probably, even some long overdue cost cutting.
Of course, if the Democrats take control of the White House next year, the solution to the problem may well be to add to the income tax already unfairly and unjustly burdening the evil rich, while promising to use the new income to prop up the teetering foundation of the carelessly managed USPS.

John G.Nash is a freelance journalist and photographer whose works have been featured, since 1975, in more than 125 different publications. He's currently based in west-central Florida, and welcomes comments sent to john@have-eye.com.

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