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Can We Afford to Change the US Postal Service?

Sep 12, 2011 • Government, Households, Labor, Thinking Economically • 222 Views    1 Comment

There are so many reasons not to change the US Postal Service. For tough to reach rural communities, post offices are conveniently located. For homebound elderly, 6-day dependable prescription delivery is crucial. USPS workers have been promised generous pension dollars. The USPS employs more than 600,000 people. Amazon would like us to receive books on Saturday. Or, maybe checking the mailbox almost everyday is just what we are used to.

But, on the other hand…

The USPS is hemorrhaging money. Mail volume is plunging and expenses are soaring. Supposedly supporting itself through stamp money and other services, by the end of 2011, the USPS will have a $10 billion loss. A USPS paper says that were it a private business, it would already have filed for bankruptcy.

The bottom line?

Should the USPS offer fewer services and if so, what? Or should its expense be further added to an already astronomical federal deficit?

The Economic Lesson

Every decision has an opportunity cost. Choosing is refusing.

If we choose less spending, then what USPS service are we willing to sacrifice? Change contractual retiree benefits? Increase the price of stamps? Close less-used post offices and distribution facilities? Sell real estate? Charge more for Saturday delivery? Slower service?

An Economic Question: If you were solving the USPS financial crisis what opportunity cost would you accept as a tradeoff?

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  • charlesc12

    The US postal service is under because it is federally run, within the federal government there is a sense that pensions and salaries should be “fair”. Fair unfortunately means more than we can afford as a country. The postal service should be made private with fundemental capitalism keeping it afloat. Lets face it efficeny is hard to come by in the federal government.

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