Can We Afford to Change the US Postal Service?
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.
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?