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Do You Care If You’ve Got Mail?

Dec 5, 2011 • Businesses, Demand, Supply, and Markets, Economic Debates, Economic History, Government, Households, Innovation, Labor, Macroeconomic Measurement, Thinking Economically • 197 Views    No Comments

In Canada, when postal workers went on strike because of wage cut proposals, many people were saying, “Who Cares?”

In the U.S., Hallmark and Amazon have said that they do care about the future of the Postal Service. If asked, approximately 650,000 postal service employees would have agreed.

The problem is money. Last year, the USPS lost $5.1 billion. And that total would have been double if Congress had not postponed retiree prefunding payments that were due.

The USPS is a huge business. One of the largest US employers, they run more than 32,000 post offices and target 150 million points of delivery. And yet, the US Congress makes their big decisions. Just to decide the fate of Saturday mail delivery, a Senate bill has required 2 years of studies. (How long would FedEx have pondered the issue?)

Here, here and here, other econlife posts discuss USPS problems.

The Economic Lesson

As Deputy Postmaster for the Colonies, Ben Franklin established our first home mail delivery system, diminished to a single day the letter delivery time between New York and Philadelphia, and to 6 days between Philadelphia and Boston. When the British fired Franklin for his rebellious political activity, the postal system was making a profit.

Crucial for U.S. economic development, the information infrastructure that Ben Franklin initiated was only the beginning. For a history of The Information, this James Gleick book is superb. Also, this Teaching Company lecture (#28) ideally conveys the issues.

An Economic Question: Why are USPS cutbacks such a dilemma?

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