Time to privatize the Postal Service?


There’s been a lot of talk about a public option for health insurance. But what about the public option for mail?

The U.S. Postal Service offers universal coverage -- that is, it guarantees that mail can be sent and received by everyone, regardless of preexisting conditions, such as living in the boonies.

It also loses tons of money.

In its most recent fiscal year, which ended Sept. 30, the postal service lost $3.8 billion. That’s after losing a total of $7.8 billion over the previous two years.


Thanks to the sputtering economy and a steady transition of business and personal communications to the Internet, the postal service says it delivered 26 billion fewer pieces of mail this year, a nearly 13% drop from the year before.

It’s thus fair to wonder: Can this system be saved?

Put another way, is it time we privatized the postal service?

Richard Maher, a postal service spokesman in Los Angeles, said these are fair questions.

“The postal service is asking for a national dialogue on this,” he said. “What is our role going to be in the future? We need to have a conversation about that.”

To jump-start that conversation, I stopped by a post office in Culver City, where I found a long line of people waiting last week to mail holiday cards and packages. This was shortly after the postal service faced its busiest day of the year, with about 830 million pieces of mail entering the system last Monday.

I asked whether a private company could do a better job.

Some of those I spoke with, such as L.A. resident Victoria Yambao, 52, said things are fine just as they are.

“It works for me,” she said. “I get my mail.”

Others -- in fact, most people I met -- were more critical of the federal agency whose very name has become synonymous with murder and mayhem (as in “going postal”).

“I’m sure someone else could do a better job,” said L.A. resident Ryan Schultz, 30. “The post office employees are extremely rude and don’t seem to respect customers very much.”

L.A. resident Teresa Lopez, 41, was even more contemptuous. “The postal service is terrible,” she said. “I’m sure FedEx could do a better job. They could be competitive.”

I called FedEx and asked if they wanted to take over the postal service.

“That’s not something we would comment on,” a company spokeswoman, Ann Saccomano, cagily replied. “It’s speculative.”

A UPS spokesman, Norman Black, was more forthcoming when I put the same question to him.

“We believe that the government plays a role in terms of ensuring that every mailbox is reached every day,” he said. “That is not a responsibility that UPS would want.”

That makes sense. The big private shippers probably would be happy to cherry-pick profitable urban routes but would want nothing to do with having to schlep mail up and down unprofitable rural roads.

It seems to me that the only privatization scheme that stands even a remote chance of working would be to break the postal service network into hundreds of regions and territories, and then have local companies compete for mail-delivery rights in each area.

But you’d still have to wonder how any such private-sector players would be more successful at the game than a long-established heavyweight like the postal service.

“If the system was privatized, it might cost 44 cents to get a letter across Los Angeles but $5 to get it to Connecticut,” said Maher, the postal service spokesman.

“When you think about a network that delivers to all homes every day -- it’s huge,” he said. “Would a private company be able to do that? I don’t think so. I think we would lose universal service.”

I tend to agree. For-profit, market-driven companies tend to put bottom-line issues ahead of all other considerations -- and why wouldn’t they? That’s the nature of the beast.

And that’s why 47 million people don’t have health insurance, and why sick people can’t get coverage, and why people get their policies canceled when they need them most.

What private company in its right mind would want the postal service’s responsibilities?

That said, we still have a multibillion-dollar matter of how to restore the system to self-sufficiency.

The postal service receives no tax money -- it’s required by law to raise enough revenue to cover its costs. Federal law also says the agency can borrow up to $3 billion a year from the Treasury Department, but its total debt can’t top $15 billion.

The postal service now owes Uncle Sam about $10.2 billion. It’s going to max out its credit card very soon.

For 2010, the postal service is already estimating that it could lose nearly $8 billion and deliver 11 billion fewer pieces of mail.

To fix that, the agency wants to end a government requirement that it pay more than $5 billion annually into a fund to cover future retirees’ health benefits. It also wants to end Saturday mail delivery.

“We need to find a way to sustain this organization into the future,” Maher said.

Higher rates? Guaranteed. Reduced service? Inevitable. Some legislative changes, including, perhaps, billions in bailout cash? Probably unavoidable.

And then what? Considering that the postal service reaches every household in the country, there must be some way this could be leveraged with marketers and other business interests.

Moreover, why limit the system’s network of post offices to stamps and boxes? Why not have the post office deal in all manner of communications, from book and cellphone sales to DVD rentals?

Heck, why not sofas, lattes and Wi-Fi access?

There’s a role for private companies in the mail business, just as there’s a role for private insurers in the healthcare business. But they can’t (or won’t) cover the entire country.

The postal service isn’t perfect. But it shows why public options are important -- and, in some cases, necessary.

David Lazarus’ column runs Wednesdays and Sundays. Send your tips or feedback to