The U.S. Postal Service: Structural Problems Require A New Approach
71 Pages Posted: 18 Nov 2020
Date Written: October 24, 2020
The financial losses being incurred by the U.S. Postal Service is not a new subject. To understand the cause for these losses would better enable analysts and policymakers to properly address the problem. Of the various reforms that have been advanced, privatization has been the most radical, but generally relegated to more academic discussions and dismissed beyond cursory proposal in policy considerations.
The depth by which a full evaluation would need to be required to ascertain the true nature of the problem must be left for future endeavors. This is largely due to the complexity introduced by the legal, financial, economic, organizational and political aspects that affects the operations of the USPS. It is unlikely that such a comprehensive assessment can be made here, although it is hoped that the more salient aspects of the problem can be alluded to in this paper. In addition, this paper hopes to provide an assessment that departs from the more traditional financial market point-of-view, along with some perspectives into potential reforms that might be considered.
Since the creation of the USPS was founded in the prescription of the U.S. Constitution, this paper will provide a brief history of the legal aspects of the USPS. This will not be a legal analysis, but from the perspective of a lay person’s view.
This paper will then attempt to provide a brief overview of the economics that underlies this industry. An in-depth coverage will be a massive undertaking since there are a number of aspects that deserves treatment. As such, this section will highlight some of the macroeconomic aspects, as well as the microeconomic elements. More so, the legal and regulatory nature of the USPS gives this organization a somewhat unique dimension.
This is followed by a financial analysis section, though it is more from the perspective of an investor’s due diligence. Although the USPS is a government agency and does not offer to sell ownership shares through any of the stock markets, the analysis proceeds to evaluate it as if a stock purchase could be made.
These first 3 sections provide the basis for the next section that attempts to isolate some of the more critical barriers facing the USPS to become fully sustainable in the long-run. Again, it is not a comprehensive assessment, nor will its treatment be in any significant detail. It main objective is to provide some focus on certain barriers that may be important if any reform is to be successful.
The next section will list some of the reform measures that have been proposed-past and present. These reform measures have been ‘disaggregated’ from its more comprehensive packages in order to discuss them in isolation. This is done as a preparatory step for the final section.
This last section provides a ‘framework’, not a recommended course of action. It is meant to be the basis in which a new discussion can ensue to determine if a true reform package can be created. It is not based on any theoretical framework. It is strictly a pragmatic one, that accepts certain premises to continue, but requires the relaxation of other restrictions to allow the USPS to reach its end-goal.
Keywords: U.S. Postal Service, economics, due diligence, reform framework
JEL Classification: D42, H13, H23, H42, L51, L87
Suggested Citation: Suggested Citation