I love August in Washington, D.C. The traffic is better, the workload is lighter, and liberty and freedom aren’t under attack by Congress.
That means that the cronies roaming the halls of Congress have less to do, but very shortly their Gucci loafers will again shuffle around, over, and even on each other in the halls of Congress. While this year Congress will only be back for a few short weeks before they leave again to campaign, there are still cronies salivating at the chance to help their clients manipulate Congress into beating up competitors they can’t beat in the market place.
Of course, the usual suspects are a part of their plan — taxes, healthcare, intellectual property, and defense spending on projects that might not even see the light of day. But this year, even the U.S. Postal Office is likely going to be under attack.
I love crony hunting: pointing out the ludicrous nature of their arguments and exposing their profit motives. And I even find it particularly gratifying to defend pieces of government that are truly in need of real reform. In these cases, the cronies don’t care about real reforms — they just want “reforms” that benefit their clients’ bottom lines, or hurt their competitors.
This is the case with the U.S. Post Office. It’s a mess. They have a retirement system that is weighing them down, unions that are hard to manage, and a primary service that is declining in the age of the Internet. They need real reform.
That isn’t want the cronies want. They want to reform the USPS, but the reform they care about is getting more business for themselves. I certainly understand their motives, but that doesn’t make it right. Big shippers want the USPS to raise prices on companies like Amazon and other large companies in order to make their own services appear more attractive.
If the USPS does that, these big shippers would get more business. But, like increases in the minimum wage accelerate the use of robots to replace minimum-wage employees, higher shipping prices are also likely to speed up the development of new shipping solutions. Higher prices are almost always not acceptable to big businesses who want to increase their margins, not shrink them.
The end result would be less business for the big shippers and less business for the USPS in one of the only areas where they are growing and turning a profit.
For a libertarian such as myself, defending a government program can be tricky, especially one that can’t even pick the right Statue of Liberty! But this one is in the Constitution: Article I, Section 8, Clause 7 of the U.S. Constitution empowers Congress “To establish Post Offices and post Roads.”
The ability to communicate and even ship goods across the country, to remote areas, and in a reasonable time has helped transform the business landscape of the country. The founders knew that connecting the country this way was important.
And, admittedly, it is also possible that cronies exist to keep shipping prices low. Congress has taken action against that, though. The 2006 Postal Accountability and Enhancement Act made it illegal for USPS to price parcel delivery below its cost. In order to assure that, the Postal Regulatory Commission oversees the deals made with Amazon and other third parties to make sure that the deals are profitable. And, the PRC has also noted that competitive products — shipping packages instead of first-class mail — help fund the infrastructure of the Postal Service.
When we look at the numbers, first-class mail shrunk $1.87 billion in fiscal year 2017 while package delivery brought in $19.5 billion, or 28 percent of USPS’ annual revenue: a $2.1 billion revenue increase. And deals with private shippers accounted for $7 billion of that $19.5 billion.
If we fast forward, it is likely that Amazon and other larger companies who use the USPS and other methods will eventually develop their own delivery service as they vertically integrate: drones, self-driving fleets, or just their own people-driven fleet of shippers. But, if they all just left now, that would leave taxpayers holding the bag on supporting the USPS. It could harm the recent economic growth that we have seen. And, it would give a victory to the cronies.
The USPS needs to future-proof itself — not shoot itself in the foot when Congress looks to reform it. Union reform, retirement account reform, and defending taxpayers and entrepreneurs all need to be at the top of the reforms’ priorities.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
