6 ms·

The USPS lost $2.7B last year, even though it has a monopoly on mail. Why anyone would want to give it more responsibility is beyond me.

mschuster91 9y ago
> The USPS lost $2.7B last year, why anyone would want to give it more responsibility is beyond me. The loss comes from having to serve literally the entire country by law. A postal service in cities is profitable - a postal service that has to serve even the remotest ditch in the deepest desert of a flyover state with daily mail will always incur loss. And that is what society is for: to bear the cost of providing everyone in the country with affordable mail. To add banking services to the unbanked (or those who do not trust the megabanks any more, given their historic lack of customer support and historically low image) is something that can very well be used to offset these losses.
- peacetreefrog 9y ago
  So the postal service loses money because it's mandated by law that it has to serve the entire country. But mandating that it has to provide banking services for the entire country is going to save money? Ok.
  - wlesieutre 9y ago
    When you receive a money transfer does your bank send a truck out to your remote mountaintop cabin to drop it in your mailbox? Providing basic banking services at a post office is not nearly as big a proposition as delivering mail to every address in the country. Plus banking services are touched less frequently than mail. I get junk mail every day. I don't know the exact logistics of what they're suggesting, but I have a hard time seeing how it could be as expensive as mail delivery.
- pbreit 9y ago
  Actually, the USPS' primary financial challenge is a 2006 law that instituted unique pension funding requirements. It is otherwise unsubsubsidized. https://www.21cpw.com/paea-the-most-insane-law-by-congress-ever https://www.21cpw.com/paea-the-most-insane-law-by-congress-e...
shkkmo 9y ago
These losses are primarily the fault of congress, not the USPS. ridiculous things like ePacket: https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-usps-epacket-gives-postal-subsidies-to-chinese-e-commerce-merchants-to-ship-to-the-usa-cheap/#7c213af040ca https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-... combined with lack of control over their business model and having to meet requirements that other businesses don't: https://blog.boomerangapp.com/2016/10/whats-killing-the-post-office-its-not-email/ https://blog.boomerangapp.com/2016/10/whats-killing-the-post...
- peacetreefrog 9y ago
  Congress isn't going anywhere though, why would their impact on the ability of the USPS's money to make money banking be any different from mail?
  - toomuchtodo 9y ago
    Because physical logistics are labor and capital intensive, whereas banking is not. USPS can deliver banking services in a financially sound manner without needing to generate a profit from it.
Klathmon 9y ago
Why does the USPS need to make money? Why isn't mail (and possibly other services that the USPS could provide) treated like road maintenance or police or whatever else? (I have a vague idea that this may be a politically loaded question, so I just want to put this disclaimer here to say that I genuinely don't mean for it to be. I don't know much about the past of the USPS and why it is the way it is, so i'm asking)
- peacetreefrog 9y ago
  It's an interesting question. Obviously the money has to come from somewhere. Mail trucks cost money, and no one is going to go out and deliver letters for free. It's easy to say we should just make up the difference with tax reciepts like we are now. I think it's less a philosophical question -- is mail like roads or police? -- vs a matter of efficiency. It's obviously possible to NOT lose money delivering much more difficult things than paper. FedEx and UPS do it all the time. But they're private businesses who compete with each other (and Amazon and whoever else), so they have to figure it out or they won't be around. The USPS, meanwhile, doesn't have to compete with anyone (in fact, it's illegal for anyone else to deliver mail) and has no incentive or need to be efficient because they can draw on the US Treasury whenever they need to. It's not that they're bad people, it's just the nature of the incentives and system involved (and also it's run by congress). These same dynamic would be there in banking though, which is why this seems like such a bad idea.
  - Klathmon 9y ago
    I don't think competition is the answer here, I think it's more similar to the healthcare debate. Do you make people hard to deliver to have to pay more, or do you "average" out the cost and make everyone pay roughly the same amount? With a combination of taxes, flat-rate fees, and delivery-distance based costs, I think it's more than possible to make a system where it's not "free" or extremely cheap to send somewhere hard-to-get, but it's also not prohibitively expensive. And IMO the postal service is riding that line in a way that i'm happy with. I appreciate that I can send a small box across the country for $5, and I can do that whether I live in NYC or in middle-of-nowhere pennsylvania. And I'm more than happy to pay a bit more in taxes to make up for the difference that the flat-rate doesn't cover if it means that lower-income individuals won't need to pay as much to send mail at all. I know that there are problems with not having competition, but I think mail delivery is along the same lines as other "naturally monopolistic" things like power, water, sewer, etc...
geofft 9y ago
> The USPS lost $2.7B last year The USPS spent $2.7B more than it gained in revenue from sales of stamps etc. The idea that a government agency is supposed to be profitable, and the use of the business term "lost" is appropriate, is a politicized, partisan one. (The extent to which the USA's post isn't really a government agency any more is also extremely politicized and partisan.) One way to tell that the profitability model isn't appropriate is, what would happen if the USPS did achieve profitability? The USPS's own press release attributes $1.1B of their "loss" to a refusal by regulators to let stamp prices remain at 49 cents, requiring them to go back to 47 cents. How is a "company" that already has extremely below-market prices and can't even get regulators to permit them to keep a 2-cent increase supposed to maintain profitability, should they ever achieve it?
- peacetreefrog 9y ago
  That's the point though. The USPS costs more then it takes in, by a lot. Yeah, it's due to regulators, but they're not going anywhere. That's exactly the argument against having USPS pick up additional responsibilities like banking. The USPS opens a bank branch in every post office, now those same regulators (who can't even agree on increasing the price of a stamp) are pricing loans and opening checking accounts? What reason is there to believe that would end well, especially when it's a whole new line of business for them? Not complaining, but the fact I'm getting hammered by downvotes on all of these responses is mind boggling to me. I'm surprised how much of the tech world apparently thinks this is a good idea.
  - geofft 9y ago
    Not that I downvoted, but I think the downvotes are because your statement reads as a criticism of the USPS's internal competence and ability to run a successful operation. "The USPS is required to suck by external forces that we will not realistically be able to get rid of" is I think a pretty different position and one I'm more likely to agree with.
    - peacetreefrog 9y ago
      Fair enough. Nothing personal against the people of the USPS. I do think those same "external forces we won't realistically be able to get rid that require the USPS to suck" would also make them suck at banking though.

mschuster91 9y ago

> The USPS lost $2.7B last year, why anyone would want to give it more responsibility is beyond me. The loss comes from having to serve literally the entire country by law. A postal service in cities is profitable - a postal service that has to serve even the remotest ditch in the deepest desert of a flyover state with daily mail will always incur loss. And that is what society is for: to bear the cost of providing everyone in the country with affordable mail. To add banking services to the unbanked (or those who do not trust the megabanks any more, given their historic lack of customer support and historically low image) is something that can very well be used to offset these losses.

peacetreefrog 9y ago
So the postal service loses money because it's mandated by law that it has to serve the entire country. But mandating that it has to provide banking services for the entire country is going to save money? Ok.
- wlesieutre 9y ago
  When you receive a money transfer does your bank send a truck out to your remote mountaintop cabin to drop it in your mailbox? Providing basic banking services at a post office is not nearly as big a proposition as delivering mail to every address in the country. Plus banking services are touched less frequently than mail. I get junk mail every day. I don't know the exact logistics of what they're suggesting, but I have a hard time seeing how it could be as expensive as mail delivery.
pbreit 9y ago
Actually, the USPS' primary financial challenge is a 2006 law that instituted unique pension funding requirements. It is otherwise unsubsubsidized. https://www.21cpw.com/paea-the-most-insane-law-by-congress-ever https://www.21cpw.com/paea-the-most-insane-law-by-congress-e...

shkkmo 9y ago

These losses are primarily the fault of congress, not the USPS. ridiculous things like ePacket: https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-usps-epacket-gives-postal-subsidies-to-chinese-e-commerce-merchants-to-ship-to-the-usa-cheap/#7c213af040ca https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-... combined with lack of control over their business model and having to meet requirements that other businesses don't: https://blog.boomerangapp.com/2016/10/whats-killing-the-post-office-its-not-email/ https://blog.boomerangapp.com/2016/10/whats-killing-the-post...

peacetreefrog 9y ago
Congress isn't going anywhere though, why would their impact on the ability of the USPS's money to make money banking be any different from mail?
- toomuchtodo 9y ago
  Because physical logistics are labor and capital intensive, whereas banking is not. USPS can deliver banking services in a financially sound manner without needing to generate a profit from it.

Klathmon 9y ago

Why does the USPS need to make money? Why isn't mail (and possibly other services that the USPS could provide) treated like road maintenance or police or whatever else? (I have a vague idea that this may be a politically loaded question, so I just want to put this disclaimer here to say that I genuinely don't mean for it to be. I don't know much about the past of the USPS and why it is the way it is, so i'm asking)

peacetreefrog 9y ago
It's an interesting question. Obviously the money has to come from somewhere. Mail trucks cost money, and no one is going to go out and deliver letters for free. It's easy to say we should just make up the difference with tax reciepts like we are now. I think it's less a philosophical question -- is mail like roads or police? -- vs a matter of efficiency. It's obviously possible to NOT lose money delivering much more difficult things than paper. FedEx and UPS do it all the time. But they're private businesses who compete with each other (and Amazon and whoever else), so they have to figure it out or they won't be around. The USPS, meanwhile, doesn't have to compete with anyone (in fact, it's illegal for anyone else to deliver mail) and has no incentive or need to be efficient because they can draw on the US Treasury whenever they need to. It's not that they're bad people, it's just the nature of the incentives and system involved (and also it's run by congress). These same dynamic would be there in banking though, which is why this seems like such a bad idea.
- Klathmon 9y ago
  I don't think competition is the answer here, I think it's more similar to the healthcare debate. Do you make people hard to deliver to have to pay more, or do you "average" out the cost and make everyone pay roughly the same amount? With a combination of taxes, flat-rate fees, and delivery-distance based costs, I think it's more than possible to make a system where it's not "free" or extremely cheap to send somewhere hard-to-get, but it's also not prohibitively expensive. And IMO the postal service is riding that line in a way that i'm happy with. I appreciate that I can send a small box across the country for $5, and I can do that whether I live in NYC or in middle-of-nowhere pennsylvania. And I'm more than happy to pay a bit more in taxes to make up for the difference that the flat-rate doesn't cover if it means that lower-income individuals won't need to pay as much to send mail at all. I know that there are problems with not having competition, but I think mail delivery is along the same lines as other "naturally monopolistic" things like power, water, sewer, etc...

geofft 9y ago

> The USPS lost $2.7B last year The USPS spent $2.7B more than it gained in revenue from sales of stamps etc. The idea that a government agency is supposed to be profitable, and the use of the business term "lost" is appropriate, is a politicized, partisan one. (The extent to which the USA's post isn't really a government agency any more is also extremely politicized and partisan.) One way to tell that the profitability model isn't appropriate is, what would happen if the USPS did achieve profitability? The USPS's own press release attributes $1.1B of their "loss" to a refusal by regulators to let stamp prices remain at 49 cents, requiring them to go back to 47 cents. How is a "company" that already has extremely below-market prices and can't even get regulators to permit them to keep a 2-cent increase supposed to maintain profitability, should they ever achieve it?

peacetreefrog 9y ago
That's the point though. The USPS costs more then it takes in, by a lot. Yeah, it's due to regulators, but they're not going anywhere. That's exactly the argument against having USPS pick up additional responsibilities like banking. The USPS opens a bank branch in every post office, now those same regulators (who can't even agree on increasing the price of a stamp) are pricing loans and opening checking accounts? What reason is there to believe that would end well, especially when it's a whole new line of business for them? Not complaining, but the fact I'm getting hammered by downvotes on all of these responses is mind boggling to me. I'm surprised how much of the tech world apparently thinks this is a good idea.
- geofft 9y ago
  Not that I downvoted, but I think the downvotes are because your statement reads as a criticism of the USPS's internal competence and ability to run a successful operation. "The USPS is required to suck by external forces that we will not realistically be able to get rid of" is I think a pretty different position and one I'm more likely to agree with.
  - peacetreefrog 9y ago
    Fair enough. Nothing personal against the people of the USPS. I do think those same "external forces we won't realistically be able to get rid that require the USPS to suck" would also make them suck at banking though.