7 ms·

Huh? I'm not sure what this has to do with taxes or government spending. The USPS doesn't get tax money; it's financed by its customers, like any other busine

by magduf 7y ago

Huh? I'm not sure what this has to do with taxes or government spending. The USPS doesn't get tax money; it's financed by its customers, like any other business, it just happens to be wholly owned by the federal government. Postal rates are high because they're forced by the UPU agreement to deliver Chinese mail for almost nothing, so they pass the costs on to US customers.

ikeboy 7y ago
This is incorrect. There's no mechanism by which cheaper prices for UPU mail translates into higher prices for US customers. If they had pricing power they'd raise prices regardless of fixed losses elsewhere.
- Consultant32452 7y ago
  The USPS has to ask permission from regulators to raise prices, unlike their more private counterparts.
  - ikeboy 7y ago
    And that is evaluated on a per market basis. The assertion that losing money on some services causes them to raise prices elsewhere is baseless. Even if there was a mechanism the numbers don't work - there's orders of magnitude more packages sent within the US than into the US from UPU.
    - Consultant32452 7y ago
      I was commenting on your remark about USPS lacking pricing power. I wasn't really disagreeing with you, just pointing out some of the moat between them and pricing power.
dmix 7y ago
What is the UPU and how'd they get this power?
- johneth 7y ago
  Universal Postal Union: http://www.upu.int/en.html http://www.upu.int/en.html "With its 192 member countries, the UPU is the primary forum for cooperation between postal sector players. It helps to ensure a truly universal network of up-to-date products and services."
- wincy 7y ago
  There’s a really excellent planet money podcast about this. Back when the US was a major exporter the UPU was great for US merchants. https://www.npr.org/sections/money/2018/08/01/634737852/episode-857-the-postal-illuminati https://www.npr.org/sections/money/2018/08/01/634737852/epis...
  - adventured 7y ago
    > Back when the US was a major exporter the UPU was great for US merchants. The US is the world's #2 exporter. $1.57 trillion versus $2.15 trillion for China. China's figure peaked a few years ago, the US is likely to narrow that gap, especially with US energy exports continuing to ramp up. US exports of goods are near an all-time high after adjusting for inflation.
- krisgee 7y ago
  Universal Postal Union is a UN body that manages the relationships between different national post offices. They set standard rates and stuff for all member countries so that each country doesn't have to negotiate a treaty with any other country it wants to send international mail to. https://en.wikipedia.org/wiki/Universal_Postal_Union https://en.wikipedia.org/wiki/Universal_Postal_Union
mfer 7y ago
The USPS has been getting money from taxes to offset the debt they run each year. For many years now they have been in the red. Fortune wrote about it back in 2015[1] and you can read the 2018 financial results[2]. Some tax money goes to the USPS. [1] https://fortune.com/2015/03/27/us-postal-service/ https://fortune.com/2015/03/27/us-postal-service/ [2] https://about.usps.com/news/national-releases/2018/pr18_093.htm https://about.usps.com/news/national-releases/2018/pr18_093....
- ceejayoz 7y ago
  That first article is severely stretching the definition of "getting money". Virtually all of the alleged $18B is attributed to the law that gives the USPS jurisdiction over your mailbox. The second just reflects Congress's attempts to deliberately hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations. https://www.uspsoig.gov/blog/be-careful-what-you-assume https://www.uspsoig.gov/blog/be-careful-what-you-assume https://www.bloomberg.com/opinion/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service https://www.bloomberg.com/opinion/articles/2018-04-04/congre... > The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees' health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make.
  - reallydude 7y ago
    > hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations Maybe it's a flawed methodology (arguable), but being fiscally responsible about pensions is something that should be encouraged. In California pension liabilities are out of control and at impractical levels, causing all sorts of havoc and manipulation (corruption). https://www.vcstar.com/story/news/2018/12/07/governor-jerry-brown-gavin-newsom-california-state-government-pension-reform-supreme-court-benefits/2232837002/ https://www.vcstar.com/story/news/2018/12/07/governor-jerry-...
    - ceejayoz 7y ago
      If fiscal responsibility were the goal, they'd have required the other federal agencies to do the same. That this specifically targets one of the few agencies ripe for potential privatization is... suspicious. Even if it made fiscal sense, the sudden switch is problematic.
BurningFrog 7y ago
The USPS gets a monopoly on its gigantic market from the government. That is an enormous government subsidy. It is very much not like any other business.
- tasty_freeze 7y ago
  The USPS does have a special relationship, but it isn't a one way street. First, it isn't a monopoly -- there are many other shippers competing in the profitable segments of the market. Second, USPS is obligated to service every location in the US, and at government-controlled prices. USPS will deliver, door to door, a letter from Nowhere, MT to Remote, GA for $0.55, even though they take a loss on it. Try to get Fedex to match that.
  - amluto 7y ago
    > Second, USPS is obligated to service every location in the US I’ve heard this many times. I also know quite a few places that USPS does not service.
  - BurningFrog 7y ago
    > First, it isn't a monopoly But it is. A simple googling gives many hits confirming this simple fact. This one seemed most informative: > The USPS actually has two legally enforced monopolies, as per Title 39 of the US Code. One is over the delivery of anything defined as a “letter,” which is within certain size and weight limits. The second is over the use of your mailbox. From https://www.econlib.org/rick-geddes-explains-the-postal-monopoly/ https://www.econlib.org/rick-geddes-explains-the-postal-mono...
    - tasty_freeze 7y ago
      That is defining monopoly in a very constrained way. You might as well be complaining that USPS having a monopoly over delivering watch fobs. FedEx isn't trying to capture the $0.55 letter delivery market.
      - 7y ago
buck4roo 7y ago
It's not "any other business"; it's a shared resource that improves the lives of all citizens. And we WANT it that way. "Any other business" would not offer or employ any of the features we expect from our Post Office (systemwide flat rate parcel & 1st class letter, 6d/wk delivery (for free!), lack of surge/congestion pricing). If you think UPS and FedEx aren't taking profit away from USPS think again.
morpheuskafka 7y ago
It has a legal monopoly, the power to tax competitors under the Private Express statutes (this is why there is no FedEx First Class mail competitor), it is exempt from local taxation, and doesn't pay federal taxes to the same extent a regular business would.
deleted 7y ago
[deleted]

by magduf 7y ago

ikeboy 7y ago

This is incorrect. There's no mechanism by which cheaper prices for UPU mail translates into higher prices for US customers. If they had pricing power they'd raise prices regardless of fixed losses elsewhere.

Consultant32452 7y ago
The USPS has to ask permission from regulators to raise prices, unlike their more private counterparts.
- ikeboy 7y ago
  And that is evaluated on a per market basis. The assertion that losing money on some services causes them to raise prices elsewhere is baseless. Even if there was a mechanism the numbers don't work - there's orders of magnitude more packages sent within the US than into the US from UPU.
  - Consultant32452 7y ago
    I was commenting on your remark about USPS lacking pricing power. I wasn't really disagreeing with you, just pointing out some of the moat between them and pricing power.

dmix 7y ago

What is the UPU and how'd they get this power?

johneth 7y ago
Universal Postal Union: http://www.upu.int/en.html http://www.upu.int/en.html "With its 192 member countries, the UPU is the primary forum for cooperation between postal sector players. It helps to ensure a truly universal network of up-to-date products and services."
wincy 7y ago
There’s a really excellent planet money podcast about this. Back when the US was a major exporter the UPU was great for US merchants. https://www.npr.org/sections/money/2018/08/01/634737852/episode-857-the-postal-illuminati https://www.npr.org/sections/money/2018/08/01/634737852/epis...
- adventured 7y ago
  > Back when the US was a major exporter the UPU was great for US merchants. The US is the world's #2 exporter. $1.57 trillion versus $2.15 trillion for China. China's figure peaked a few years ago, the US is likely to narrow that gap, especially with US energy exports continuing to ramp up. US exports of goods are near an all-time high after adjusting for inflation.
krisgee 7y ago
Universal Postal Union is a UN body that manages the relationships between different national post offices. They set standard rates and stuff for all member countries so that each country doesn't have to negotiate a treaty with any other country it wants to send international mail to. https://en.wikipedia.org/wiki/Universal_Postal_Union https://en.wikipedia.org/wiki/Universal_Postal_Union

mfer 7y ago

The USPS has been getting money from taxes to offset the debt they run each year. For many years now they have been in the red. Fortune wrote about it back in 2015[1] and you can read the 2018 financial results[2]. Some tax money goes to the USPS. [1] https://fortune.com/2015/03/27/us-postal-service/ https://fortune.com/2015/03/27/us-postal-service/ [2] https://about.usps.com/news/national-releases/2018/pr18_093.htm https://about.usps.com/news/national-releases/2018/pr18_093....

ceejayoz 7y ago
That first article is severely stretching the definition of "getting money". Virtually all of the alleged $18B is attributed to the law that gives the USPS jurisdiction over your mailbox. The second just reflects Congress's attempts to deliberately hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations. https://www.uspsoig.gov/blog/be-careful-what-you-assume https://www.uspsoig.gov/blog/be-careful-what-you-assume https://www.bloomberg.com/opinion/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service https://www.bloomberg.com/opinion/articles/2018-04-04/congre... > The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees' health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make.
- reallydude 7y ago
  > hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations Maybe it's a flawed methodology (arguable), but being fiscally responsible about pensions is something that should be encouraged. In California pension liabilities are out of control and at impractical levels, causing all sorts of havoc and manipulation (corruption). https://www.vcstar.com/story/news/2018/12/07/governor-jerry-brown-gavin-newsom-california-state-government-pension-reform-supreme-court-benefits/2232837002/ https://www.vcstar.com/story/news/2018/12/07/governor-jerry-...
  - ceejayoz 7y ago
    If fiscal responsibility were the goal, they'd have required the other federal agencies to do the same. That this specifically targets one of the few agencies ripe for potential privatization is... suspicious. Even if it made fiscal sense, the sudden switch is problematic.

BurningFrog 7y ago

The USPS gets a monopoly on its gigantic market from the government. That is an enormous government subsidy. It is very much not like any other business.

tasty_freeze 7y ago
The USPS does have a special relationship, but it isn't a one way street. First, it isn't a monopoly -- there are many other shippers competing in the profitable segments of the market. Second, USPS is obligated to service every location in the US, and at government-controlled prices. USPS will deliver, door to door, a letter from Nowhere, MT to Remote, GA for $0.55, even though they take a loss on it. Try to get Fedex to match that.
- amluto 7y ago
  > Second, USPS is obligated to service every location in the US I’ve heard this many times. I also know quite a few places that USPS does not service.
- BurningFrog 7y ago
  > First, it isn't a monopoly But it is. A simple googling gives many hits confirming this simple fact. This one seemed most informative: > The USPS actually has two legally enforced monopolies, as per Title 39 of the US Code. One is over the delivery of anything defined as a “letter,” which is within certain size and weight limits. The second is over the use of your mailbox. From https://www.econlib.org/rick-geddes-explains-the-postal-monopoly/ https://www.econlib.org/rick-geddes-explains-the-postal-mono...
  - tasty_freeze 7y ago
    That is defining monopoly in a very constrained way. You might as well be complaining that USPS having a monopoly over delivering watch fobs. FedEx isn't trying to capture the $0.55 letter delivery market.
    - 7y ago

buck4roo 7y ago

It's not "any other business"; it's a shared resource that improves the lives of all citizens. And we WANT it that way. "Any other business" would not offer or employ any of the features we expect from our Post Office (systemwide flat rate parcel & 1st class letter, 6d/wk delivery (for free!), lack of surge/congestion pricing). If you think UPS and FedEx aren't taking profit away from USPS think again.

morpheuskafka 7y ago

It has a legal monopoly, the power to tax competitors under the Private Express statutes (this is why there is no FedEx First Class mail competitor), it is exempt from local taxation, and doesn't pay federal taxes to the same extent a regular business would.

deleted 7y ago

[deleted]