Time to End the Postal Monopoly

by | May 28, 2019

Time to End the Postal Monopoly

by | May 28, 2019

After blaming the billions of dollars a year in losses by the United States Post Office (USPS) on its failure to charge Amazon enough to deliver its packages — “making Amazon richer and the Post Office dumber and poorer” — Donald Trump, on April 12, 2018, signed Executive Order 13829, which established the Task Force on the United States Postal System “to evaluate the operations and finances of the United States Postal Service (USPS) and develop recommendations for administrative and legislative reforms for the U.S. postal system.”

The task force’s report, United States Postal Service: A Sustainable Path Forward (dated December 4, 2018), recommended that “the USPS and Congress work to overhaul the USPS’s business model in order to return it to sustainability. Both administrative and legislative actions are needed to ensure that the USPS does not face a liquidity crisis, which could disrupt mail services and require an emergency infusion of taxpayer dollars.”

But the Post Office is already facing a “liquidity crisis.” In fiscal year 2018 (which ended on Sept. 30, 2018), the USPS reported an increase in annual revenue by $1 billion over the previous year. However, it also spent almost $4 billion more than it took in during the year, resulting in a $1.2 billion increase over the amount of money it lost last year. The Postal Service not only loses billions of dollars every year, it has done so for the past decade. As acknowledged by the task force’s report,

The USPS has been losing money for more than a decade and is on an unsustainable financial path. The USPS is forecast to lose tens of billions of dollars over the next decade. Further, as of the end of FY 2018, the USPS balance sheet reflects $89 billion in liabilities against $27 billion in assets — a net deficiency of $62 billion.

According to Postmaster General Megan Brennan, “Existing laws and regulations limit our ability to introduce new products or services, enter new markets, generate new revenue streams, or manage our cost structure.” “We cannot generate revenue or cut enough costs to pay our bills,” she maintains. Without drastic operational changes, the USPS will continue to post losses at “an accelerating rate.”

It turns out that commercial package delivery for e-commerce retailers such as Amazon was actually profitable for the USPS. Revenue from delivering packages increased in 2018. The problem is that revenue from first-class mail, which is still the biggest source of the USPS’s revenue, continues to decline even as labor costs continue to increase. In 2018, labor costs accounted for 76 percent of overall operating costs, and especially the pension and health benefits provided to each of the USPS’s retired government employees.

Lost in all of this is the real problem with the Post Office, specifically the postal monopoly and, to a larger extent, the fact that the federal government is involved in the postal business.

The Post Office

According to the aforementioned report of the Task Force on the United States Postal System, “The USPS is a $7 billion enterprise that collects, processes, transports, and delivers 46 billion pieces of mail and packages to nearly 159 million households and businesses annually.” According to the USPS, it carries 47 percent of the world’s mail volume, travels 1.5 billion miles a year to deliver the mail, has more than 30,000 “Postal Service-managed retail post offices in the United States,” employs more than half a million career employees, and operates the largest civilian vehicle fleet in the world.

The USPS is actually older than both the Constitution and the Declaration of Independence. The Continental Congress appointed Benjamin Franklin the first postmaster general in 1775. After adoption of the Constitution in 1789, the federal government established three departments: State, Treasury, and War. They were joined by the Post Office Department in 1792. Unlike the departments of Labor, Education, Health and Human Services, and Housing and Urban Development, the Post Office is one of the federal government’s few departments that is clearly authorized by the Constitution. In Article I, Section 8, Paragraph 7, Congress is given the power “to establish Post Offices and post Roads.” According to U.S. Code, Title 39, Part V, Chapter 50, §5003, the following are considered post roads:

(1) the waters of the United States, during the time the mail is carried thereon;

(2) railroads or parts of railroads and air routes in operation;

(3) canals, during the time the mail is carried thereon;

(4) public roads, highways, and toll roads during the time the mail is carried thereon; and

(5) letter-carrier routes established for the collection and delivery of mail.

The Postal Reorganization Act of 1970 reconstituted the Post Office Department as the United States Postal Service. The USPS is now a government corporation like the Corporation for Public Broadcasting, the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association (Fannie Mae), the National Railroad Passenger Corporation (Amtrak), and the Tennessee Valley Authority (TVA). The new USPS officially began operations on July 1, 1971.

The head of the Post Office is the postmaster general. Until 1971, he was appointed by the president (subject to Senate confirmation), and was a member of the president’s cabinet. Now, the postmaster general is appointed by a board of governors, who are appointed by the president (subject to Senate confirmation). Postage rates are set by the Postal Regulatory Commission, formerly called the Postal Rate Commission, the members of which are appointed by the president (subject to Senate confirmation).

The Post Office operates under a Universal Service Obligation (USO). According to U.S. Code, Title 39, Part I, Chapter 1, Section 101,

(a) The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.

(b) The Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining. No small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective postal services be insured to residents of both urban and rural communities.

The unofficial motto of the Post Office, which is engraved on the outside of the James A. Farley Post Office building in New York City is, “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”

The postal problem

The Federal Trade Commission (FTC), established in 1914, is a federal agency “with a unique dual mission to protect consumers and promote competition.” According to the FTC,

Free and open markets are the foundation of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers —both individuals and businesses — the benefits of lower prices, higher quality products and services, more choices, and greater innovation. The FTC’s competition mission is to enforce the rules of the competitive marketplace — the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices.

But when it comes to the postal monopoly, the FTC is silent.

According to the official USPS publication, Report on Universal Postal Service and the Postal Monopoly, “To ensure funding of the USO, Congress and the President established the Private Express Statutes (PES) and the mailbox access rule, which together comprise the postal monopoly.” By law, only the Post Office is allowed to deliver regular mail, and mailboxes can be used only for the deposit of outgoing mail to the Post Office or incoming mail from the Post Office.

According to U.S. Code, Title 39, Chapter I, Subchapter E, Part 310, Section 310.2, “Unlawful carriage of letters,”

(a) It is generally unlawful under the Private Express Statutes for any person other than the Postal Service in any manner to send or carry a letter on a post route or in any manner to cause or assist such activity. Violation may result in injunction, fine or imprisonment or both and payment of postage lost as a result of the illegal activity.

A letter is defined, in Section 310.1, “Definitions,” as “a message directed to a specific person or address and recorded in or on a tangible object.” According to Section 310.3, “Exceptions,”

  • The sending or carrying of letters is permissible if they accompany and relate in all substantial respects to some part of the cargo or to the ordering, shipping or delivering of the cargo.
  • The sending or carrying of letters is permissible if they are sent by or addressed to the person carrying them.
  • The sending or carrying of letters without compensation is permitted.

The use of a “special messenger” to deliver a letter is permitted under certain circumstances:

(1) The use of a special messenger employed for the particular occasion only is permissible to transmit letters if not more than twenty-five letters are involved. The permission granted under this exception is restricted to use of messenger service on an infrequent, irregular basis by the sender or addressee of the message.

(2) A special messenger is a person who, at the request of either the sender or the addressee, picks up a letter from the sender’s home or place of business and carries it to the addressee’s home or place of business, but a messenger or carrier operating regularly between fixed points is not a special messenger.

The PRS statutes are suspended, according to Section 320, for “extremely urgent letters.” However, there are several caveats:

For letters dispatched within 50 miles of the intended destination, delivery of those dispatched by noon must be completed within 6 hours or by the close of the addressee’s normal business hours that day, whichever is later, and delivery of those dispatched after noon and before midnight must be completed by 10 A.M. of the addressee’s next business day. For other letters, delivery must be completed within 12 hours or by noon of the addressee’s next business day. The suspension is available only if the value or usefulness of the letter would be lost or greatly diminished if it is not delivered within these time limits.

That is why UPS and FedEx are able to legally deliver overnight letters. Packages were never subject to the delivery monopoly. That is why Americans can lawfully ship packages of any number, size, weight, or content to any address by UPS or FedEx instead of the Post Office.

The Post Office has its own law- enforcement agency, the United States Postal Inspection Service (USPIS). In addition to enforcing some 200 federal laws relating to “crimes that adversely affect or entail fraudulent use of the U.S. Mail, the postal system, postal employees, and customers,” the USPIS enforces the postal monopoly, and can carry out searches and seizures if it suspects that the postal monopoly is being contravened. The aforementioned Report on Universal Postal Service and the Postal Monopoly concluded, “Reducing or eliminating the Private Express Statutes (PES) and mailbox rule will harm the Postal Service’s ability to provide universal service at affordable prices, and it is the American public who will suffer.”

The simple solution

The simple solution to the postal problem is not to reform, make more efficient, modernize, or privatize the Post Office, although all of those things would be an improvement. It is certainly true that delivering the mail is an illegitimate function of government. To the libertarian, the only possible legitimate functions of government are defense, judicial, and policing activities. All government actions, at any level of government, beyond the reasonable exercise of those functions are illegitimate — and that includes the Post Office. Government should never punish individuals or businesses for engaging in entirely peaceful, voluntary, and consensual personal or commercial activities that do not aggress against the person or property of others. As long as people don’t infringe on the liberty of others by committing, or threatening to commit, acts of fraud, theft, aggression, or violence against their person or property, the government should just leave them and their businesses alone — and that includes the Post Office. The simple solution is to just end the postal monopoly.

Violating the postal monopoly is the ultimate victimless crime. Libertarians frequently point out the absurdity of laws that seek to prevent and punish the commission of victimless crimes — such as selling drugs, using drugs, exchanging money for sex, engaging in illegal gambling, charging usurious interest rates, discriminating in employment or housing, or raising prices after a natural disaster. Many Americans consider those actions to be immoral. And so do many libertarians — they just don’t believe it is the business of government to legislate morality or punish activity that doesn’t aggress against the person or property of others. But what could possibly be immoral or wrong with an entity’s delivering a letter for some other entity to a third entity — as long as all parties were in agreement with the activity? Where is the crime? Where is the victim? Where is the harm? Could anything possibly be more innocuous?

The postal monopoly is worse than occupational licensing. An occupational license is a certificate of permission and approval from a government-sponsored board that a job-seeker is required to obtain before he can begin working in a certain occupation. It is government permission to work. It is government approval for two parties to freely contract or engage in commerce. But at least with occupational licensing, the government barriers to entry can be overcome by paying a fee, taking a course, receiving training, or passing a test. Not so with overcoming the postal monopoly. It matters not how efficiently, inexpensively, or safely one can deliver the mail. There is absolutely nothing that can be done to defeat the postal monopoly.

The postal monopoly is the most egregious form of government interference in the market. Governments in many states prohibit certain business from opening on Sundays, staying open past a certain time at night, or selling alcohol before a certain time on Sunday (or not at all). But the postal monopoly is a nationwide, 24/7, 365-day, perpetual, permanent ban on engaging in a certain kind of commerce.

The postal monopoly is not mandated by the Constitution. Frustrated with high postage rates, Lysander Spooner, back in 1844, challenged the postal monopoly when he began the American Letter Mail Company. Article I, Section 8, Paragraph 7 of the Constitution — where Congress is given the power “to establish Post Offices and post Roads” — has never been amended. Therefore, Spooner’s arguments against the postal monopoly are just as relevant now as they were then.

In his 1844 essay “The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails,” Spooner uses the Constitution against the postal monopoly:

The power of Congress, then, is simply “to establish post-offices and post roads,” of their own — not to interfere with those established by others.

The constitution expresses, neither in terms, nor by necessary implication, any prohibition upon the establishment of mails, post-offices and post roads, by the states or individuals.

The constitution expresses, neither in terms, nor by necessary implication, any surrender, on the part of the people, of their own natural rights to establish mails, post offices, or post-roads, at pleasure.

The simple grant of an authority, whether to an individual or a government, to do a particular act, gives the grantee no authority to forbid others to do acts of the same kind.

This doctrine also fully admits the absolute authority of Congress over whatever mails they do establish. It admits their right to forbid any resistance being offered to their progress, and to prohibit and punish depredations upon them. But it, at the same time, asserts that the power of Congress is confined exclusively to the establishment, management, transportation and protection of their own mails.

The power “to establish post-offices and post roads” of their own, and the power to forbid competition, are, in their nature, distinct powers — the former not at all implying the latter.

Spooner and other private-mail entrepreneurs during the 1840s were all eventually shut down by the government. They not only proved that private mail delivery was possible, but also forced the Post Office to reduce its prices.

It goes without saying that pursuant to the Constitution, there might still be a government Post Office, but there would certainly be no postal monopoly. Private businesses would have the opportunity to compete with the Post Office, as well as with each other, for customers. They might even put the Post Office out of business, which would be ideal, since delivering the mail is an illegitimate function of government. Because the Post Office is constitutional, the chances of ending government mail delivery are slim. But it is time to end the postal monopoly. Although the Constitution does authorize the establishment of post offices, it nowhere establishes a postal monopoly. There is no reason that private industry cannot deliver packages and letters just like the Post Office.

Republished from fff.org.

About Laurence Vance

Laurence M. Vance is a columnist and policy adviser for the Future of Freedom Foundation, an associated scholar of the Ludwig von Mises Institute, and a columnist, blogger, and book reviewer at LewRockwell.com. He is also the author of Social Insecurity and The War on Drugs Is a War on Freedom. His newest books are War, Christianity, and the State: Essays on the Follies of Christian Militarism and War, Empire, and the Military: Essays on the Follies of War and U.S. Foreign Policy.

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