A Federally Owned GM Is An Old Idea–USPS

As Government, Inc. continues its march to convert more and more private enterprise to government ownership outright or a skeleton company that is merely a puppet under government direction it would behoove us to recall a little history with regard to how well the government runs any enterprise.  The Constituion gives the government power to create post offices and to run the postal system.  That was a very useful power and one that was intended to benefit the entire country.  All our post offices were direct government operations for over 150 years.   The postal employees were government employees.  There were a few exceptions along the way like the old Pony Express and some of the earliest air mail systems which were operated by private contractors.   But even those contractors were under the direction and control of the Federal government.  All the expenses and revenues of the Post Office were part of the Federal budget.   If it operated at a loss then the Congress had to specifically fund the shortfall in the next budget.    For the first 60 years or so of our history the Post Office really had no competition in the transmission of communications.  Then came the telegraph.  

The telegraph was the first inroad on the Post Office because it could transmit information infinitely faster but it was expensive.  It was out of the reach of most people and was restricted primarily to business and used by individuals only for very important matters.  That was why receiving a telegram was such a big deal 100 years ago.  You knew a telegram was not to wish you happy birthday.  More likely it was to announce the death of a relative or something else of great import.   Along the way with the Post Office came the unions in the 20th century.  The unions changed the Post Office.  During the mid years of the 20th century the efficiency of the Post Office steadily declined and the costs always increased and at a faster rate than would be justified by inflationary effects.   The unions always insisted on more pay and better benefits and they got them because of their friends in Congress.  After all they represented a sizable block of votes that could be counted on to not only vote their way but to actively campaign and help with fund raising, etc. 

In the ’50’s, ’60’s and even into the ’70’s you never heard of Fedex, UPS or DHL or any other transporter of “mail”.   When they began to emerge in the ’70’s there was a hue and cry from the Post Office and its unions.  They could see the hand writing on the wall.  Those private companies outperformed them by leaps and bounds.  They delievered faster and more cheaply than the Post Office.  Mostly those companies were dependable and very responsive to customer satisfaction.  They cared about their customers.  The Post Office, lead and prodded by its union members, fought hard against these companies.  The PO threatened and indeed brought litigation to stop them from doing business.  The PO contended that under the Constitution and laws that it was illegal for anyone other than the Post Office or a contractor picked by the Post Office to handle any “mail”.  There were allegations of criminal proceedings that could be brought agains these companies and their employees for tampering with the mail.  Today it is still against the law to tamper with the mail or rifle someone’s post box or mail box.   The unions accused the private companies of cherry picking the deliveries and only accepting the items that were profitable like an ordinary first class letter.  The Post Office moaned that it had to accept everything such as third class and advertisements–the so called junk mail. 

Fortunately for all of us the Post Office ultimately lost that bitter battle.  It was very bitter.  Threatening someone with jail is pretty serious especially when there were some members of Congress cheerleading on the sideline.  But public opinion and the law eventually won the day.  Congress made the Post Office the United States Postal Service and took it off the books.  It was supposed to operate at a profit and the Congress would not have to fund it in the annual budget.  Even the other  unions around the country finally backed off from support.  They had threatened all kinds of actions to support their fellow union members at the Post Office.  But the public recognized how terrible the service was from the Post Office compared to the  private companies.  Now all law firms and major businesses routinely use Fedex, UPS or DHL to deliver their documents and communications.  How often do you use them yourself when shipping Christmas presents or birthday gifts to family members?  Have you tried to get the Postal Service to forward your mail after a move recently?  That is a real crap shoot at best.  Notice how energetic those clerks are at the Post Office when you do have to go there to ship something?   Would you hire one of them to work at your business?

Now we have GM.  It is rapidly becoming a Government enterprise.  Its business model will be one imposed by the EPA, Dept. of Transportation and I guess the Treasury or whatever Government entity ends up with the stock ownership.  Do you believe that the future GM will negotiate hard with the unions down the road or cave in every time to garner votes for and support from members of Congress.   Will the future GM even need a marketing department?  What is the point when your product will be mandated from Government, Inc.?  If you think the Postal Service is an icon of business acumen and service for its customers you will love the future GM.

Pundits repeatedly talk about the AIG executives receiving bonuses for companies that had a loss and pound them for being rewarded for failure.  As I have said here several times I don’t like AIG.  Litigated against them a few years back and didn’t like them at all.  However, I have been presented many, many times over my career with situations that were dire.  There was going to be a loss.  I was hired to minimize the loss.  If you are given a project were the potential loss is say 10 million and you work on it and due to your work the ultimate loss is 1 million, that is a pretty damn good job.  I have no problem at all giving someone who performs like that a bonus.  They deserve it.  I don’t know how many AIG people fall in that category but I wish there was more thoughtfulness and less ideological blasts from the pundits about being rewarded for failure.  Not saving all ten chestnuts is a bummer but saving 9 of them ain’t bad.  Of course there is also the small little item of contract rights and property rights that are supposed to be protected under the Fifth Amendment.

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1 Comment

Filed under business, Economics, government, history

One response to “A Federally Owned GM Is An Old Idea–USPS

  1. Adam

    The old dems pulled a fast one on everyone about the AIG bonuses. They were getting bad PR on the amount of the $700 billion or $1 trillion bailout (i’ve lost count) so they targeted the AIG bonuses. They moved the subject. Good PR move for sure. It was in the contract for them to receive bonuses. Period, end of story. The day the government steps in to say i can’t get a contractual bonus is the day we have lost our rights all together. Imagine what is next? Government is becoming a business, not an institution provided BY and for THE people.

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