What are the arguments for and against regulation of the United States Postal Service by the federal government? There has been widespread concern about declining revenue, but the government continues to protect the USPS from competition and force the USPS to keep prices down. According to the Wikipedia entry linked to above, the monopoly protections enjoyed by the USPS include:

The USPS enjoys a government monopoly with respect to first-class and third-class letter delivery under the authority of the Private Express Statutes. The USPS says that these statutes were enacted by Congress "to provide for an economically sound postal system that could afford to deliver letters between any two locations, however remote." In effect, those who mail letters to a near location are subsidizing those who are mailing letters to distant locations.

The USPS further enjoys monopoly status in that it possesses the exclusive permission under federal law to deliver first and third class mail. However, an exception to private carriers is made with regard to "extremely urgent letters" as long as the private carrier charges at least $3 or twice the U.S. postage, whichever is greater (other stipulations, such as maximum delivery time, apply as well). The USPS also enjoys a monopoly privilege in placing mail into standardized mailboxes marked "U.S. Mail." Hence, private carriers must deliver packages directly to the recipient, leave them in the open near the recipient's front door, or place them in a special box dedicated solely to that carrier (a technique commonly used by small courier and messenger services).

Not only do mailers to near locations subsidize mailers to distant locations, but the USPS also receives subsidies directly from tax revenue collected by the federal government (though the amount was only $36 million in 2004).

Could postal service benefit from deregulation, or is regulation required to protect the declining industry in the face of email? I see no reason to believe that UPS and FedEx couldn't handle delivering first- and third-class mail if they were allowed to do so, and their pricing schedules might end up being more favorable to consumers. The recently passed Postal Accountability and Enhancement Act is intended to allow the USPS to be more competitive with some services (i.e., most likely by raising rates) but still limits increases in the first-class postage rate and juggles money around to keep prices down. Ultimately though, are these kinds of economic decisions we want our legislators making? Why not leave them to the market?

A bit of trivia you may not have been aware of: did you know that the President, Senators, and Representatives can send mail for free merely by signing their names in the place of a stamp? It's called franking, and the practice is intended to facilitate communication between elected officials and their constituents.



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