Post part’em

Some numbers showing United States Postal Service delivery subsidization tendencies. The largest single subsidy is federally mandated. Spoiler, it’s first class mail.

2016 USPS financial and load figures, except where noted:
Net loss – $5.6 billion.
Total Operating Revenue – $71.4 billion.

Total mail volume – 154.3 billion pieces.
Total first class volume – 61.2 billion pieces.
Marketing mail volume – 80.9 billion pieces

Calculated first class revenue at $.55 per piece – $33.7 billion.
Marketing mail revenue – $17.3 billion.

Source for marketing mail revenue is 2010; it tracks very closely with 2016 volume figures. I do not know how this was calculated, since the junk mail rates are complex. In any case, we know the junk rates are much lower. This mainly represents a subsidy to smaller, local businesses.

Meanwhile, the “true cost of delivering a letter is likely more than twice what we now pay.

Assuming the post office is efficient (that is, they are properly staffed, paid market rates, have appropriate equipment and infrastructure), proper pricing of first class mail should have brought the Post Office at least an additional $30 billion. Even if they aren’t efficient, they’re a monopoly. Don’t monopolies get to set whatever price they want?

Obviously, the USPS regulators and legislative gurus think the USPS is less than 50% efficient, since that’s where they cap first class rates. President Trump thinks the problem is Amazon.

What exactly is being subsidized? Well, certainly first class mail.

Picking winners and losers is unavoidable in any government regulation – from postal rates to road placement, from income tax deductions to zoning laws. The way to approach this problem is to minimize regulation. Privatization is the first step.