Recently by Simon Black: Should I Buy Gold at Its All-Time High?
When I was a kid, it was a big deal when the postman came around. He was an important man carrying important documents from far away lands that we could only dream about and each time he pulled up there was a brief glimmer of anxiety, wondering what unexpected surprise he might be delivering that day.
At the time, I remember postage stamps for first class mail costing about 20 cents. If youre a bit older than me, you might remember them being much cheaper than that.
In fact, prior to President Nixon taking the US dollar off the gold standard in 1971, stamps cost 6 cents. In the 40 years since then, the price of a first class letter has been raised 20 times, nearly 8-fold higher than before.
To put things in perspective, the price of a stamp in 1863 was 3 cents so were talking about a 100% increase in 108-years, followed by a 733% increase over the next 40-years. And yet, despite such rampant price inflation, the US Postal Service is hemorrhage cash and nearing failure.
In fiscal year 2010, the Postal Service suffered a $8.5 billion net loss, the latest in a serial trend of widening losses. The only way the Postal Service keeps surviving is from the generosity of US taxpayers and Chinese bondholders who foot the bill for its continuance.
The Postal Service has nearly 600,000 employees; its larger than the active component of the United States Army, in fact, and, similar to how the Army is far-flung all over the world in places where it has no business operating, the Postal Service has offices across small-town America where there is no chance of profit.
There are over 3,000 post offices across the country that generate less than $27,500 in annual revenue. Its barely possible to pay rent and keep the lights on with that kind of revenue, let alone hire a staff, maintain delivery vehicles, or pay for fuel.
An organization with such a costly structure is doomed to fail, and if it werent a government agency, it would have gone bust a long time ago. By the governments own admission, the US Postal Service cant compete with private courier services, yet politicians insist on keeping it alive in the only way they know how theft and deceit.
Senator Tom Carper recently introduced a bill called the Postal Operations Sustainability and Transformation (P-O-S-T get it? See how clever they are?!?) Act of 2011.
The bill is filled with oodles of luminous wisdom like, The United States Postal Service shall develop a plan for the expansion of retail alternatives to post offices, such as the Internet.
It literally takes an Act of Congress for the Post Office to incorporate the Internet into its business model and this is what passes for a turnaround business plan in Washington.