The Future of the U.S. Postal Service

Document Type

Article

Department or Administrative Unit

Economics

Publication Date

Fall 2007

Abstract

Structural, legal, and financial constraints have brought the U.S. Postal Service (USPS) to the brink of breakdown in the past decade. Faced by declining business brought about by the e-mail revolution and competition from private express companies, the Postal Service has repeatedly requested assistance from the federal government. This culminated in December 2006 with the passage of the Postal Accountability and Enhancement Act, which introduces modest re- visions in the pricing and service policies of the Postal Service so as to make it a self-sustaining government corporation. But will it? Although the new legislation addresses some of the problems of the Postal Service, more radical changes may be necessary in the future. One possibility is the complete privatization of the Postal Service including the removal of the legal monopoly that it has on the delivery of letter mail, so as to foster competition in the mail delivery. Because these remedies are currently too controversial for Congress to implement, their chances of being enacted in the near future are dim. In- stead, what is emerging is a partial approach to privatization in which the Postal Service forms worksharing agreements with private-sector firms to take advantage of their efficiencies. Whether such partial privatization will significantly improve the efficiency of mail delivery remains to be seen. This article discusses the nature and operation of the Postal Service and assesses the merits of its possible reforms.

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This article was originally published in CATO Journal. The full-text article from the publisher can be found here.

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CATO Journal

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