• SUPPORT CATO
• FOR STUDENTS
• FOR MEDIA
• FREE NEWSLETTERS

• HOME

• ABOUT

• BLOG

• BOOKSTORE

• EVENTS

• EXPERTS

• MULTIMEDIA

• PUBLICATIONS

Books

Reviews & Journals

Public Filings

Policy Studies

Opinion & Commentary

• RESEARCH AREAS

• SPEAKERS BUREAU

• SUPPORT CATO

You’ve Got . . . U.S. Mail?

by Solveig Singleton and Lucas Mast

This article appeared on cato.org on August 30, 2000.

PRINT PAGE

CITE THIS

  Sans Serif

  Serif

The U.S. Postal Service, realizing that e-mail threatens its traditional monopoly, has announced plans to offer free e-mail to its more than 120 million residential customers. One wonders how an organization that cannot reliably deliver a package on time and in good condition is going to manage what will end up the largest e-mail database ever. Benjamin Franklin, our first postmaster, must be cursing from the grave.

The Postal Service proposes to assign everyone a free e-mail address on the basis of his or her street address, which raises the possibility that those addresses could be turned into massive mailing lists, making people susceptible to “spam” (junk e-mail) and mail fraud. Holding off the deluge for the time being, however, is the Postal Service’s inability to work out all the bugs in delivery.

For one thing, Postal Service gurus have not decided how much to charge for delivering your e-mail. What they have decided is that the local post office will print out the e-mails and deliver them -- limit two pages -- at a premium rate of 41 cents, 8 cents higher than normal first-class postage. The Postal Service seems untroubled that its new e-mail plan defeats the very advantage of e-mail (that it is free and fast), but so it goes in government bureaucracies.

A similar high-tech offering launched by the Postal Service in 1982 was a miserable failure. E-COM, an attempt to fight off competition from fax machines, allowed patrons to send electronic messages from printer to printer only in local post offices. The program was axed, but only after squandering $42 million. More recently, the Postal Service introduced an on-line postage system that has yet to make a profit.

Deputy Postmaster General John Nolan promises, “We’ll be as secure, or more secure, than other sites in the terms of the privacy people can expect from us.” But the prospect of a centralized e-mail operation carried out under the auspices of a government-enforced monopoly does not bode well for privacy. Imagine the potential dealings between the FBI, armed with its new e-mail surveillance tool “Carnivore,” and the mail police at the Postal Service. Let’s suppose for a moment, however, that this operation manages to get up and running and is reasonably popular. Then we come to the real problem: Why should the Postal Service be permitted to leverage its government-protected monopoly into an otherwise competitive market, potentially driving out private entrepreneurs?

As a quasi-governmental agency, the Postal Service is exempt from many regulations that constrain private businesses. It also wields regulatory power that could be used against its own competitors in the e-mail business, such as America Online and Earthlink. All Postal Service activities are tax-exempt, and the massive retirement fund for its 900,000 employees is subsidized by federal government matching grants. The Postal Service even has a line of credit with the U.S. Treasury. Dave McClure, executive director at the U.S. Internet Industry Association, points out the unfairness: “They are a monopoly. It all comes down to this: The e-commerce industry should not have to compete with its own government. The purpose of government is to govern, not to put private enterprise out of business.”

Certainly, the Postal Service loses patrons when people use e-mail rather than traditional “snail mail.” But this does not justify expanding into electronic services; rather, it is a sign that the time has come to remove the Postal Service’s special protections and allow everyone in the message delivery business to play by the same rules. No doubt the Postal Service would like to preserve and even expand its protections, but that will be bad for consumers, who benefit from increased competition and innovation, and will force e-commerce businesses to redirect energy to fight off unfair competition from the Postal Service.

It is the e-commerce entrepreneurs who are enriching lives by creating jobs, spurring the economy and increasing the efficiency of everyday life. By intruding, the Postal Service can only harm that progress.