Postmaster General Says Service Is Improving; Privatize USPS for 21st Century, Panelists Say

July/August 1995 • Policy Report

U.S. Postmaster General Marvin T. Runyon gave the keynote speech at Cato’s June 14 conference, “Postal Service in the 21st Century: Time to Privatize?” Runyon maintained that the shortcomings of the U.S. Postal Service, which holds a government monopoly on most mail delivery, are being overcome by sound management practices. Other speakers took exception during a day of lively discussion and analysis.

Economist Rick Geddes of Fordham University pointed out that personal letters and greeting cards, which consumers often consider the most important kind of mail, constitute only 8.4 percent of first class mail. Bills, payments, bank statements, and the like sent between households and businesses make up 15.4 percent of first class mail, and business‐to‐business communications account for over 30 percent. Advertising constitutes nearly 45 percent of first class mail.

Gene Del Polito of the Advertising Mail Marketing Association maintained that the USPS does not provide timely and reliable service at prices the market is willing to pay and that treating the symptoms will not cure the fundamental problems of the postal monopoly.

Steve Gibson of the Bionomics Institute shed light on market alternatives in his review of the growth of telecommunications and information processing capacity and the spread of personal computers, fax machines, and e‐mail. He observed that as more homes and businesses plug into a national telecommunications network, more routine payments and communications will be handled electronically.

Thomas M. Lenard of the Progress and Freedom Foundation offered evidence that what private delivery is currently allowed, mainly delivery of unaddressed advertising mail and periodicals, costs less than the USPS.

Murray Comarow of American University, formerly executive director of President Johnson’s Commission on Postal Reorganization, which resulted in the current form of the USPS, cautioned that proponents must think through the effects of privatization before making such a drastic move. Thomas DiLorenzo of Loyola College pointed out that many of the arguments made today to justify a federal postal monopoly were used to justify government monopolies in other utilities that now are being privatized.

Rep. Dana Rohrabacher (R‐Calif.) set forth his plan to privatize the USPS by giving it to postal workers as an employee stock ownership company. The Postal Service would retain its monopoly on mail delivery for several years to allow it to reorganize. Douglas Adie of Ohio University argued that it would make more economic sense to break up the Postal Service into regional units and sell shares in those new enterprises to workers and public alike.

Whatever its eventual effect, the conference apparently had some immediate impact on the USPS. The day before the conference, the Postal Service used full‐page newspaper ads to announce the release of a new study that purportedly found that the monopoly’s service has dramatically improved over the past year. The WASHINGTON POST reported, “The results were announced on the eve of a Washington conference sponsored by the Cato Institute, a libertarian think tank that has advocated privatizing the Postal Service. Postal officials hoped that Runyon’s announcement would dampen the enthusiasm of congressional Republicans for such a change.”