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Friday, July 15, 2011

Are we this bad off?

As I am reading through my Adam Smith (once again), I come across this ditty:


The post office is properly a mercantile project. The government advances the expence of establishing the different offices, and of buying or hiring the necessary horses or carriages, and is repaid with a large profit by the duties upon what is carried. It is perhaps the only mercantile project which has been successfully managed by, I believe, every sort of government. The capital to be advanced is not very considerable. There is no mystery in the business. The returns are not only certain, but immediate.


It turns out that the Post Office is not an automatic profit maker - ours isn't in the US, I don't believe, and I think Sweden(?) privatized theirs recently. My point is that Adam Smith took the post office to be a good profit center for the state and 225 years later the unions, bureaucrats and the general inefficiency of the state monopoly seems to have proven him wrong (at least in practice).

Smith: Wealth of Nations, Book V, Chapter 2 | Library of Economics and Liberty

Comments:
USPS receives no net government subsidy for its normal operations. It does receive some federal funding for the services it provides for the legally blind and for the delivery of absentee election ballots. Part of its legal mandate (Postal Reorganization Act of 1970) is that it actually NOT make a profit. Congress must approve all rate increases, and denied a rate increase to 46 cents in 2010.
The USPS is also one of the few agencies *explicitly* authorized to the government in the constitutions (as opposed to implicitly under the "necessary and proper" clause).
 
Yep - but Smith thought the post could be used by the state to make money. if our USPS was not mandated to be zero profit do we think it could turn a profit?
 
I do not think the post office is all that bad. The government does deliver the mail for the most part without a problem.
 
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