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Should We Continue To Subsidize Rural Mail Delivery?

Rural Mail Boxes

Commenting on the news that the Postal Service would seek to end Saturday mail delivery, Matthew Yglesias makes this comment:

USPS is built around a cross-subsidy model. The idea is that a monopoly on the right to deliver daily mail will generate lucrative profits in most cases, and those profits will allow the USPS to cover the cost of unprofitable routes, thus fulfilling its Universal Service Obligation. And for a long time, it worked great. In fact, the profits were so big that the USPS workforce was able to help itself to relatively generous compensation packages while still leaving plenty of money to run the postal service.

But the monopoly has become less lucrative and that’s not going to change in the future. That’s squeezed the budget, squeezed postal workers’ compensation packages, and is now squeezing the quality of nationwide mail service. As a country, we need to ask ourselves whether providing subsidized mail delivery to low-density areas is really a key national priority. Without the monopoly/universal service obligation, it’s not as if rural dwellers wouldn’t be able to get mail, it’s just that they might need to pay more in recognition of the fact that it’s inconvenient to provide delivery services to low-density areas. Nostalgia-drenched Paul Harvey Super Bowl ads aside, it’s not the case that rural Americans are unusually hard-pressed economically or are disproportionate contributors to the economy. They are, rather, the beneficiaries of numerous explicit and implicit subsidies, of which the Postal Service’s universal service obligation is one.

Most of the complaints one hears about privatizing first class mail and ending the USPS monopoly on its delivery center around the issue of what is to be done about delivery to rural areas. The basic idea behind is that it shouldn’t cost rural customers, or those who want to correspond with them, more to send first-class mail than it does to send first-class mail from one major city or suburb to another. There’s no economic rationale for this kind of policy. Indeed, it exists nowhere else almost nowhere else in the delivery business right now. If you want to send a package via USPS, you are generally going to pay based on where you’re sending it to. UPS prices its delivery services in much the same manner. The only place you see “flat-rate” pricing is in things such as overnight mail, which is based on an entirely different kind of business model from regular package shipping and for which the customer is paying a premium for the convenience of next-day, or 2nd-day, delivery of something that would ordinarily take a few days longer.

Instead of being based on economics the subsidization of low-cost delivery to rural areas is based mostly on issues of equity and the idea that it’s not fair for rural customers to pay more than urban and suburban customers to mail a simple letter. In the days when a large portion of our population was based in rural areas, this is something that may have made some sense, but I have to wonder if it does now. As Yglesias notes, it’s simply not the case that rural residents are, as a rule, more economically hard-pressed than their fellow Americans in suburbs and cities. So, why should we maintain the policy of requiring USPS to follow this rule, and why should it be a bar of any kind to the idea of opening up the delivery of first-class mail, and other classes of mail for that matter, to competition? Moreover, considering that the rural share of the population continues to shrink over time, how much longer does it make sense to keep this policy in place?

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    It is in the national interest, for democracy, education, and commerce, to have universal connectivity.

    If you think it’s time to ditch universal mail for universal broadband, go for it.

    But we need one or the other.

    Highly-rated. Helpful or Unhelpful: Thumb up 38 Thumb down 1

  2. john personna says:

    (When the “market” argument becomes “devil take the hindmost” it is at its least attractive extreme.)

    Like or Dislike: Thumb up 9 Thumb down 1

  3. stonetools says:

    Personally, as an urban person, I dislike having to subsidize those who voluntarily chose to live way out there in order to get away from”problems associated with large populations” to quote a commenter on another thread. But I agree with JP that we may still need a universal network of some kind to hold us together.

    Like or Dislike: Thumb up 9 Thumb down 5

  4. john personna says:

    @stonetools:

    I think so. Rancher Jim could afford a PO Box in town, but many rural poor would not allocate for that. Their mail would end up “C/O Rancher Jim” etc., in one great big mess.

    Like or Dislike: Thumb up 6 Thumb down 0

  5. Why, yes, let’s further isolate heavily rural areas. That’s just what we need: more ways to piss off the wingnuts.

    Like or Dislike: Thumb up 6 Thumb down 5

  6. Ron Beasley says:

    Keep in mind part of the UPS business model is to let the USPS deliver packages to those rural areas and even smaller packages in urban areas.
    Another point, at least out here in the west is those rural areas frequently don’t have access to broadband so are most in need of snail mail.

    Like or Dislike: Thumb up 14 Thumb down 1

  7. Just Me says:

    If they don’t want to deliver the mail, then at the very least people in rural, non delivery areas should get a free PO box that is within a reasonable driving distance.

    Cutting off the rural poor, so life is easier for the urban isn’t the best way to handle things.

    Like or Dislike: Thumb up 9 Thumb down 1

  8. OzarkHillbilly says:

    I have had a po box for 20+ years reaching back to my time in the city. I won’t list all the positives but 1) it is cheap, and 2) it is secure.

    As to,

    why should it be a bar of any kind to the idea of opening up the delivery of first-class mail, and other classes of mail for that matter, to competition?

    There is this little thing that you worship Doug that keeps it from opening up to competition: The Free Market. For the very plain and simple reason that nobody can make a profit delivering 2nd and 3rd class mail and first class mail is a smaller and ever shrinking percentage of mail. Nobody wants that job.

    Like or Dislike: Thumb up 12 Thumb down 0

  9. Mike says:

    @stonetools: I am sure there are a lot of people who hate paying taxes to support public schools since they don’t have any kids but I still think it is a good idea. Goods school are good for the country (how to get a good school is another problem). Ending subsidies to those in rural areas in the form of having the same mailing rates is a step in the wrong direction. When we can afford to spend $2 billion a more a month in Afghanistan, we can spend $5 billion a year on our postal system.

    Highly-rated. Helpful or Unhelpful: Thumb up 21 Thumb down 1

  10. beth says:

    The only problem I see is with prescriptions by mail. I know my mother had all her medicines delivered by mail since she wasn’t mobile enough to get to a pharmacy and wouldn’t have been able to get to a P.O. box either. I’m sure the AARP will lobby to get some sort of medical delivery service instituted.

    Like or Dislike: Thumb up 11 Thumb down 0

  11. stonetools says:

    For the very plain and simple reason that nobody can make a profit delivering 2nd and 3rd class mail and first class mail is a smaller and ever shrinking percentage of mail. Nobody wants that job

    Well, maybe Doug thinks the Pony Express will ride again.

    Like or Dislike: Thumb up 6 Thumb down 0

  12. Trumwill Mobile says:

    There is an argument that the USPS should keep flat prices for the same reason that pricing is generally flat for satellite and cell phones despite higher per capita costs for local channels andtowers . There is value in cost reliability. So that someone in Atlanta can place a singular stamp on an item and not have to look up some chart for the price of where they aresending iit took. With packages, you can’t add easily do that because package prices are always going to be variable on size and weight. But it’s not actually clear to me that if UPS were to have a first class letter option that it wouldn’t have flat prices for simplicity sake for the same reason Dish and Verizon generally do.

    Like or Dislike: Thumb up 6 Thumb down 0

  13. Trumwill Mobile says:

    @Ron Beasley: While true, the percentage of the population that UPS doesn’t deliver to is very small. I live in a rural area and both UPS and FedEx not only deliver here, but have storefront deals in town.

    Like or Dislike: Thumb up 2 Thumb down 0

  14. anjin-san says:

    What was that line from Foundation about a civilization falling?

    Oh yes – “Circulation first ceases at the fringe”…

    Like or Dislike: Thumb up 13 Thumb down 0

  15. Unsympathetic says:

    Who is this “we” you speak of?

    USPS is profitable when you back out the Republican inanity.

    http://www.cnbc.com/id/45018432/The_Truth_About_The_Post_Office039s_Financial_Mess

    There’s a big range of options between Congressional micromanagement and privatization. It should be an independent agency with a lot of autonomy to make decisions about things like stamp prices and exactly which post offices to keep open or closed.

    The irony in all of this is that once privatization is completed, it means no local delivery of Soldier of Fortune to Rural Route 129, Middle Of Nowhere, ID, for less than $27.50

    Don’t forget that we always must have a post office — the Constitution specifies that. The Constitution says what it says, conservatives – not just what you wish it meant.

    At the time the Constitution was written, postal service was the fundamental public means of communication. Today it’s email, phone, and all of the forms of public social media, including this blog. Can you imagine anybody suggesting that all of that be provided as a public service, all run through the USPS?

    Like or Dislike: Thumb up 13 Thumb down 0

  16. JKB says:

    I get bills, junk mail and crap from politicians. I’m not sure why you think I would pay to receive that? It has no value to me. Well, maybe the water and power but not the bills for those services. I then have to store this crap until such time as I drive 15 miles to throw it in the dump….for a fee.

    How about just setting rural deliver for one day a week and mandate all due dates for bills, court summons, jury duty, legal responses, etc. be no earlier than 1 month after the date of actual delivery for those who live in reduced service areas.

    Like or Dislike: Thumb up 2 Thumb down 12

  17. Franklin says:

    I have to say, I think this idea is completely stupid. Especially stonetool’s argument “for those people who voluntarily chose to live way out there.” First off, ever hear of food? You might want some farmers around. Second, I don’t hear many of the rural folk asking for subsidies to bail them out after hurricanes and earthquakes like many of the urban folks on the coasts. We live in a society, right? I think we can help each other out at least a little bit here. And I say this as a college-town semi-liberal who has almost nothing in common with most rural folks.

    To be fair, it wouldn’t have killed the USPS to reduce delivery on several days of the week rather than just Saturday, at least for those in rural areas – would they really have a problem with only MWF delivery?

    Like or Dislike: Thumb up 3 Thumb down 5

  18. john personna says:

    @JKB:

    If we were in desperate time, 1 day a week delivery might be a reasonable alternative, but I think the USPS can be cleaned up with out such extremes. As someone said, empower the organization and stop micromanagement.

    Like or Dislike: Thumb up 6 Thumb down 1

  19. john personna says:

    @Franklin:

    To be fair, it wouldn’t have killed the USPS to reduce delivery on several days of the week rather than just Saturday, at least for those in rural areas – would they really have a problem with only MWF delivery?

    US Postal Service defies Congress, will end Saturday mail delivery service in August

    Congress sucks.

    Like or Dislike: Thumb up 4 Thumb down 0

  20. stonetools says:

    @Mike:

    I am sure there are a lot of people who hate paying taxes to support public schools since they don’t have any kids but I still think it is a good idea. Goods school are good for the country (how to get a good school is another problem). Ending subsidies to those in rural areas in the form of having the same mailing rates is a step in the wrong direction.

    Indeed. I have no children but have no problem paying taxes for good public schools. What’s paradoxical (and infuriating) is that it is conservatives living in rural areas who are the very ones who reject communitarian, “public goods” arguments and who insist that us city dwellers are sheeple who don’t know how to care of ourselves unlike those “rugged individualists” who live out in the country. My feeling is that we should tell those people to f&*k off and pay the true cost of postal delivery to rural areas. Guess that’s why I’m not a politican.

    Like or Dislike: Thumb up 6 Thumb down 2

  21. Rafer Janders says:

    @Franklin:

    Second, I don’t hear many of the rural folk asking for subsidies to bail them out after hurricanes and earthquakes like many of the urban folks on the coasts.

    Are you joking? Rural areas request federal disaster assistance after floods, tornadoes, blizzards and other hazards of rural life all the time. All the time. Like here, for example:

    Kasich Seeks Federal Disaster Relief After Tornado:Aid To Help Residents Of Clermont County
    UPDATED 5:59 AM EST Mar 07, 2012

    CINCINNATI —Ohio’s governor asked for federal assistance for a county hit hard by last week’s tornadoes. Gov. John Kasich’s office sent a letter Wednesday afternoon to President Barack Obama asking for a presidential disaster declaration for Clermont County.

    Read more: http://www.wlwt.com/Kasich-Seeks-Federal-Disaster-Relief-After-Tornado/-/9838586/10428304/-/10g0jdi/-/index.html#ixzz2K8hNPiWz

    Or here:

    Herbert requests federal assistance for Washington County flooding

    By Michael Mcfall The Salt Lake Tribune
    Published September 20, 2012 5:50 pm

    Gov. Gary Herbert declared a state of emergency for Utah on Thursday due to the recent flooding in Washington County and requested federal funds to help rebuild.

    Like or Dislike: Thumb up 6 Thumb down 1

  22. Ron Beasley says:

    @Trumwill Mobile: Not out here in the west. Both UPS and FedEX have centers that do nothing but deliver packages to the USPS. I have received 4 small packages over the last month. Three were shipped via UPS and one by FedEx and all of them delivered by the USPS and I live in a dense urban area.

    Like or Dislike: Thumb up 6 Thumb down 0

  23. C. Clavin says:

    This cracks me up.
    Republicans create a financial crisis for the USPS…then use it to call for the elimination of the USPS. Of course the USPS is hurting…thanks to Republicans it has to prefund ALL of it’s retirees health benefits 75 years into the future. Who the f’ has to do that?
    It’s the economy in microcosm.
    Republicans create a fiscal crisis…then use it to call for the elimination of programs they don’t like.
    Then the Republican Entertainment Complex…(Doug)…repeats the talking point verbatim. Lather…rinse…repeat.

    Highly-rated. Helpful or Unhelpful: Thumb up 29 Thumb down 1

  24. Rafer Janders says:

    @Franklin:

    First off, ever hear of food? You might want some farmers around. Second, I don’t hear many of the rural folk asking for subsidies to bail them out after hurricanes and earthquakes like many of the urban folks on the coasts.

    You know that farmers practically live off federal farm subsidies, right?

    Like or Dislike: Thumb up 12 Thumb down 3

  25. john personna says:

    @C. Clavin:

    I’ve got to admit, it fits the profile … manage badly, blame “government,” even when you are the “government” doing the bad managing.

    Like or Dislike: Thumb up 12 Thumb down 0

  26. stonetools says:

    @C. Clavin:

    Its almost like Republicans don’t WANT government to work.
    What’s paradoxical again is that its these rural folks out there who keep electing the Republicans who screw up the services that the rural people depend on!
    Logic, how does that work?

    Oh well, these legislators are working hard to restrict abortion, “abolish” Obamacare and “defend” the Second Amendment and down-home values, so I guess it all makes sense in the end.

    Like or Dislike: Thumb up 5 Thumb down 0

  27. wr says:

    I thought we decided a couple hundred years ago that we were going to be a nation of equals, rather than a collection of tiny independent communities.

    That means we coastal elites subsidize rural mail delivery and the folks out there subsidize urban renewal projects. We are all in this together, one nation united.

    Why libertarians are so fundamentally offended by this I will never understand.

    Highly-rated. Helpful or Unhelpful: Thumb up 26 Thumb down 0

  28. Trumwill Mobile says:

    @Ron Beasley: Hmmm, I am outhere in the east , five hours fromNNow international airport and two from the nearest decent regional one. Population 4k in a couty of 8. It’s always UPS or FedEx when sent through those carriers.

    Like or Dislike: Thumb up 1 Thumb down 0

  29. john personna says:

    @stonetools:

    Just think how much it rankles for the uniformed, jack-booted, oppressor to show up every day (in short pants!) to deliver the mail.

    Like or Dislike: Thumb up 7 Thumb down 0

  30. Gustopher says:

    I think we need to tighten our belt and make sacrifices if the Republican goals of low taxes are to be met, consequences be damned.

    Lets start with something moderately small, which will put a bit of pain on areas that vote Republican — perhaps when they start seeing the consequences, they will change their tune, either by rejecting Republicans at the ballot box, or by choosing different Republicans.

    So, screw the rural areas, let them drive into town to get their mail.

    Like or Dislike: Thumb up 5 Thumb down 2

  31. Gustopher says:

    @Unsympathetic: Mr. Mataconis knows this, as it has been pointed out every time the USPS is mentioned. It is willful ignorance on his part to ignore it.

    Highly-rated. Helpful or Unhelpful: Thumb up 15 Thumb down 0

  32. roger says:

    @Ron Beasley: I have had three packages delivered by FedEx to the USPS where they were promptly lost. And once the package reached the post office, all tracking ended after a postal employee signed for the package. “Smartpost”, hmmm…

    Like or Dislike: Thumb up 0 Thumb down 0

  33. wr says:

    @Gustopher: The only way tfor an adult to maintain a belief in libertarian philosophy is to refuse to acknowledge the existence of facts.

    Highly-rated. Helpful or Unhelpful: Thumb up 17 Thumb down 0

  34. Moosebreath says:

    @Trumwill Mobile:

    “While true, the percentage of the population that UPS doesn’t deliver to is very small.”

    Not true. For example, UPS does not deliver to the entire state of Maine. If you send something there with them, they will fly in to New Hampshire, and then put it in a mailbox.

    Like or Dislike: Thumb up 3 Thumb down 0

  35. stonetools says:

    @Gustopher:

    Its hard for someone to acceopt something as fact when his ideology depends on him NOT accepting it as fact.

    Like or Dislike: Thumb up 7 Thumb down 0

  36. C. Clavin says:

    @ Gustopher/Unsympathetic…
    He does the same thing with the economy…everytime he writes something about the GDP or unemployment he neglects, or vastly understates, the role of Government shrinkage…which he advocates…in the weak recovery. In otehr words…he’s getting what he wants…but wants to complain anyway just to make points for his team.
    As I typed above…part of the Republican Entertainment Complex…Lather, rinse, repeat.

    Like or Dislike: Thumb up 4 Thumb down 0

  37. Trumwill Mobile says:

    @Moosebreath: Hmmm, I wonder why they would deliverto IIdaho Nd Montana but not Maine.

    Like or Dislike: Thumb up 0 Thumb down 0

  38. john personna says:

    You know what would end the need for USPS?

    Obamaphones!

    Like or Dislike: Thumb up 7 Thumb down 0

  39. Ron Beasley says:

    @Trumwill Mobile: I suspect that those of you on the east coast don’t really appreciate what rural is. It can mean 2 hours to the nearest town. The kids attend a residence school because it’s impractical to bus them every day. No broadband internet and they only have electricity and telephone service because the infrastructure for those services was subsidized by the government in the first place. The nearest regional airport is 5 hours away and the nearest international airport over 8 hours.

    Like or Dislike: Thumb up 3 Thumb down 0

  40. stonetools says:

    @Ron Beasley:

    “Rural” isn’t really the same as “distant bedroom community” .

    Like or Dislike: Thumb up 1 Thumb down 1

  41. Just Me says:

    I live in a smallish town in NH-it isn’t super rural, but in reality the whole state of NH is pretty rural outside of a few large cities (which are really only large by NH standards).

    UPS delivers here, but FEDEX contracts with non FEDEX employed people to deliver for them (eg somebody contracts with FEDEX to do their rural deliveries, they get paid a set amount, but aren’t employees of FEDEX).

    Like or Dislike: Thumb up 0 Thumb down 0

  42. Trumwill says:

    @Ron Beasley: To repeat, I live in the west and not the east. Apparently, according to Moosebreath, we get more UPS/FedEx presence than does Maine for some reason. (Which does lead me to retract my comment. If they’re using a metric other than rurality so that Portland, Maine, is excluded, then UPS and FedEx are passing on more places than I realize due to some other factor.)

    I don’t know what percentage of the population lives further away from cities than I do, but it’s a relatively small percentage. Outside of Alaska, where do you have to live to be five hours away from a regional airport? Glasgow, Montana, is one of the most remote places I’ve found, but even it has access to Billings. I struggle to find a place as remote as what you describe.

    Like or Dislike: Thumb up 0 Thumb down 0

  43. 11B40 says:

    Greetings:

    Back when Mission Statements became a managerial rage, I came up with my Universal Mission Statement in order to prevent my having to attend any more Mission Statement seminars. It went like thus: Our Mission is to provide quality goods and services on a timely basis at prices that our customers perceive as a value and that allow for continuing operations.

    In that light, my approach to the Postal Service’s problems would be to not only end Saturday delivery, but also deliveries on Tuesdays and Thursdays.

    The mail that comes to my residence is mostly invoices (bills), magazines, and direct (advertising) mail. None of it requires same day or even next day action. So, in my opinion, the Postal Service has worked itself into a position in which it it delivering more service than is rationally required and at prices that do not allow for the above “continuing operations”. Its customers may indeed see as “a value”. I see it as both “a value” and a “get-over”.

    But in the historical way that it takes a committee to redesign a horse into a camel, the Postal Service has preferred to kick the can around and around while ignoring all the information available about its inexorable decline. My advice would be to cut deeply, not just the marginal Saturday bit, and then hope to develop some new services and revenue sources in the future.
    The Empire can no longer be defended.

    Like or Dislike: Thumb up 0 Thumb down 0

  44. Trumwill says:

    @11B40: @11B40:

    In that light, my approach to the Postal Service’s problems would be to not only end Saturday delivery, but also deliveries on Tuesdays and Thursdays.

    I would alter this to say they should split delivery to MWF for some places and Tuesday-Thursday-Saturday for the rest. That way you still get full-time employees, but you need fewer of them.

    Like or Dislike: Thumb up 2 Thumb down 0

  45. Mike says:

    All of this reminds me of my backpacking trip to Havasu Falls in AZ. The Indian Village is accessible by hiking, pack mule, and helicopter. It is an 8 mile hike to get there and 2 more miles to the campground. They literally helicopter in the portopotties for the campground – quite a sight to see a sling-loaded portopotty in the early morning.

    And of course, they get daily mail service from the USPS by pack mule and there is a post office in the tiny village.

    http://en.wikipedia.org/wiki/Havasupai_people

    Like or Dislike: Thumb up 1 Thumb down 0

  46. Argon says:

    Gads, Libertarians know the price of everything but the value of nothing.

    Like or Dislike: Thumb up 12 Thumb down 0

  47. reid says:

    @Ron Beasley:

    Not out here in the west. Both UPS and FedEX have centers that do nothing but deliver packages to the USPS.

    A data point from New Mexico: I have stuff delivered all the time (to an out-of-the-way town), and UPS and FedEx both deliver to my door. Sometimes, a shipping option is to drop the package off at the local post office for delivery, which generally adds a day. It’s slightly cheaper for me and I assume cheaper for UPS.

    Like or Dislike: Thumb up 0 Thumb down 0

  48. rudderpedals says:

    @Just Me: FedEx last mile delivery people are all franchisee independent contractors. It used to be controversial but the abusive/efficient model lives on.

    Like or Dislike: Thumb up 1 Thumb down 0

  49. Tsar Nicholas says:

    I always get a kick out of these “role reversal” subjects.

    Yglesias has no problem cutting subsidized rural mail deliveries because none of his pet demographics would be impacted and the closest he’s gotten to the tribulations of rural life is when we saw “Brokeback Mountain.” But then if you sat down with Yglesias, read him his own article, and then pointed out that using the same logical underpinnings the Feds should eliminate subsidies for a whole host of other programs, e.g., unemployment insurance, education, student loans, urban healthcare, women’s healthcare, etc., not only would he instantly pull a 180 and start fighting you, tooth and nail, he’d probably accuse you of racism, without even realizing the irony of his own race-based presumptions.

    Then let’s take a look at the flip side of this coin. There might not be anything more tragically ironic than watching self-proclaimed “conservative Republicans” turn into spendthrift liberals when their own wallets and pocketbooks are at stake. We’ve seen that sort of thing play out, like Kabuki theaters, in recent campaigns. If a Republican presidential hopeful goes to Iowa for example and talks about “less government” and “less spending” the crowds will cheer. But if the same politico in the same speech declares we also should cut farm subsidies the same crowd will boo him off the stage.

    People are selfish. They’re hypocritical. Their cherished “principles” only go as far as their own bank accounts and their own pet peeves and pet issues. Ultimately what this all proves, yet again, is that Hamilton was right and Jefferson was wrong.

    Like or Dislike: Thumb up 4 Thumb down 0

  50. Franklin says:

    @Rafer Janders: Yes, Texas lead the country in FEMA requests last year with 75. But you know how much that cost, total? $20 million. That’s with an M. How much did New Jersey get? If I remember correctly, it was well into the billions, with a B.

    Regardless, it doesn’t really change my point at all: the feds try to help where help is needed. If Kansas needs help with tornado relief and rural post office delivery, then give them help.

    Like or Dislike: Thumb up 0 Thumb down 0

  51. JohnMcC says:

    There is a bothersome little thing in the U S Constitution (Article I, Section 7) that requires Congress to build & maintain Post Offices and Post Roads. So one could deduce that the Founders thought rural delivery was important.

    There is also a good bit of skeptism in the quoted original post and in Mr Mataconis’ remarks that rural Americans have greater poverty than urban folk. I spent a few minutes on the google machine and every reference I could find addressing this contradicts Our Host. But just for the hell of it I will overlook his apparent loose connection to the reality of rural America and point out that to the extent it is true that rural people have a prosperous life it is largely because of Federal Government programs. Going as far back as 1935 rural telephone and electrification subsidies enriched rural areas. There are small communities (non-metro is the term used — not the same as ’2 hours to get to a store’ of course — but a reasonable proxy for ‘country’) that would wither and die without Social Security checks.

    Of course, letting the market decide is always good for cloaking a thoroughly venal argument. Let me demonstrate: It is much more expensive to build roads in rural areas if the volume of traffic per dollar spent is considered. So obviously we should privatize rural highways; let those people who chose to live in the country pay tolls. That’s how we’ll have a great nation!

    The ignorance of libertarians never ceases to amaze me.

    Like or Dislike: Thumb up 6 Thumb down 0

  52. 11B40 says:

    @Trumwill:

    Greetings, Trumwill:

    Your suggestion certainly sounds like something reasonable to look at to me.

    On re-reading my comment, I was perhaps a bit more definitive than I meant to be. I spent a couple of Christmas times work in the then PO while in college, but other than that, my experience has been as a satisfied customer. In college, I studied a bit of Public Administration. One of the paradigms in that field is the “fundamental” versus “incremental” question. The USPS seems way too bound to operating on the latter basis when in actuality their challenge is a fundamental market shift.

    Like or Dislike: Thumb up 0 Thumb down 0

  53. OzarkHillbilly says:

    @Rafer Janders:

    You know that farmers practically live off federal farm subsidies, right?

    Large and corporate farmers. Your small organic and truck farms get very little in the way of aid.

    Like or Dislike: Thumb up 3 Thumb down 0

  54. OzarkHillbilly says:

    @Trumwill Mobile:

    It’s always UPS or FedEx when sent through those carriers.

    Here in Washington Co, MO it is both. I get Fed–Ex and UPS but have seen both drop off packages at the Post Office. I live on a State Highway, not a gravel road, so that might be the diff.

    Like or Dislike: Thumb up 0 Thumb down 0

  55. PJ says:

    Blue states should just stop subsidizing red states, and then the blue states would have no problem subsidizing rural mail delivery, and a LOT of other things in blue states.

    Like or Dislike: Thumb up 3 Thumb down 0

  56. Trumwill Mobile says:

    @PJ: Then do we let Wyoming put up roller coaster at Yellowstone National Park and turn Hill Air Force Base over to Utah? And indeed, why should we continue paying veterans benefits to Montana just because they served in the military. Or snowbird retirees who paid into social security all their lives. Also, people driving or having things shipped from Seattle to Chicago will justhave rto fly over the Dakota. And screw the Indians, amirite? That’ll teach those ungrateful Bastards.

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  57. stonetools says:

    @Trumwill Mobile:

    Sounds like you are OK with the gumint subsidizing independent minded, real ‘ Murican rural folk at the expense of those effete, gun-hating, sheeplike city folk. OK then. So will the rugged individualists living out there in God’s country shut up now about their moral superiority to urban folk and quit praising themselves for their “independence”? Thanks!

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  58. Trumwill Mobile says:

    @stonetools: More like if we’re going tohave a dsocially contract, we shouldn’t exclude states we don’t like from them. If we’re going to have a post office, they should deliver to the icky states, too. If we’re going to have welfare programs for Indians, we shouldn’t exclude the ones in North Dakota. If we’re going to have military bases, we ought to pay for them. If we’re going to set aside half of a states land for national parks, we should pay the equivalent of taxes on them. If we’re going to pay health care for military vets, we should not exclude them for living in the wrong state. If we’re going to have interstates, we should not have them stop in North Dakota Nd start up again in Washington.

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  59. Trumwill Mobile says:

    If we want to do away with those things, then let’s do away with them. Let’s just not talk high and mighty about social contracts and being in all this together and then exclude people in states that we don’t think are sufficiently grateful.

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  60. Dave Schuler says:

    I have no problem with subsidizing rural mail delivery. As jp noted in the very first comment, it’s in the national interest. It enhances social cohesion.

    I have a problem with subsidizing urban mail or third class mail to anywhere. Urban and inter-urban mail delivery would be snapped up by delivery services if it were opened to them.

    None of this addresses the Post Office’s real problem: retiree pensions and healthcare. It’s not unique. It’s a problem for nearly all governments and companies, especially large companies with large populations of retirees and many fewer present employees, e.g. large manufacturers.

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  61. grumpy realist says:

    @Tsar Nicholas: You don’t seem to understand our argument. We’re just taking your own argument, running it to its logical conclusion, and pointing out the great gaping holes that result.

    Bluntly, if you want to be a he-man son of the earth independent of the government then pony up for the actual cost of the services you then demand of the government. If the actual cost of getting a bloody package out to your Rural Ye Traditionale American Farme is $48, then pay for it. And don’t bitch about the cost. You’re the person who chose to live out there rather than closer to a cheaper service.

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  62. Ron Beasley says:

    Found this on the UPS – USPS partnership:
    USPS and UPS Team Up to Cut Greenhouse Gas Emissions
    I would guess it also saves UPS some money and gives the USPS some much needed revenue.

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  63. Kip Smith says:

    OK Doug — do you want a serious answer to your question? I actually worked for the USPS as a rate economist AND published a paper about the economics of delivery 15 years ago (and can provide a cite if you’re really interested). That paper was (believe it or not), one of the the first attempts to quantify where the USPS made money on a route basis.

    So this is actually a REALLY complicated question – when I wrote the paper profitability was dictated NOT by location (e.g. rural vs. urban) but by level of affluence. Think about it — there is a fixed cost to run a particular route. The “profitability” of any individual route will be based on the number of pieces of mail that are delivered on the particular route. Which makes sense, if you think about it. And who gets the most mail? The most affluent people. There are also costs associated with mail processing (primarily class based — a presorted barcoded bill is MUCH less expensive to process than a hand written letter and that has an impact on overall profitability) — but the idea that “rural” delivery is in and of itself unprofitable is wrong. Delivering to people who are generally NOT sent much mail is unprofitable; delivery to those who receive a great deal is profitable. I’ve been out of postal economics for a long time now but the economic logic should continue to hold.

    Well, I could go on for many hours — but here are a few key points:
    1) Most USPS delivery is “unprofitable” — delivery to the top 10% is and business delivery was (and is?) where the USPS makes most of its money.
    2) Implicit cross-subsidies are rampant — it’s not simply rural vs.urban
    3) There is a HUGE value in having universal service
    4) YOU don’t personally cross-subsidize mail delivery (and for individuals, the cross-subsidy runs from all those business TO you when you want to send a holiday card or a check to the dentist)
    6) Of all the crap that’s going on in the US and the world, WHY (!) do we want to spend the time on the USPS? Aren’t there better things to do with our limited time?

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  64. john personna says:

    @Kip Smith:

    Thanks for that, all very interesting. I have noticed that since I switched more fully to electronic statements and electronic bill pay I have for the first time days with no “real” mail, and even some days with no mail at all. Assuming I am non-unique (safe), delivery days should indeed be cut more aggressively.

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  65. john personna says:

    @Kip Smith:

    BTW, on “6″ I’d think it would be because this one might actually be simple enough for a quick fix, if we just do it.

    Other people hate US Mail in the same way they hate Amtrak. For them it is a visible example of government they might “reduce” and so they must.

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  66. al-Ameda says:

    Isn’t this the social compact we make? That we will share many common costs, that yes there will be situations where one group of people receives a service that is subsidized by another?

    Where does this end? I am quite willing to pay for the common postal service, the one that provides service rural areas.

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  67. Spartacus says:

    @Kip Smith:

    Very fascinating. Where does one go after being a rate economist for USPS?

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  68. john personna says:

    Felix Salmon:

    As Jesse Lichtenstein details in his amazing 10,000-word Esquire story about the Post Office, the organization does actually have a detailed plan for becoming fully self-reliant over the next few years. Abolishing Saturday delivery is just one small part of that plan; all of it, by law, requires Congressional buy-in. The plan may or may not be successful, but, as they say, plan beats no plan. The big problem is simple, but huge: Congress isn’t playing along, and instead is just making matters worse, unhelpfully micromanaging everything from postage rates to delivery schedules to health-care contributions.

    That’s why I love the idea of the Post Office doing something that’s clearly illegal, putting the ball squarely in Congress’s court. The idea is both delicious and dangerous: go ahead an implement the plan whether Congress likes it or not. And then dare them to bring down the hammer, or simply capitulate to the inevitable. They might not like the latter option, but the former would surely be worse for all concerned.

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  69. SJ Reidhead says:

    I gather you have never been to the Southwestern states. The majority of mail delivery is rural. I suspect that there is this tacky little thing called the Constitution that prevents big city types from deciding that those of use who live in the middle of nowhere are cut off from the rest of the nation. You see, we pay our taxes. We support our country. We’re just as good as folks in DC or NYC, so why shouldn’t we have the very same rights? After all states like Texas, New Mexico, Arizona, Utah, Nevada, Colorado, and Wyoming are part of the United States.

    It’s not like this is door to door delivery. Far from it. We’re talking about rural post offices that serve families who may live 30 minutes up a dirt road, then must drive fifteen minutes after reaching the highway, just to pick up their mail. As for UPS, Fed Ex, and other delivery companies, if the customer is off the main highway, the package is usually left at the post office.

    Where I live, there are some families, who, if the rural post offices were closed, would drive those thirty minutes to the highway, then up to an hour to a post office in a larger community. Somehow I don’t think this is what was envisioned in the Constitution.

    SJR
    The Pink Flamingo

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  70. anirprof says:

    >I don’t hear many of the rural folk asking for subsidies to bail them out after hurricanes and earthquakes like many of the urban folks on the coasts

    Seriously? Go look into federal crop subsidy and crop insurance programs. Or take a look at disaster relief sent to rural areas after tornadoes (e.g., Joplin), floods, hailstorms, etc. The dollar amounts are so much smaller than NOLA or NYC that you might not notice their debate and passage, well, that and they don’t tend to suffer much debate since aid to rural areas combines Democratic support for government aid with GOP self-interest.

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  71. anirprof says:

    @SJ Rehead
    >In Southwestern states the majority of mail delivery is rural.

    Really? The Southwestern states are the MOST URBANIZED in the country! Utah, Arizona, and Nevada are all in the top 10 for urbanization nationally — about as urbanized as Massachusetts! More urbanized than New York, Pennsylvania, or Illinois.

    Yes, those states have wide open space, but almost nobody lives there. For every Nevadan who lives an hour away from a post office, 100 other Nevadans live close to one in the Las Vegas or Reno metro areas. Not exactly “majority rural”

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  72. I knew Kip Smith back in the day — he was right then and he is right now, particularly on his last point as the Postal Service is sliding steadily, but surely down the slope of irrelevance. The legitmate postal policy questions are not rural vs. urban but how do you wind down and shut down the enterprise over the next 20 years or so and what do with the legacy retirement costs. Going from 6-day to 5-day is just the tip of the albatoss’ nose.

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  73. @Spartacus:

    Where does one go after being a rate economist for USPS

    Many places over the years for ex postal economists like – go to work for another federal agency, get a job on the Hill, get a job with a state or federal regulatory agency, become a farmer, work as an economist in state government, work for AT&T or a regulated utility, consult or sign up with a Beltway Bandit, teach, lobby, become a Postmaster (or work elsewhere in USPS finance, planning and operation functions), become an investor, get a brokerage license or do something like get a law degree and change careers.

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  74. Tony W says:

    @OzarkHillbilly:

    nobody can make a profit delivering 2nd and 3rd class mail and first class mail is a smaller and ever shrinking percentage of mail.

    Actually it’s the other way around – because of the highly mechanized mail processing equipment at BMCs around the country “Junk” mail and other large-quantity, presorted letters (like utility bills) essentially subsidize your handwritten letters to grandma.

    First class mail is an amazing bargain at an under-50-cents flat rate, and that’s the root of Doug’s question. Can we continue to subsidize that bargain now that bulk mail volumes have been dropping for many years and show little sign that they will return to the number seen in the 90′s?

    Because advertisers are no longer footing the bill, it appears we have to turn increasingly to either government support or reduced service levels.

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  75. Pharoah Narim says:

    Universal Broadband = ObamaNet? I’m seeing a real opportunity for the President to forge a legacy. I wish he’d go for it. The exploding conservative heads in reaction would be worth it by itself.

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  76. Trumwill Mobile says:

    That would be a double win for liberals. First, they get a government program, then they get to feel superior by complaining about those ungrateful, free loading red states that disproportionately benefit.

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  77. wr says:

    @Tony W: “Can we continue to subsidize that bargain now that bulk mail volumes have been dropping for many years and show little sign that they will return to the number seen in the 90′s? ”

    As usual, the question is not “can we continue,” but “do we choose to continue…”

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  78. john personna says:

    @Pharoah Narim:

    It would be enough for me if we said local cable tv/internet monopolies could not live forever, and at some point, after a first provider has been repaid, secondary entrants should be considered on their merits.

    My city cable was done by a small company in the 60′s, if I understand correctly, since then the monopoly has been acquired by one corporation after another. Most recently, Time Warner. Time Warner did not provide universal city coverage in exchange for monopoly. It simply acquired a 1960s tv effort.

    Quasi competition from one phone company is not enough.

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  79. Pharoah Narim says:

    @John Personna:

    I’d agree. Quasi-fascist foot rubbing has kept has kept several industries alive well past their usefulness and relevancy. Center mass–in my opinion–is campaign financing and ease of movement from industry to gov’t regulatory positions and back to industry. That’s my number one concern with the President’s Consumer Protection Bureau–in ten years it’s manned by industry hacks that start writing policy to limit completion and raise prices on consumer.

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  80. Mikey says:

    @Pharoah Narim:

    ease of movement from industry to gov’t regulatory positions and back to industry

    Regulatory Capture

    Regulatory capture is a situation where a government agency responsible for regulating a specific industry finds itself advocating for major companies in the industry instead of the interests of members of the public. People may refer to such agencies as “captured agencies.”

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  81. john personna says:

    I see that:

    Considering its operations alone, the agency actually made $100 million delivering the mail — earning $17.7 billion in revenue against $17.6 billion in operating expenses. But the health care funding and some other expenses pushed it to a net loss.

    So we know that mail is (a) constitutionally mandated, (b) been an operation of government since the formation of the union, (c) manages to make a profit on current operations, but (d) suffers downsizing largely as a result of technological progress.

    I don’t think past US government employees (direct or indirect) should suffer for technological progress. If it is progress killing them, it isn’t “lax operations.”

    Indeed should someone attempt to further burden falling mail volume to pay for health care of past mailmen, you’ll only hasten the decline and speed the transition to electronic methods.

    I hope the libertarians don’t welcome that and the opportunity to stiff their past servants.

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  82. john personna says:

    @Mikey:

    As Felix Salmon notes though, we have a curious reversal on the mails:

    The fight between the Post Office and Congress is a very peculiar one. Normally, when the government owns some incredibly profligate business, it’s Congress which tries to impose efficiency gains and fiscal discipline, while the business insists that all of its spending is absolutely necessary and that it has already cut to the bone. In this case, however, the roles are reversed: the Post Office wants to change, and it’s Congress which is stopping it from doing so.

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  83. Trumwill Mobile says:

    Existing obligations shod be meeting to whatever extent possible (and it’s possible here) , though that’s a different question from what obligations we should incur going forward. Especially in an enterprise with potentially dour future projections and hamstrung when it comes to reform.

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  84. Mikey says:

    @john personna: Yes, that’s true. It seems to overlap in an ironic way though–in both instances (regulatory capture and the USPS) Congress’ influence is exerted in ways that keep the industry from functioning in a way that’s best for most Americans, but instead favors a selected few.

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  85. john personna says:

    @Mikey:

    I’m not sure this is either lobbyist or profit driven. It seems (as noted above) that some want the Post Office as a model of failure, and those people help shape its destiny.

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  86. matt says:

    @OzarkHillbilly: I was going to post something very similar after reading his post.

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  87. Nailpounder says:

    So you urbanites believe that you deserve better and cheaper mail service than the “rednecks” in the country side? Maybe we ought to cut off your food supply for a month and see if you don’t have a better appreciation for us rural folks. And contrary to your tunnel-vision analysis, not everyone who lives in rural areas is a wingnut, anymore than everyone who lives in the city is a gangbanger.

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  88. Nailpounder says:

    @stonetools: Sounds like you’re the one with the superiority complex. You think the world revolves around you because you live in the city? Left to depend on your own urban resources, your world would collapse and become a scene out of the apocalypse within a matter of weeks. I generally lean toward the liberal side of things, but if people like you are representative of urban liberalism, then I want no part of it. You’re just as much a HATER as the wingnuts.

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