Blind Greed at Root of USPS Privatization Thinking

Congress apparently does not care about the financial state of the U.S. Postal Service and seems willing to let it twist in the wind as the postal service continues to lose at least $25 million a day.

Meanwhile lawmakers are leaving the USPS to do its dirty work by closing local post offices and its employee headcount, further reducing necessary services to people and businesses.

By the postal service’s own estimates, these cost-cutting efforts can only save about $20 billion. Obviously, this can’t come close to making a dent in the USPS’s deficit.

Since it abandoned its plan to cut Saturday first class mail delivery a few weeks ago http://about.usps.com/news/national-releases/2013/pr13_0410bogstatement.htm the USPS must find another way to cut costs since it’s still not getting any help from Congress.

It’s fairly well-known that when companies are put on the selling block they try to reduce expenses as much as possible to make them attractive to potential buyers. Layoffs are often a big part of this.  http://onlinelibrary.wiley.com/doi/10.1002/smj.4250140903/abstract

Last year, the Senate passed a postal reform bill that partially addressed the USPS’s problems but the House did not, leaving the issue up to the current Congress which so far has not acted.

Maybe Congress is biding its time, hoping for conditions that would support privatization will come about. This isn’t likely to happen.

Certainly, the buzz at some mailing industry conferences seems to suggest Postal Service privatization is inevitable http://www.savethepostoffice.com.

One thing the privatization proponents are underestimating is backlash from both the public, labor unions and the more than $9 billion mailing industry.

As a reporter covering many different industries over the past 31 years, one common theme I’ve observed is that irrational greed can often blind rational judgment.

Case in point: a few years ago, Tishman-Speyer Properties defaulted on a $5.4 billion investment to buy New York City apartment complexes Stuyvesant Town and Peter Cooper Village.

Even if the entire real estate market had not collapsed Tishman made one fatal miscalculation here: it assumed it could convert all those apartments to market-rate rents. Tishman apparently forgot, or ignored the fact that nearly 75% of those apartments were rent-stabilized and ineligible for massive rent hikes. It’s unlikely Tishman did not know this.

Which leads us back to the USPS.

Those that see potential dollar signs in a privatized USPS fail to acknowledge the extreme antipathy to the idea in this country to destroying the one institution everybody needs and trusts despite its imperfections.

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One Response to Blind Greed at Root of USPS Privatization Thinking

  1. Lynn N says:

    The only ones who will make money on the privatization of the USPS will be 2 or 3 mega- companies- the small and mid-sized companies- will be forced to pay exorbitant prices to mail their products. We’re not even talking about your garden variety consumer! It’s well known that when private industry takes over functions normally within the governmental control, they do it more expensively, and less efficiently. There have to be some government utilities. The market does not and should not control everything.
    The only parties who “made out like bandits” (an apt expression here) in the sale of the Stuyvesant Town complex were the financial brokers.

    Like

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