A Financially Self Sufficient Postal Service

Andrew Gelman, a professor of statistics at Columbia University and a prolific writer on statistics and its use in public policy and political campaigns illustrated that the financial problem facing the Postal Service is a legacy of the regulatory structure and financial objects of the Postal Service under the Postal Rate Commission. While not familiar with the current debate, his post in Statistical Modeling, Causal Inference, and Social Science, states what should be clear for anyone who has studied business.  An enterprise will find profitability difficult if not impossible if its customers have more market or political power than it has.

Basically, the post office is always broke because it’s legally required to be broke. It’s not like other utilities which are regulated in a gentle way to allow them to make profits. Looking at this from a political direction, things must somehow be set up so that the Postal Service’s customers have more clout than the Postal Service itself. I don’t really have a sense of why this would happen for mail more than for gas, electricity, water, etc.

Rates charged by the Postal Service need to reflect rates that a profitable well managed firm would charge.   The Postal Service cannot afford to offer lower rates to customers that have political clout.   This will likely result in higher rates for single piece First Class, Periodicals, and non-Profit Standard mail.

About the author