American postal workers and their allies complain that U.S. Postmaster General Patrick Donahoe is trying to privatize his agency, and Donahoe says this is preposterous. Who’s right?
It might be useful to consider what’s going on in Britain, where the Conservative-run government of Prime Minister David Cameron really did take the Royal Mail private last October. On Wednesday, Edward Miliband, leader of the opposition Labour Party, accused Cameron of giving a select group of hedge funds a “golden ticket” in the postal IPO, while workers who also received shares were treated more shabbily.
Miliband was referring to the rule allowing the hedge funds to sell their shares immediately, even as postal workers had to hold on to their own stock. He also cited a recent report that Peter Davies, co-head of developed markets strategy at Lansdowne, a British hedge fund that has been granted permission to flip its shares in the public offering, served as best man at Chancellor of the Exchequer George Osborne’s wedding. The Guardian has this choice quote from Miliband’s speech:
“What we have discovered today is one rule for the postal workers and another rule for the hedge funds. Who runs these hedge funds? They have been very coy about who runs these hedge funds. None other than the chancellor’s best man runs one.”
Cameron responded that Miliband was grandstanding. This is how the Daily Mail described the prime minister’s defense: “He said left-wing Labour leaders Michael Foot and Neil Kinnock had railed against successful privatisations of firms like [British Telecom] and British Airways.” Here’s more from Cameron:
“What we are talking about is an exercise in privatising the Royal Mail, which has been a success for our country. A business that lost £1 billion under Labour now has paid money back to the taxpayer, is making profits. And the people you should be praising is the 140,000 employees of Royal Mail who are now shareholders.”
Donahoe often speaks as though he’s trying to prevent the same alleged scandal that Miliband describes—chicanery, corruption, and rampant Wall Street profiteering. Both men also engage in similar populism.
But the American postmaster general isn’t advocating anything as radical as a U.S. Postal Service IPO. He wants to open post offices in Staples (SPLS) stores at a time when fewer and fewer people are venturing to traditional post offices. No, the Staples stores won’t be staffed by union members. That would require hiring unionized postal clerks, something the USPS can’t afford after reporting a $5 billion loss last year.
But Donahoe’s critics rarely draw the distinction between his plan and a full-fledged privatization like the Royal Mail IPO. On Monday, the California Federation of Teachers voted to support the American Postal Workers Union’s call for a Staples boycott. Here’s how CFT President Joshua Pechthalt described the action:
“We want to send a clear message to USPS and Staples that we value public service. When it comes to privatizing the U.S. mail, we say ‘no sale.’”
Clearly both the teachers and the postal workers have decided that this is a resonant line of attack. If only it was fair. They might want to look at what’s happening in the U.K. and then decide whether Donahoe is really such a bad guy.