Businessweek Archives

Neither Rain Nor Sleet Nor Good Idea Shall Shake Up The Postal System


Economic Viewpoint

NEITHER RAIN NOR SLEET NOR GOOD IDEA SHALL SHAKE UP THE POSTAL SYSTEM

It is far easier to create bad public programs than to eliminate them once they have been around for a while. This old but frequently ignored law of political science has been called "the tyranny of the status quo," and it helps explain why even downright perverse government policies stubbornly survive and sometimes even expand.

The political status quo is important because groups with a lot to gain from particular programs fiercely defend their continuation, regardless of harmful consequences to others. At the same time, opposition often is weak and fragmented because the damage, in the form of high taxes or bad service, may be spread over so many groups that no single one has a strong enough incentive to protest vigorously. Sometimes, the harm becomes apparent only after a policy is changed, as when privatization reveals how inefficient a state enterprise had been or when drastically reduced tariffs and quotas on imports encourage imports of attractive foreign products.

Government monopoly over mail delivery provides an excellent example of the influence of the status quo. In the past, most nations gave government enterprises sole responsibility for the delivery of letters. The U.S. Constitution does not stipulate a government monopoly, but it does give Congress the power "to establish post offices and post roads."

DEAD LETTERS. Yet after the experience of the past 50 years, few rational people anywhere would advocate a government monopoly to collect and distribute mail. The quality of service in different countries ranges from barely adequate to atrocious: In Canada, Italy, Israel, Argentina, and most Third World countries, no one expects letters to be delivered within a reasonable time. The U.S. postal system is better run than average, but dissatisfaction is widespread. In my home, Chicago, a recent scandal revealed that tons of mail had either been burned, discarded, or left undelivered for years.

The monopoly enjoyed by postal systems has made them sluggish and unimaginative. Successful overnight delivery of mail and small packages was pioneered by Federal Express Corp. despite obstacles erected to prevent regular private-mail service. United Parcel Service Inc. and other companies have taken over most of the market for larger packages by offering speedier, more reliable, more convenient, and sometimes less expensive service. Postal systems played no part in developing fax transmission, computer-based electronic mail, and interactive TV, though a less-regulated system would have tried to branch out into these newer forms of message delivery.

But except in a few nations, it hasn't been possible to get more than cosmetic changes in postal monopolies. Privatizing mail delivery and other reforms are strongly resisted politically by postal workers who fear, correctly, that many of them would lose their jobs. In the U.S., politics is an integral part of the system because postmasters are often political appointees. Postal managers also oppose radical change, since they expect to be replaced by more efficient managers from the private sector, while regulators expect their power to be reduced if competition replaces government controls. Businesses and households that benefit from subsidies to third-class mail and delivery in rural areas often oppose reform because they expect the cost of their mail service to rise.

MOMENTUM. Fortunately, the status quo can be undermined when the harm becomes sufficiently large and transparent. Dynamic political leaders, such as Margaret Thatcher, may come to power calling for widespread privatization and other cutbacks in government programs and regulations. Other politicians, such as President Carlos Menem of Argentina, change their views after being in office for a while, because they see the opportunity for political gain by catering to the interests of those hurt by bad government policies.

The trend during the past 15 years toward privatizing badly run government enterprises has gained worldwide momentum. Many nations have sold off telephone companies, oil refineries, airlines, and government enterprises in various other sectors. Even state-owned postal systems have not been immune to pressures toward privatization. The Netherlands announced in April that it will shortly begin to sell a majority interest in its post and telephone monopoly. Although Britain has one of the more efficient postal systems, it recently proposed a public equity offering that will place a majority of the shares in private hands. Sweden is letting private companies compete with the state-run system in delivering mail in Stockholm. I expect other countries to follow Sweden's example and allow private competition against the state postal system.

If the tyranny of the status quo ever becomes generally recognized as a reliable law of politics, there will be increased opposition to bad proposals, even those framed on a small scale or characterized as temporary. And it may become a little easier to eliminate existing policies that have clearly done far more harm than good.GARY S. BECKER


Hollywood Goes YouTube
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus