-
Essay / Should Congress repeal Private Express' statutes?
In July 2009, the Government Accountability Office (GAO) classified the United States Postal Service budget as "high risk" and recommended oversight by Congress and the Executive Branch. Specifically, the GAO stated that "In a challenging economic environment and changing business environment, USPS faces a deteriorating financial condition in which it does not anticipate meeting its expenses and financial obligations during fiscal years. 2009 and 2010” (“Restructuring”, 2009). , p. 1). The GAO stated that mail volume in 2009 would likely decrease by about $28 billion from 2008 and that the USPS would likely experience declining volumes over the next five years ("Restructuring," 2009, p. 1). . Clearly, the USPS is currently facing a dire financial situation in which major reforms are needed to ensure the agency's long-term success. In this policy review, I will focus particular attention on the Private Express statutes, which grant the Postal Service a monopoly on first-class mail. As I will argue here, the Private Express statutes should be repealed for economic and historical reasons. In particular, the economic reasons given for maintaining a monopoly on first-class mail are based on two principles. First, the Postal Service must maintain a monopoly in order to fulfill its legally mandated universal service obligation, and second, the mail market is a natural monopoly and the USPS must therefore be allowed to operate as a monopoly in order to achieve economies of scale. I will examine both of these arguments from an economic perspective to determine their validity. The Postal Service does not rely on a monopoly to provide univer...... middle of paper ......onLit.Cohen, RH (2003, February 20). Testimony before the President's Commission on the Postal Service. Retrieved January 15, 2010 from http://www.treas.gov/offices/domestic-finance/usps/testimony-docs/Cohen.pdf Geddes, R. (2003). The structure and effect of international postal reform. Retrieved January 23, 2010 from http://www.aei.org/paper/17066 Geddes, R. (2005). U.S. Postal Service Policy Oversight Reform [Electronic version]. Journal of Economic Perspectives, 19(3), 217-232. Restructuring the U.S. Postal Service to achieve sustainable financial viability. (2009, July). Retrieved January 17, 2010 from http://www.gao.gov/new.items/d09937sp.pdfPriest, G.L. (1975). The history of the postal monopoly in the United States. Journal of Law and Economics, 18(1), 33-80. Retrieved January 18, 2010 from JStor.