Cranach

The U.S. Postal Service is having financial problems again and is proposing higher postage feeds and cutting out Saturday deliveries.  What, though, do you get in your mail these days?  In an age of e-mails and electronic banking, do we even need snail mail anymore?  Yes, we need delivery of packages for what we order online–something done profitably by Fed-Ex and UPS–so why not make that the business of the USPS, with those who still send paper correspondence paying for them as little packages?  Or why not let the government-subsidized post offices go out of business and let the private companies do it all?  Here is a proposal and rationale:

The Postal Service projects deficits of $238 billion — roughly the current gross domestic product of Portugal — through 2020. Raising rates slightly and reducing delivery would make tiny dents — and that’s the best possible outcome; in the worst, the changes would accelerate the service’s problems. Meanwhile, the debate obscures the fact that digital communications are fast eliminating the need for mail delivery.

To understand what could happen to the Postal Service, look at Kodak, whose 130-year history includes the kind of dominance that USPS long enjoyed. Even as the long-term threat from digital photography became clear in the 1990s, Kodak temporized. It tinkered with its traditional film, paper and chemicals businesses, never acknowledging that digital would all but eliminate them. Kodak continually predicted growth, even as it fell from being one of the most profitable companies in the world to one that’s essentially worthless.

The Postal Service, too, is looking at the future as a variant of the present. USPS, convinced of the long-term need for physical mail delivery, has been relying on increases in volume, according to a Government Accountability Office report published in April. Yet delivery volume for first-class mail fell 22 percent from 1998 through 2007, tumbled an additional 13 percent last year and was down 3 percent in the first half of this year despite heavy mailings from the Census Bureau.

Step one in avoiding Kodak’s fate is for the Postal Service to acknowledge that its future will have almost no connection to the present. Anything that can be conceived of as information will, in time, be sent electronically. The Internet is faster, cheaper and more convenient for the sender and the receiver.

E-mail has already supplanted letters, but that’s just the start. More people will send money via PayPal or other electronic services rather than mail checks. As is increasingly the case, people will download their movies and books, check their bills online, receive information about their investments electronically, and so on.

USPS’s future lies in things that need to be delivered physically: shoes, computers and other objects. On those items, the Internet can’t compete, and USPS has assets that could let it take on UPS and FedEx (which, unencumbered by USPS’s declining business, are in splendid shape; UPS reported Thursday that its second-quarter profit had nearly doubled, to $845 million, from a year earlier).

via Paul B. Carroll and Chunka Mui – How the U.S. Postal Service can save itself.