United State Postal Service Goes Postal On Rate Increases

Well, here they go again - another 2 cent or 4.5% increase in the cost of a first class stamp.  The recent history of postal rate increases by the USPS has been on a sharp upward trajectory (courtesy: Wikipedia.org.)

In nine years since 2001, including the newly proposed rate increase, the cost of a stamp will have risen by 35.3%.   Keep in mind that over the past nine years the inflation rate has remained subdued and personal income growth for those in the private sector has been virtually nonexistent.

In March of 2009, John Potter, head of the US Postal Service told Congress that the “Postal Service, which has served America for 234 years, is experiencing a very serious financial crisis because of the downturn in the economy.  We are facing losses of historic proportions…our situation is critical”.   Mr. Potter also noted that “the law constrains us from taking the businesslike actions necessary to fully and properly align our institutional cost base with reduced and evolving customer demand”.

Mr. Potter is correct that the Postal Service is not taking the proper “businesslike actions” but he is dead wrong in his assertion that the Postal Service financial crisis is due to the recession.  The Postal Service is floundering because of it monopolistic position, excessive price increases for mediocre service,  the relentless economics of the Internet and competition by well run private enterprises in the package delivery business.

Consider the following:

-Postal mail volume has seen a steep decline of 20% since 2000.  Continuously raising prices as demand slumps will only increase USPS losses.   Economics 101 Mr. Potter - demand falls as prices increase.  Mail can be sent and bills paid on the Internet at a fraction of the price charged by the USPS - higher stamp prices will merely serve to increase use of the lower cost option.

-USPS lost $3.8 billion last year and expects to lose $7 billion this year.  Additional rate increases to avoid losses will result in a vicious cycle of further reduction of volume for the Post Office, requiring additional rate increases.

-USPS Vice President Steve Kearney warned that the “The Postal Service faces a serious risk of financial insolvency”.  Translation - we will be needing a taxpayer bailout sooner rather than later.

-This from the Wall Street Journal:

Most employees have no-layoff clauses, the starting salaries are about 25% to 30% higher than for comparably skilled private workers, and the fringe benefits are so expensive that the Government Accountability Office says $500 million a year could be saved merely by bringing health benefits into line with those of other federal workers.

The most overdue reform is to strip away the Post Service’s monopoly on first-class mail and bulk mail. Competition is the key ingredient to innovation, low prices and good service.

No private business in America could continually raise prices, lose billions of dollars and then hope to win back customers by promising poorer service.

-As the Post Office continues to furiously raise prices, both volume and revenue continue to plunge, as can be seen by the following figures from the USPS.  The latest large proposed rate increase tells us that the Post Office has truly gone “Postal”  -  repeating the same act again and again and expecting a different result.

The Postal Service has not changed with the times, plodding along like it was still the 1950’s. Attempted organizational changes and cost cutting measures have failed.  Raising rates further is the most self destructive action that the Post Office could possible take.  The Postal Service needs to be dramatically restructured and reduced in size to reflect the basic economic reality of its core business.  Congress should cut the Post Office loose from self defeating regulations of a by gone era, let them operate as a business and close the door on taxpayer bailouts and subsidies.

More on this topic:

Obama Says We Can Do With Health Care What We Did With The Post Office

Why The Post Office Needs To Charge Us More

Government Thwarts Oil Cleanup - Incompetence or Calculated Political Decision?

It has been over two months since the Deepwater Horizon oil rig exploded and sank in the Gulf of Mexico on April 22, 2010.  Estimates of the amount of crude oil gushing into the Gulf range from 60,000 to 100,000 barrels a day causing an ecological disaster along the entire gulf coast.   As residents fume about the slow and nonchalant government cleanup efforts, logical minds are beginning to wonder why the government does not take some common sense efforts to facilitate the cleanup.

DEEPWATER HORIZON

A Government intent on facilitating the cleanup and mitigating the huge environmental damage of the oil spill would address the following:

1. Rather than rejecting offers of foreign government help, this assistance should have been immediately accepted.
2. Suspend EPA rules on the amount of oil allowed in discharge from skimmer boats which is preventing large amounts of oil from being recovered.  Blindly following bureaucratic rules when they do not make sense creates a general sense of incompetence.
3. Large amounts of skimmer boats are not being allowed to participate in the cleanup efforts since by law they must be stationed elsewhere.  Exactly where else would you want the skimmer boats to be when they are urgently needed today in the Gulf?
4. Federal authorities have hampered and restricted local efforts to contain and cleanup the oil spill based on mindless reams of regulations which make no sense under emergency conditions.

Speculation on why the government has reacted at a snail’s pace in addressing the Gulf oil disaster center on basic incompetence and at worst, a calculated political decision.   Consider the following from the Wall Street Journal:

As the government fails to implement such simple and straightforward remedies, one must ask why.

One possibility is sheer incompetence. Many critics of the president are fond of pointing out that he had no administrative or executive experience before taking office. But the government is full of competent people, and the military and Coast Guard can accomplish an assigned mission. In any case, several remedies require nothing more than getting out of the way.

Another possibility is that the administration places a higher priority on interests other than the fate of the Gulf, such as placating organized labor, which vigorously defends the Jones Act.

Finally there is the most pessimistic explanation—that the oil spill may be viewed as an opportunity, the way White House Chief of Staff Rahm Emanuel said back in February 2009, “You never want a serious crisis to go to waste.” Many administration supporters are opposed to offshore oil drilling and are already employing the spill as a tool for achieving other goals. The websites of the Sierra Club, Friends of the Earth and Greenpeace, for example, all feature the oil spill as an argument for forbidding any further offshore drilling or for any use of fossil fuels at all. None mention the Jones Act.

To these organizations and perhaps to some in the administration, the oil spill may be a strategic justification in a larger battle. President Obama has already tried to severely limit drilling in the Gulf, using his Oval Office address on June 16 to demand that we “embrace a clean energy future.” In the meantime, how about a cleaner Gulf?

Leaders Out Of Touch With Economic Reality

Politico reports that almost half the members of Congress are millionaires compared to just 1% of the subject population that they rule.   Could this be one of the reasons why the Washington elite is so out of touch with the concerns of the average American?

The economy and pocket book issues are the main concerns of the electorate, regardless of whether they are currently employed or not.   The unemployed see their ship sinking rapidly and those still employed are seeing their standard of living decaying at an alarming rate.   While the average down on his luck American is worried about basic daily issues, the elite rulers of Washington are busily engaged on planetary quests to reduce carbon emissions and tell other nations how to conduct their affairs.    The recent election results prove that voters believe that their basic concerns are not even on the “to do” list of the Washington elite.

Among the highlights: Two-hundred-and-thirty-seven members of Congress are millionaires. That’s 44 percent of the body – compared to about 1 percent of Americans overall.

CRP says California Republican Rep. Darrell Issa is the richest lawmaker on Capitol Hill, with a net worth estimated at about $251 million. Next in line: Rep. Jane Harman (D-Calif.), worth about $244.7 million; Sen. Herb Kohl (D-Wis.), worth about $214.5 million; Sen. Mark Warner (D-Va.), worth about $209.7 million; and Sen. John Kerry (D-Mass.), worth about $208.8 million.

All told, at least seven lawmakers have net worths greater than $100 million, according to the Center’s 2008 figures.

“Many Americans probably have a sense that members of Congress aren’t hurting, even if their government salary alone is in the six figures, much more than most Americans make,” said CRP spokesman Dave Levinthal.

Do The Obese Have The “Right” To Become More Obese?

In an attempt to help those who cannot help themselves from becoming obese, the government has implemented new legislative fiats requiring restaurants to post the calorie count of each item on their menus.   Unfortunately, the heavy hand of government dictate is producing counter productive results.  Consider the following study showing that forcing restaurants to post calorie information has actually had no beneficial impact but instead, has perversely resulted in consumers consuming more empty calories, not less.

After Calorie Warnings, Diners Order More Calories

Before food czars get any more punch-happy on their own Kool-Aid, they need to be purged of the illusion that their laws are actually working. Last month, New York University and Yale medical professors published a ground-breaking study, which shows that New York City’s law requiring fast food chains to post calories on their menus doesn’t reduce their customers’ caloric intake.

Sixteen municipalities including California, Seattle, and Portland have passed laws similar to NYC’s, and the Menu Education and Labeling Act, which would impose labeling regulations nationwide, is pending in Congress.

But the researchers’ most striking finding was that customers actually ordered more caloric items after the law went into effect than before, despite the fact that nine out of ten customers who reported using the information said they made healthier choices as a result of the law.

But the problem may also be more complex. It’s possible that people who are less educated may actually think they are eating more healthily than they are notwithstanding the calorie numbers staring them in the face.information and that 15% said they used it. But these figures demonstrate the law’s failure—not success. Despite the fact that people were readily presented with

The Department is boasting that 56% of customers saw the caloric the nutritional information, 85% of them ignored it.

The lawmakers who enacted the calorie posting regulations succumbed to the fallacy that everyone thinks like them. They probably reasoned that because they would make healthier choices if presented with nutritional information, everyone else would as well. But maybe what consumers actually want is a delicious meal at a low price.

So what’s the next step for an imperial government gone mad with regulations and micro control over the lives of their disconnected citizens??  You can see the next step coming.  For those of us unable to think properly, based on bureaucratic notions of proper eating habits, the only option left is to impose more draconian rules.  If fat people can’t stop themselves from gorging on food, the next logical legislative fiat would necessarily involve requiring restaurants to forcible eject or refuse to serve those individuals that the government “deems to be obese”.

I wonder how that will work out?

With apparently little of consequence to do for the people she allegedly works for, the Secretary of State has spent considerable time and a large amount of taxpayer money planning a “Plaque Monument” to her greatness.   FYI Madame Secretary - usually monuments are erected after a popular consensus has been reached that someone deserves to recognized.

The Washington Post reports on the Secretary of State’s outrageous efforts to immortalize herself.  The story starts when a Clinton shrine (including the notorious 800 pound plaque) erected by the US Agency for International Development was later removed by the Bush Administration and put into storage.    Soon after the election, Madame Clinton with plenty of free time on her hands, went right to work on - you guessed it - restoring her monument.

I was quite honored upon leaving the White House to have a plaque put up in the lobby recognizing my work,” she said. “And if anybody knows where that plaque is — [laughter and applause] — you know,” Clinton playfully smiled, looking at someone just off the stage to her right, and shrugged, “I’d just love to see it again.”

So, for an estimated $40,000, the agency was preparing to schlep the holy plaque back and put it up next week on another wall in the lobby. The photos of her travels won’t be returning, but who needs them? After all, a large photo of the secretary sits at the agency entrance, alongside President Obama’s and Vice President Biden’s.

Then Thursday afternoon, hours after we made inquiries, we got word from a State Department official traveling with Clinton in Pakistan that, no, the plaque’s not going up. “The secretary prefers that public funds not be used for this purpose,” we were told, “and if USAID wants to restore the wall, it should pursue private funding.”

How’s this for an idea?  If the multi-millionaire Secretary really feels she needs a monument, why doesn’t she pay for it herself?   An even better idea would be to dedicate herself to serving the country in a more meaningful manner.