Wednesday, September 21, 2011
The Postal, Postal System!... A Symptom? or A Sign?
It seems the ship of state is sinking fast and no one seems to know how to plug the hole and get it sailing again. The steady bleeding of jobs is taking its toll. Everybody knows the problem but nobody seems to have an effective solution. If it is not fixed soon it could drag us into another Great Depression. In the first one the market fell 89% from its all time high. A comparable fall today would mean a bottom of 1564 points. This article addresses the problems and offers a workable solution. If Congress continues to fail to come up with a sound solution it could be a long and painful fall. The housing market will continue to fall and as more people lose their unemployment income it may even escalate. The Fed is certainly not offering any workable solutions. Mine may not be liked but at least it is one. Got a better one lets hear it.
Further proof of the problem showed up on the television this morning. The U.S. Postal Service is in danger of going out of business. Article 1, Section 8 of the Constitution requires the government to establish and manage a Postal System. It also requires the posting of Roads. Does that mean making roads or just posting signs so people know where they are going. I am not sure on that one, but I am sure that the Founding Fathers meant for the government to meet these obligations in perpetuity. So maybe if we look a little harder at the Constitution we might find the answers to our problems are in there. Let me start with showing how the Postal System and Posting Roads are good/bad signs of the problem. One thing is certain if the ship of state continues on its present course it will soon pass the point where it can be salvaged. Based on polls even the average citizen understands this.
Their seems to be several problems with the system. It is mainly a failure of Congressional oversight. Unsound business practices also are contributing to the problem. It is not a labor problem, though Congress would like to blame the problems on labor. There are a lot of factors contributing to the growing shortfall of the system. Some blame it on competition, the sudden growth of the internet and even the social media explosion. They keep raising and raising rates and yet service is not improved. The question is, is the Postal Service doing what it was designed to do? It was designed to deliver the mail. It was not required to deliver mail to homes. This can be proven because in many small communities you have to go to the Post Office and pick up your mail. In the news clip I just watched the Postal Service wants to not only reduce service by eliminating Saturday delivery, but also close 3700 locations and lay off as many as 120,000 jobs. That I am sure will not help the economy out of its problems. Those actions do not address the problems at all. Cutting back is sometimes required to help a business stay in business. The first thing that should be looked at though is the operational goals and getting rid of things that do not contribute to that goal. The proposed cuts certainly will not help them produce the 5.5 Billion dollars that they are saying they will not be able to pay. How about addressing the real problems. The Postal Service is being totally mismanaged and it is not using todays technologies to help solve the problem; The Problems are really pretty simple to fix. Yet when dealing with government nothing is simple.
Actually the Postal System problems are a reflection of the whole problem of government. The system is not working because it is doing what politicians want it to do. That is not necessarily what the Constitution instructed them to do. As I said earlier Article1 Section 8 outlines the obligations of the government. The Post Office does not come up till paragraph 7. The first paragraph of section 8 gives Congress not only the power but the responsibility to collect Taxes, Duties, Imports and Excises, to pay the Debts and provide for the common defence and general Welfare of the United States. If all of this is in the first paragraph it all must have had equal importance in their eyes. The question is what is the general Welfare? Having read many of Paine, Franklin and Jeffersons writings they all felt the state had a responsibility to take care of the elderly, disabled, veterans and those in need. Many politicians argue against that view. If one looks at the providing for the welfare of your family. It includes providing shelter, food, protection, education, health and a means or way to get to and from where they need to be and go, even if it is just to the outhouse. It is a duty of the parent and leader of a family. The same should hold true for the state. As our infrastructure collapses around us it is clear that our leadership has not and is not providing even these basic necessities. In fact what does America have to show for its great mountain of debt. Not a fuctional government that is for sure.
It is time to create a new tax that the Federal Government gets none of and which goes directly to the states in which it is collected and spent strictly to repair the infrastructure. That will create jobs and put the country back on a sound footing. There is an old business axiom you have to spend money to make money. So far the government has mastered spending but not the making or creating money. Building and rebuilding infrastructure will create jobs and stimulate the economy by buying materials for the work being done, which create taxes for the government. It needs to be a permanent program as infrastructure is an ongoing issue. It is not a one time thing. The key is keeping the money out of the hands of the Fed. The only role the Fed should have is oversight to make sure the states are in fact spending the money only on infrastructure and using it to fill gaps and pay salaries. The states are not much better than the Fed when it comes to spending money.
My solution advocates for a $1.00 a gallon gas tax dedicated just to that purpose. You say that is unfair. At least a person could feel something they pay is going to help America. It would help reduce our dependence of foreign oil. It would also show the world America is serious about fixing our problems. It also would inspire people to get out of their twelve mile per gallon truck and demand not only power, but economy also. More people might be inspired to get a forty mile per gallon car. That will not only cut your tax obligation, it will again help reduce America's dependence on foreign oil. If you have to have the twelve mile per gallon vehicle for work add the costs in your contracts. Making the tax apply only to gas, and not diesel which is used by farmers and commercial truckers, should avoid any inflationary charges for food and transportation costs.
The Congress will no longer have to deal with this issue. That alone should save Americans money. Then Congress can focus on undoing the mess they have made and start getting the tax system in order. They need to get rid of all special deductions and loopholes and make it fair across the board for every American citizen. No breaks for big business or the rich. The currently proposed plan to cut one and a half trillion dollars is a drop in the bucket. America spends 1.2 Billion dollars per day in interest on the national debt. Over the ten years they are proposing to cut one and a half trillion in debt, the interest on the national debt alone will accumulate another 4.38 Trillion dollars of debt. So America will be at least 2.88 Trillion more in debt than when they started the ten years. That is providing everything goes as planned and there are no more setbacks.
To show the total incompetence within the present government. The argument is being made that the system is unfair and that China needs to lower the value of their money. If that happens several other things will happen. The value of the dollar will go up. That is good. No that is bad. That means American products cost more overseas and we will be less competitive in foreign markets. Also we will have to pay China wih more valuable dollars on all the debt we owe them. Finally lowering their money makes their products more competitive with America's products. They want to cut something, cut their own pay build shower rooms and bedrooms in all their offices and send them home nine months out of the year. That is how Congress started out. It was not meant to be a full time job. They certainly could not do anymore damage than they presently are. They could go to Washington two weeks every other month and just use that time to pass and repeal bills. Repealing legislation would probably go a long ways to solving many of America's problems. If they did all their planning and preparation at home, maybe the citizens would have a voice in the government instead of the lobbyists and special interest groups. This is totally possible thanks to the new technology available today.
Getting back to what this whole blog is about. The first thing the Postal Service needs to do is set a realistic rate for the postage. What is a fair rate. Well if rates had just kept up with inflation they would be at least 69 cents. How I got this figure was pretty simple. Most of the things that were a nickel when I was a kid, candy bars and soda pop being two examples. Candy bars that were a nickel are now like a $1.15. That is an increase of 23 times. Soda pop is hard to compare because when I was a kid you only got 8 ounces for your nickel. However then you could take the bottles back and get 2 cents which would buy a whole hand full of candy. Soda pops today are generally in 12 or 20 ounce containers and while pop cans are recyclable it is hard to figure exactly. At $1.50 which is an average vending machine price the increase would be thirty times which means the rate should be around 90 cents for a stamp. That only allows for the inflation since 1958. It does not address the period from 1885 to 1958. From 1885 to 1958 the price of a stamp only went up 1 cent. In fact for a period from 1885 till 1932 a stamp was only 2 cents. It went to 3 cents for a year or so during World War I but dropped back down after the war. From 1932 till 1958 it stayed at 3 cents. Then after 1958 stamps started changing. In the next ten years the stamp jumped 2 cents. From 1968 on the jumps became more costly. Two things happened that changed the dynamics of the problem. The Postal System was unionized and the dollar went off the gold standard. Which effected prices more is hard to tell.
It is my understanding that the Postat System is not allowed to make a profit which is acceptable. It also should not operate at a loss. The system has not adjusted to the economic realities it operates in. Costs do go up and the Postal Service has raised rates often. The question is have the increases reflected the actual costs that the Postal System was, and is incurring. The cost of vehicles to transport mail for the carriers and the increased size of the United States since the Constitution was passed do not reflect that they have. The history of the stamp system only goes back to a period just after the Civil War. Prior to the war rates and methods of mail distribution were much different.
From the above information it is easy to see that the system is a bit obsolete. Had prices kept up with inflation over the 126 years a postage stamp would realistically be around $2.00 So the system does definitely need fixed but the cuts the Postal System is proposing are not the right answers. They need to revamp the totally unrealistic system they have in place. It defies business sense and common sense to run it the way it is being run. Where is the Congressional oversight. It would probably not make things any better if the Congress was doing it's job, but at least we would know who to point the finger at.
One major sign of a management problem is giving away free materials and then discounting their service. I am talking about their package shipping program. They will give customers "free" boxes and then give them a discounted rate to ship them. So who is paying for the boxes and discounts. This makes absolutely no sense. I am sure the company with the contract to sell the boxes to the Postal System would disagree with me. Of course ending the program will add to the unemployment problem. I guess you will have to make your own decision which is worse and if you want to write your Congressman to complain.
On top of the box problem they are spending tons of money on TV advertising to tell about their guaranteed loss program. I am sure the advertising company making the TV adds is charging a very "fair" rate to the Post Office. The evidence of the mismanagement problem is magnified when they are putting things on stamps like the Simpsons. Are they paying for the rights to those adds. Either they paid fees for the rights to use the Simpsons on stamps or they are just providing free advertising for the Simpson's. In either case it is wrong. Stamps should be restricted to leaders and events that have contributed to America in some way. Someone needs to make some decisions to correct these problems. It is like no one is in charge. They go from one stupid idea to the next.
The stamp buyers of course foot the bill for all of this stupidity. Shipping packages is not what the Postal Service was designed for. I do not think the Pony Express riders carried packages. They carried mail, and yes I know the Pony Express was not part of the Postal Service, but they were competing with the Postal Service and were put out of business by a new and improved service. The telegraph lines finally crossed the country and the Pony Express's nitch service dried up. The point is that the Pony Express saw opportunity in meeting a need and met it. They did it profitably if I understand correctly. That is how UPS and Fedex came into being. They saw a need that they could do better and cheaper or at least more efficiently. They built solid business' models. With all the delivery services available the first thing the Postal Service needs to get out of is the package delivery service. Especially doing it for free. Shipping materials are a business expense that any business can write off and not pay taxes on. Please explain the logic of doing it the way they are. They also need to stop delivering catalogs and advertisement flyers, which they handle while also giving a discount. Here is a novel idea, how about focusing on MAIL.
The second thing the Postal Service intends to do is cut out 3700 locations. So they intend to make themselves less accessable. That is a really smart move. DUH!!!!!!!!!!! How about opening thousands more offices and making them all mail pick up points. The money saved not running delivery vehicles would about balance the budget I am reasonably sure. Americans could definitely use the exercise and for the disabled and those who do not desire to pick up their own mail a job opportunity is created for someone who is willing to do so. The final thing is the cutting of 120,000 jobs and putting that many people out of work. I am not a rocket scientist, but that definitely would not be good for the economy. Instead of fighting and complaining about the computer competition how about setting up computer access points in Post Offices and helping the customers. For a fee of course. How about printing out E-mails and putting them in a patrons personal box. The need for a hard copy may still exist. Yet this would be a move toward eliminating the need to pollute the atmosphere with exhaust fumes. The creation of many more postal locations would require that they be manned. Eliminating Saturday service is something that is long overdue and the easiest to adapt to. My personal opinion is the whole country needs to go to a four day week. It is time for it to happen. It would create thousands of jobs if companies actually complied with it. Most business's other than retailers no longer work on Saturdays. The Postal Service problem is really that they do not want to adapt and move into the new age. They are in a really bad rut, (which is nothing more than a grave with both ends kicked out) and unwilling to move forward. Their problems can be solved but it will take some major adjustments. One more issue to address. Already overloaded with work who decided that the Postal System should handle Passports. If they are going to do it they should have dedicated personel for that purpose so that those handling mail issues can do so.
On the issue of Posting of Roads. This is a personal one being a retired trucker. Every state in the United States uses the green and white signs for the interstate system. They mark the exits and entrances and each mile is posted so a person has a reference point to know their exact location. This can be important in cases of an emergency. However there is one state that has put themselves above the law and does not comply with it. That is California. The police officers I questioned about it said they did not post the signs to make it harder for speeders to evade law enforcement vehicles. Excuse me but every other state in the United States manages fine. It is a pretty lame excuse. Of course California's financial management seems to not be much better than the Postal Service or the Federal government, which mandated the signs on the interstate system.