Why Postal Reform Will Fail

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BY MARK  JAMISON

By any meaningful measure, whatever postal reform bill emerges from the current legislative process, it will be insufficient to staunch the flow of blood draining from the Postal Service.  More likely than not, the bill will facilitate the destruction of a national treasure by strangling the principles that support its existence.  Postal reform is going to fail because Congress cannot understand the fundamental role of a national post as essential infrastructure.  

Congress will do nothing to stem the slow evisceration of the network.  It will do nothing to prevent the wholesale destruction of the value of First Class mail.  It will do nothing to imbue a real spirit of innovation and service that restores and reinvigorates the positive role of government in ensuring the health and progress of society through promotion of the general welfare.

Congress will do nothing to hold the current management of the Postal Service accountable for the destructive and dysfunctional culture it has fostered and promoted.  It will do nothing to prevent the further perversion of the national trust embodied in the social and aspirational values that led to the provision of a means to bind the nation together in our founding documents.  It will do nothing to hold itself accountable for its desultory and self-interested approach to governing, for abandoning basic democratic values in constructing legislation.

The current administration will do nothing to stand for our basic principles either.  The legislation the President is likely to sign will result in the destruction of least 100,000 — perhaps as many as 200,000 — good, solid, middle-class jobs.  The legislation will ultimately result in large sections of the American public being abandoned in order to better serve very narrow interests.  It will transfer billions of dollars of revenue into the hands of a corporate elite, cause the deterioration of the security of our communications, and undermine one of the basic strengths of our democracy, the free flow of information and opinion.

Yes, postal reform is going to fail, and it will be as a result of our continuing self-immolation by the partisan bickering that masquerades as political dialog.  Both of our political parties have become captured by an almost mystical worship of free markets as some sort of sacrosanct natural phenomenon.  With few exceptions, our political class has succumbed to the proposition that every transaction, even basic discourse, is simply a matter of economic exchange.  

This belief has led to arcane and destructive budgeting procedures like those that created this fictional postal crisis.  It has also produced a complicated, obtuse, and impenetrable tax system that transfers the wealth, promise, and progress of the nation into the hands of an elite few.  At its most basic level, the system refuses to pay for the basic services a society must have to be deemed civilized.

 

THE CURRENT POSTAL CRISIS can be most directly attributed to the 2006 Postal Accountability and Enhancement Act (PAEA), which placed imponderable burdens on a basic piece of our national infrastructure.  Financially the greatest of those burdens was the massive transfer of postal revenues to the Treasury, ostensibly for the purpose of funding long-term liabilities to the retiree health care fund (RHBF).  In reality, this was simply a means of masking the continuing and ongoing profligacy of Congress.

More damaging, though, was the philosophical underpinnings of the law.  The PAEA abandoned the notion that the Postal Service is an essential service provider.  In its place, the PAEA has contributed to transforming a national institution into little more than a corporate behemoth whose primary focus is promoting “stakeholder” values.  It gave imprimatur to a long simmering agenda to abandon the promise of universal service, the utility of a broad wide ranging neutral network, and a commitment to employment in favor of a model that curried favor with a relatively narrow segment of the postal market — advertisers and marketers.

The financial crisis of 2008 and the Great Recession that followed was, at its cold black heart, the result of our increasing enthrallment with the idea of “something for nothing.” The crisis was created when the sector of the economy known as Finance, which is supposed to facilitate flows of capital in order to enhance meaningful economic activity, ascended to primacy based on the idea that the simple manipulation of money — rather than basic hard work and traditional economic activity — could produce endless profits and capital accumulation.

We are told that that the great postal crisis started not with the financial collapse and the ensuing recession but with the diversion of First Class mail to electronic methods of communication.  It’s interesting that prior to 2008, senior postal officials had not done very much to address the potential losses of volume that the growth of the electronic economy might cause.  The effects on mail volumes were foreseeable as early as the tech boom of the early 1990’s, if not before.  Yet the Postal Service made little effort to innovate or prepare.

Nor did the Postal Service work very hard to convince Congress that in fashioning the PAEA steps were necessary to put the Postal Service on a sustainable financial footing.  Instead of anticipating declines in volume, the Postal Service bet heavily on the assumption that volumes would constantly increase.  It designed rates and product offerings based on that assumption, and it invested heavily in capital-intensive automation equipment and processing capacity that required huge volumes to pay off the investment.

The Great Recession didn’t change the threat of electronic diversion.  The loss of billions of pieces of mail volume that began in 2008 was not caused by a huge increase in e-mail or electronic bill pay.  The fact is that our drunken infatuation with easy credit and financial manipulation had created a market for billions of pieces of mail promoting credit cards, mortgages, and other financial products.  When the financial markets collapsed and credit markets froze, the marketing that produced those billions of pieces of mail dried up, virtually over night.  When the party on Wall Street ended, mail volumes plummeted, and any pretense of being able to make the idiotic payments to the health care fund imposed by PAEA vanished.

 

IN THE SPIRIT OF NEVER LETTING A GOOD CRISIS GO TO WASTE, the leadership of the Postal Service resurrected its dream of a smaller, cheaper workforce, diminished service, and a reduced retail footprint.  Make no mistake, this has been the Holy Grail of postal management.  Excessive workshare discounts have facilitated the shift to a contracted workforce, and combative negotiating tactics with landlords and abuse of emergency suspension procedures have made it possible to close hundreds of post offices. 

The fallout from the financial crisis and the ongoing recession opened up an entire field of new possibilities for postal management.  Declining revenues could be depicted as an existential threat to the Postal Service, and the prospect of huge deficits could be made to look even worse and more threatening by attributing them not simply to RHBF payments but to a collapse in First Class mail volumes that was Internet-driven and permanent.  Portraying the decline in First-Class mail volumes as permanent and more precipitous than they actually were allowed postal management to plant seeds of doubt concerning the product that service standards and universal service are built around.

Without First Class mail, the reasons for a universal post become quite shaky.  This becomes even more apparent in an environment where we are predisposed to ignore arguments about the social value of public goods.  At one time we understood the value of universal service in addition to the commercial opportunities a broad and deep network provided.  At one time we justified aspects of our rate system — like preferential rates for media mail and periodicals — by pointing to the vast public good provided by a system that facilitated these forms of communication.  But in a world where all transactions are seen as market transactions, where we have lost sight of the intangible value and importance of public goods, there isn’t much space for arguments grounded on these principles.

The leadership of the Postal Service has engaged in a relentless effort to undermine the relevance of First Class mail and consequently the value of the universal service obligation.  The effort has taken shape and matured over the last four years, but the Postal Service has hit its stride with the proposed reduction of First Class service standards.  The “rationalization” of the mail processing network will make some future restoration of higher standards prohibitively expensive.

It’s interesting that a few commentators have recently seemed inspired by the Postmaster General’s new upbeat attitude.  In recent public appearances Mr. Donahoe has started offering a more positive vision of the future of the Postal Service.  And why not?  The screaming and rending of garments over impending deficits have changed the entire dynamic of the conversation.

The Republicans in Congress already had an agenda that fit Mr. Donahoe’s vision of a privatized service with fewer employees on the public payroll, reduced benefits and wages, and services that directed profits into the hands of a small segment of the industry. He didn’t have to win them over.  They were ideologically predisposed to an eviscerated public institution.

What the dance of the last couple of years has done, what the depressing drumbeat has accomplished, is to convince most Democrats and other observers that losing only 100,000 jobs would be a good thing, that closing only half the plants would be painful but tolerable, and that fewer post offices only made sense.  Some Democrats, like Senator Carper, were already willing to accept the premise that a strong Postal Service meant a smaller Postal Service, one that ran from its obligations in the face of electronic competition and instead focused on a fairly simple goal — increasing profits for the mailing industry.

What we see taking shape in the Senate represents total surrender.  The provisions in S.1789 that hold the Postal Service more accountable for post office closings are pretty much paper tigers, designed as a sop to the folks back home, a way to say, “See, we tried to save your local office or plant.”

The provisions that encourage the Postal Service to innovate or compete in narrow ways are all going to be subject to regulatory review, and in any event a management committed to a specific course of action can easily sidestep the things that don’t fit into the plan.

Senator Tester’s amendment to shrink the Board of Governors and limit executive salaries is the only offering directed at postal management.  Nothing in the bill addresses the dysfunctional management culture, the ongoing dissembling that the Postal Service engages in to close offices or promote its plans, or the top heavy management structure. Nothing in the bill addresses the failure of the current organizational structure to protect and preserve an essential component of our national infrastructure.

 

POSTAL REFORM IS GOING TO FAIL because even if closing processing plants and small post offices is forestalled for a few months or more, even if service standards are allowed to deteriorate gradually rather than precipitously, even if new sources of revenue are identified and captured, the sad and undeniable fact is that the stage has been set.  What comes next is inevitable:  The universal service obligation will be undermined, First Class mail will become increasingly irrelevant, and the basic premises that argue for a national post will be called into question.

Very few members of Congress, with the possible exception of Bernie Sanders in the Senate and Gerald Connolly in the House and a handful of others, have even remotely begun to see the value of the postal network as infrastructure.  No one in Congress or the White House has chosen to question or push back against the growing trend to see markets as supreme rather than a part of the overall social construct.

The plain, simple, and very scary fact is that the deterioration of social values and the subservience to greed that caused the financial crisis are ongoing, and they are represented in our views and responses to most of the issues that confront us today.  Even those who allow for the possibility that government may be part of the solution seem to operate from a place that concedes that government is not only ineffective but also an impediment.  This attitude fits with our increasing disrespect for the foundational institutions that fostered the growth of our country, while conceding the radical libertarian meme that every man for himself is part of the natural order.

Postal reform is going to fail because the model, the management, and the basic ideology that have brought us to the edge of the cliff are not going away, and they will soon push us over the precipice.

[Mr. Jamison can be reached at Mij455@gmail.com.]

(Photo credit: Senators Lieberman and Carper; the signing of the PAEA in 2006; Postmaster General Donahoe.)

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