INSUFFICIENT POSTAGE

June 2001 - Apparently not every literate creature is human, for I've just seen what happens when you teach a weasel to write. There's a fine example of weasel scratchings at http://www.usps.com/ratecase/govdec.htm. Actually it's the web page where the Post Office tells the Postal Rate Commission "bite me!"

Seems the mail carriers couldn't wait till New Year's to give us our annual gift of a rate hike, so it's happening now. The first ounce of First Class will be unaffected but extra ounces will cost more. Money Orders go up 16%, Certified mail 20%, and business mailings a cent or two. Sure those are small boosts but they rake in an extra billion dollars for the postal megalo-giant this year. It's hard to visualize but they have more money than Bill Gates.

This unwelcome news comes despite the Postal Rate Commission (PRC) telling the Post Office "no way". In fact the PRC said it three times but entrenched postal bureaucrats aren't taking no for an answer. The Commission also tried to shut them up with an extra $97 million for "costs associated with supervisory personnel," but it didn't work.

It's all about money. Seems the old postal institution is facing a modern dilemma: either change with the times or close your eyes and think of the good old days. Like most bureaucracies the PO prefers the second option, and like most bureaucracies they get the glue squeezed out of them every time. In years past UPS and FEDEX took schnauzer bites out of their shorts, but today it's e-mail kicking their butt ... e-mail is free, instantaneous, and delivers in any weather. E-mail also saves you tromping to a community mail box through a minefield of doggie doo.

I will admit the nice folks in the blue or gray uniforms have been inching their way back towards competitive reality, but only inching. They offer new services and a zippy new web site. And their ideas to drum up new business, though transparent and doomed to disappoint, are at least sincere: April was "National Card and Letter Writing Month" and one web page begs strangers for "visionary business ideas and proposals that will help us continue to deliver quality services".

Regardless of this smoldering innovative spirit, their managers are mistaken in thinking they can defy gravity. Any $70 billion business requires $70 billion worth of customers to break even, and you can't just keep raising rates till you get there because your final customer won't pay $100 for a stamp. As things stand today banking and shopping on-line are reducing paper checks and catalog mailings. Digital signatures are reducing demand for paper documents. Even those magazines in brown paper wrappers are delivered in complete privacy over the internet. It's an old story - mail carriers are losing their trade.

Why the very same thing that spares most government agencies: a Federal safety net. The PO found a clause to shield them from the effects of a stumbling economy and deserting customers. They are dusting off a little known and controversial loophole in the Postal Reorganization Act which says the PO must ensure revenues are sufficient "to maintain postal services of the kind and quality adapted to the needs of the United States". Known as the "break even clause" it hints their income has to equal their expenses in providing the necessary level of service.

Necessary level of service ... common sense dictates we're no longer as dependent upon the US Post Office. Sensible folk will argue the "break even" clause doesn't dictate the level of service never be reduced, can't prevent new technology from sidestepping postal carriers. The Post Office takes a different view. They argue income must rise to match their outlay scheme.

One might say the PO is turning a blind eye - refusing to face facts - inventing reasons to stay in business. Take, for example, the new services on their web site. You can now go to their site to design your own greeting card on-line and send it to someone, but the PO idea of "innovation" is to then take your electronic card and print it out, drop it in a pouch, and deliver it on foot ... either they just don't get it or they need to prove we can't live without them. Sure a lot of people still want the paper cards on their doorstep, but I'm sure they'd prefer a nice Hallmark or Shoebox greeting to something that rolls off a printer.

But my words can't do their web page justice. You need to see it for yourself. I think you'll find it tastes a lot like public opinion damage control. They present themselves as a long suffering mega-corporation, crying about being forced to raise rates on one page, then bragging three of their PO services qualify as Fortune 500 companies on another. I'll bet when old Ben Franklin started this operation he would have been content with 800,000 employees and a budget near $70 billion. Not so his heirs.

In hiking rates the PO propagandizes their need for "... a reasonable provision for contingencies." By reasonable they mean an uncommitted reserve of nearly $2 billion a year to use as needed for "the adverse impacts of the unpredictable". The Rate Commission allowed them about a billion ... obviously not generous enough.

When the Rate Commission asked for proof more money was needed to handle unforeseen circumstances, the Post Office weaseled then produced experts to testify "... it is nonsensical to attempt to predict the unpredictable." A few paragraphs later they spun counter-clockwise to say they've calculated the unpredictable and it absolutely requires a bigger contingency fund. They've done the imaginary math.

While the Post office claims they and only they can predict the future with pinpoint accuracy, they do confess to having trouble with the near-term math. So far this year they twice decided their predictions were so poor they needed to raise their cost estimates. The PO frets about being a billion short which is in itself surprising, since their budget is almost 10% higher than two years ago (just 63 billion then, today it's 69).

The term "reduced income" comes readily to their parched lips, with the possible but unquantifiable causes being "... the state of the economy ... increased diversion to electronic and other means ..." Like most institutions they're quick to blame woes on shrinking income but even the weakest link knows income has nothing to do with outlay. If you are steadily losing customers you need to spend less on expenses not more. Not 10% more! Not $6 billion dollars more!

I only mention this grade school axiom because nine members of the postal Board of Governors, former bankers and consultants and industrialists, have inadvertently overlooked it. One hopes they will be open to suggestions of resizing their services to fit the reduced customer base since their web page states "Prudent managers of any business must use their judgment to assess the uncertainties that may lie ahead and plan what is necessary to plan for and survive the risks associated with these uncertainties".

They presume the year 2002 will be unlike any of the previous 226 years because next year threatens "financial risks [and] circumstances quite different from those that had allowed the Postal Service to succeed in recent years with relatively low contingency provisions." I'm not certain what horrible sort of catastrophe they expect in the next 18 months, but if the world is ending you can be darned sure we'll hear about it by e-mail long before the official envelopes arrive.

I encourage you all to visit their web page, to look at the smiling Board of Governors who direct and control the PO's $70 billion in annual spending, conduct long-range planning, set policies and service standards. And if they won't listen to the Postal Rate Commission perhaps they'll listen to the customers they serve.

All together now, ready? Grow up Post Office! You're over 200 years old! America's best known pundit of common sense got you started. Offer something better than e-mail, cut your expenses, but don't ask us to subsidize your losses.