Friday, January 24, 2014

USPS: The Mix Tape

Remember making mix tapes?  You could either record from the radio while your favorite songs were playing or, if you were really lucky and had a boom box with two cassette decks, you could pull a song from one onto the other.  Some of you reading this, may not even have owned a cassette deck.  The mix tape, and cassettes for that matter, have become obsolete.  The combination of CDs and the proliferation of computers which could burn CDs, doomed the poor cassette.

But what really happened here is that the market demanded a new product that was more convenient, gave the user more control, and produced a better quality and cassettes simply couldn't meet the demand.

The United States Postal Service is going through a similar situation.  This venture is losing money despite being the only show in town.  Year after year, they cannot meet their obligations or they raise rates or both.  Part of their loses can be attributed to online communication - people simply do not send letters to communicate like they used to.  They don't even pay bills like they used to.  But that is no excuse for a business to not operate in a monopoly environment.

When a normal business is losing sales volume, they typically do something new.  They improve their products, make doing business with them easier for the consumer, or maybe lower rates.  In short, they improve service.

The knee-jerk reaction of the Postal Service has been to increase cost.  And, as any thinking person would expect, people have responded to the increased costs by continuing to take their business elsewhere.  Unable or unwilling to adjust their prices, they are now seeking to improve availability of service.  They are testing ways to make their product more available and more convenient to their customers, which has earned a rebuke from big labor.

The United States Postal Service should resist the union's attempts to preserve a failed system that simply no longer works.  There is no clearer evidence needed than the weak balance sheets of the USPS despite having a complete and total monopoly on sending regular, first-class mail.  If they bend to the antiquated thinking of big labor, the market will respond and eventually send the postman the way of the mix tape.

No comments: