What Happens When Government Runs a Business?

The Post Office is in the news again. No bags of letters in the dumpster this time. It’s just a $2,200,000,000 operating loss over a 90 day period. That averages out to almost one million dollars in red ink every hour of every day. I wonder how long FedEx and UPS would survive with that record?
Anyway, officials at the Post Office are suggesting that $42 billion in yet more debt may be coming during the next four years. What is the Post Office doing to cut costs? From the Wall Street Journal we learn, “Postal service management recently concluded negotiations offering the 205,000-member American Postal Workers Union a new four-and-a-half year contract that will provide a 3.5% pay raise over three years, dole out automatic cost of living wage hikes after 2012, and expand no-layoff protections.” Since postal workers have an hourly compensation of $41 per hour, many think the country can do better by privatizing all mail service. Good point.

Some people argue that defunding NPR, Planned Parenthood, and the Post Office (which is technically a government-sponsored enterprise), should rank way behind a focus on the higher federal sums currently spent on education, health care, and various entitlements. Not necessarily so. Winning the smaller battles can be a prelude to winning bigger ones later. For example, one of the benefits the U. S. is hoping to achieve from killing Osama bin Laden is that even though he represents only one man hiding in a compound in Pakistan, his execution sends a larger message to thousands of terrorists elsewhere of the fate that awaits them if they spring into action. The defunding of the Post Office, NPR, and Planned Parenthood now would show a willingness to confront wasteful spending that could translate into larger cuts for bigger programs later.

In the late 1930s, Wendell Willkie, who became the Republican nominee in 1940, focused on the Post Office as an example of why the role of government ought to be reduced during hard times, in his case the Great Depression. Willkie noted that the Post Office had lost money almost every year of operation, and that by 1936 these losses totaled $1,601,569,000. Willkie let voters know he yearned for the day that the Post Office would be completely privatized: “If a corporation similar to the American Telephone and Telegraph Company should take over administration of the Post Office, it is my belief that we should have an even more efficient mail service, at present rates, without any deficit at all.” Willkie, as a future Republican contender, saw the Post Office as a symbol of the poor service that usually accompanies government action. To make the larger point he asked, “Would we consider it to be efficent operation if the government were to run the light and power industry as it runs the Post Office?”
The Post Office today, though not government-run as it was in Willkie’s day, is still government-protected and the annual losses and union pensions are likely to eventually be burdens of the taxpayers if the American Postal Workers Union has its way. By asking, as Willkie did, if we want other enterprises run like the Post Office is excellent preparation in the coming political elections for arguing about Obamacare, federal loans to college students, and other programs with huge government interference.