[Vision2020] Reading the Writing on the Envelope

[Art Deco]

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October 1, 2011
Reading the Writing on the Envelope
By RANDALL STROSS
THE Pony Express was famous for moving mail at astounding speed. Missouri to California in only 10 days! A triumph. 

It was also short-lived. Established in 1860, it lasted only as long as the territory it covered lacked the telegraph. Humans and horses could not match the speed of electrical signals. So when the transcontinental telegraph was completed in 1861, the company's three investors reacted swiftly. It was shut down after only 18 months. 

Now, 150 years later, the United States Postal Service is engaged in another race with technology, one it can't possibly win. But because the service is a quasi-independent government agency, it continues to maintain the huge human and mechanical infrastructure that was assembled for a pre-Internet age. 

The Postal Service proudly proclaims just how big it is. It has 574,000 employees, making it the nation's second-largest civilian employer, after Wal-Mart. The service runs 215,625 vehicles, the world's largest civilian fleet. Those vehicles traverse 1.25 billion miles annually and consume 399 million gallons of fuel. Its carriers serve 151 million homes, businesses and post office boxes. 

And the Postal Service can't resist a tacit little boast at the end of that long list of big numbers: It receives zero tax dollars for its efforts. 

Bravo! But one could point out that this is the same Postal Service that posted multibillion-dollar deficits in the 2007, 2008, 2009 and 2010 fiscal years; another is expected to be reported for the 2011 fiscal year, which ended Friday. It is curious that 2006, the year before this dismal run of losses, happened to be the very year when total mail volume peaked. In 2006, some 213.1 billion pieces were processed. In 2010, the total was just 171 billion. 

Stamped mail is the category that has declined most steeply in the last decade - 47 percent since 2001. "Standard" mail, the official euphemism for junk mail that until 1996 was called third class, dropped only 8 percent over the same period. 

The decline in mail volume has been accompanied by widening losses: $8.5 billion for 2010, and a projection of nearly $10 billion for 2011. 

The Postal Service, to its credit, acknowledges that it faces what Patrick R. Donahoe, the postmaster general, calls a new reality. In releasing results for the quarter ended June 30, the service described how "electronic diversion continues to cause reductions in first-class mail." Revenue from first-class mail declined 8.7 percent from the period a year earlier. 

The postal unions avert their eyes. They say that the service ran into trouble solely because Congress has required huge payments for future retirees' health care costs. Silly me: I thought funding benefits fully was a good thing. 

On its Web site, the American Postal Workers Union disputes  the notion that "hard-copy mail is destined to be replaced by electronic messages." Mail volume was down, it says, because its principal component - advertising - had fallen in the recession. "As the nation and the world emerge from economic stagnation, hard-copy mail volume will expand," it asserts. But that, of course, ignores the rise of the Internet, and its ever-growing use for checking bills or sending payments - with no need for that army of 500,000. 

The Internet can't be used to tele-transport packages, of course, and our use of package delivery services, including the Postal Service's, has grown with e-commerce. But the Postal Service is running large deficits, bumping up against the $15 billion limit it is permitted to borrow, and is on the brink of default unless Congress comes to the rescue. 

Is this where the Postal Service wants to make its stand, as a package delivery service, one among several providers? Does anyone really care whether the Postal Service or U.P.S. drops the package at the doorstep? 

A. Lee Fritschler, a professor of public policy at George Mason University and a former chairman of the Postal Regulatory Commission, says our Postal Service should be viewed not as a communications medium but as a broadcasting medium, spraying identical messages, in the form of "standard" mail, far and wide. If Congress had to bail out the Postal Service, it would effectively be subsidizing the private interests that use the service to distribute advertising cheaply. "Why on earth should our government be subsidizing a broadcast medium?" Professor Fritschler asks. 

Some say subsidies are perfectly defensible if the service fulfills a noble civic function. Richard R. John, a historian at the Columbia University Graduate School of Journalism, points out that the post office ran a deficit during most years between the 1830s and the 1960s. But today, when junk mail is predominant, "postal management is unable to articulate a compelling vision of the public good," he says. 

In 1861, it was easy to decommission the Pony Express, a technologically obsolete, privately owned delivery service. A century and a half later, we have a delivery service whose raison d'être is rapidly vanishing before our eyes. This one is owned by all of us, however, and we are paralyzed, unable to decide what to do. 

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross at nytimes.com.




____________________________
Wayne A. Fox
wayne.a.fox at gmail.com
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