Monday, September 5, 2011

The Squeeze on Government Employees Continues (Post Office Edition)

By their very structure government organizations are inefficient, bureaucratic and have zero to do with consumer service. As Ludwig von Mises wrote:
Bureaucratic conduct of affairs is conduct bound to comply with detailed rules and regulations fixed by the authority of a superior body. It is the only alternative to profit management. . . . Whenever the operation of a system is not directed by the profit motive, it must be directed by bureaucratic rules....The bureaucrat is not free to aim at improvement. He is bound to obey rules and regulations established by a superior body. He has no right to embark upon innovations if his superiors do not approve of them. His duty and his virtue is to be obedient...The public firm can nowhere maintain itself in free competition with the private firm; it is possible today only where it has a monopoly that excludes competition. Even that alone is evidence of its lesser economic productivity.
Thus, at every step, the shrinkage of government must be cheered on. Government always and everywhere is less efficient than the private sector. Remarkably, through the ineptness of Fed chairman Ben Bernanke and President Obama, the bureaucracy is getting even more inefficient. So inefficient, that as I have detailed, various sectors of government are collapsing from within. This shrinkage is likely to be short-lived as Bernanke will turn his money printing machines at record rates, but for now it is a marvelous thing.

Another government entity barely hanging on is the United States Postal Service. Some will argue Congressional mumbo jumbo that the USPS is a private entity, but the fact of the matter is that Congress oversees the USPS and no other individual or firm, by law, can compete in delivering first class mail.
Here's NYT on the collapsing USPS:
The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances...

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts...

The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.
As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees...

The postal service has the legal authority to close facilities, although community opposition can make the process difficult...

To placate critics and cut costs, officials say they would seek to run some postal operations out of stores like Wal-Mart or to share space with other government offices.
Cutting the work force is more difficult. The agency’s labor contracts have long guaranteed no layoffs to the vast majority of its workers, and management agreed to a new no layoff-clause in a major union contract last May.

But now, faced with what postal officials call “the equivalent of Chapter 11 bankruptcy,” the agency is asking Congress to enact legislation that would overturn the job protections and let it lay off 120,000 workers in addition to trimming 100,000 jobs through attrition.
The USPS should be allowed to collapse and the private sector should be allowed to enter the first class mail delivery business. That said, a lay off of 120,000 government workers is a good start and not a bad thing. And it follows a trend of other lay offs in the government sector.

In other words, anyone who understands that the private sector is much more efficient than government, should be able to see that the current trend in layoffs in the government sector is a very positive thing and we should hope for even greater layoffs in this sector. It will make the economy much more efficient as these people find work in the private sector. Let's hope President Obama doesn't botch things up by making government make work projects that will result in these people ending up in new useless inefficient government jobs.

Markets clear, including labor markets. With a government hands-off policy, those laid off from government jobs will eventually find honest work in the private sector, which will then allow this country to really boom.


  1. Why is it that Post Office employees receive nearly 2 and half times the pension benefits than our military?! Could it be the impact of unions...

  2. I finally saw the APWU sponsored ad for the USPS yesterday.

  3. USPS is down to a mostly nuisance organization. On any given week, there are maybe 2-3 pieces of mail that actually mean anything. The vast majority of mail is just junk, and much of that junk is nuisance since it needs to be shredded.

    When I send mail, I rarely trust my mailbox (plus I usually don't have the mail ready before the daily run anyway), so I use the local Pakmail. USPS could deliver to the local Pakmail, and I could check it once per week, and it would probably work fine.

    Just based on actual, useful service performed, having a guy drive from house-to-house every day to deliver junk that is not only unwanted by the "customer," but often inconveniences the "customer" with the added work of shredding for security is massively inefficient. It's typical of government "solutions."

  4. First off, postal workers aren’t going to get private sector jobs when they get laid off. They’re going on their near 2-year long unemployment benefits. So there will be no positive private sector job stimulation for at LEAST 2 years from these folks, even if (and that’s a BIG if) they could hold a private sector job that didn’t revolve around “you want fries with that?”

    Second, the Fed Gov uses the USPS as a kind of address tracking program for the entire country. States and counties will be hard pressed to keep up with “911 addressing” without actual mailboxes and postal addresses. I know, this would be a good thing for freedom lovers, a little anonymity, but the little county fascists will not tolerate it. “We MUST have mail services”, they’ll say.

    Let it fail, and let FedEx or UPS or Fred’s Discount Delivery pick up the slack, if there is any.

    Lysander Spooner would be proud.