- Advances in Regulatory Economics series
Edited by Michael A. Crew, Paul R. Kleindofer and James I. Campbell Jr
Chapter 8: Reform of the United States Postal Service: An Unfinished Task
8. Reform of the United States Postal Service: an unﬁnished task Michael A. Crew† and Paul R. Kleindorfer‡ 1. INTRODUCTION: PROBLEMS FACING THE UNITED STATES POSTAL SERVICE The United States Postal Service (USPS) faces substantial long-term challenges. Its traditional markets are declining, and its ability to reduce costs is limited by its organization structure. Many other countries have experienced similar problems with their postal services. Some, like Sweden and New Zealand, have attempted to address them through ‘commercialization’, a process of restructuring that retains ownership by the government but introduces modern corporate accounting, management and labor compensation, marketing, employment, capital investment and ﬁnancial practices. Germany, the Netherlands and Austria have gone beyond commercialization, privatizing their postal system. The evidence from abroad suggests that both commercialization and privatization have tended to generate economic beneﬁts, creating more ﬂexible and eﬃcient postal delivery systems and thereby typically reducing prices to large mailers (Table 8.1). The United States is now a surprising outlier among advanced countries in failing to undertake signiﬁcant structural reform of its postal service. The Postal Accountability and Enhancement Act of 2006 (HR 6407) (PAEA) takes very modest steps by the standards of other countries embarking on postal reform toward commercializing USPS. Whether they will be beneﬁcial and address the problems facing USPS is far from clear. More likely, the solution to these problems is to be found in privatization for three reasons. First, although USPS accounts for roughly a third of federal civilian employment, there...
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