How to save the U.S. postal system - AEI scholar Rick Geddes explains

"The U.S. Postal Service [has]…lost over $1 billion in each of the past six months, and over $12 billion since 2007. And the USPS is likely to default on a $5.5 billion payment due to the Treasury on August 1st.  The reason?  Congress is trying to act as a board of directors…It doesn't have to be like this. If Congress grants the Postal Service freedom to operate like a business…the USPS will be able to change its business model and delivery network, allowing it to adjust to a new communications marketplace." - Rick Geddes, AEI

In this just-published piece, American Enterprise Institute (AEI) postal reform expert Rick Geddes explains that Congress must take these steps to save the United State Postal Service.

Among his key points:

  • The rise of email and the lower volumes of mail than in years past are not an insurmountable barrier to viability.  The U.S. still sends more mail per capita than other developed countries that have commercially viable postal services. 
  • The USPS should be privatized and held to the standards of corporate law. This would include creating a board of directors with explicit fiduciary duties to shareholders and creating shares, even if they are first held by the government.
  • USPS management should be given the freedom to modernize and curtail its delivery network for a new communications marketplace. The UK's Royal Mail has cut costs by closing the vast majority of their post offices, as has Germany. Each service is now financially viable. The USPS needs similar flexibility.

 

Rick Geddes is a visiting scholar at AEI.  He can be reached through assistant [email protected] (202.862.7197).

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About the Author

 

R. Richard
Geddes
  • Rick Geddes is associate professor in the Department of Policy Analysis and Management at Cornell University. His research fields include private infrastructure investment through public-private partnerships, postal service policy, corporate governance, women's property rights, and antitrust policy. He is a Research Associate at the Mineta Transportation Institute, and a visiting scholar at the American Enterprise Institute. He was a Fulbright Senior Scholar at Australian National University in Canberra in the fall of 2009, and a Visiting Researcher at the Australian Government's Productivity Commission in the spring of 2010. His research focused on Australian public-private partnerships in both positions. Geddes teaches courses at Cornell on corporate governance and the regulation of industry.

    In addition to his teaching and research at Cornell, Geddes served as a commissioner on the National Surface Transportation Policy and Revenue Study Commission, which submitted its report to Congress in January 2008. He has held positions as a senior staff economist on the President's Council of Economic Advisers, Visiting Faculty Fellow at Yale Law School, and National Fellow at the Hoover Institution at Stanford University.

    In 2008, Geddes received the Kappa Omicron Nu/Human Ecology Alumni Association Student Advising Award. His published work has appeared in the American Economic Review, the Journal of Regulatory Economics, the Encyclopedia of Law and Economics, the Journal of Legal Studies, the Journal of Law, Economics, and Organization, the Journal of Law and Economics, the Journal of Law, Economics, and Policy, and Managerial and Decision Economics, among others.

  • Email: [email protected]

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