'Cause I Said So…

A Change of Vision Needed At The USPS

Posted in Bureaucracy, Business, Finance, Free Markets, Government, Regulation by kevinsoberg on August 9, 2011

Once again, we’re hearing about problems at the United States Postal Service. The Postal Service is still having difficulty staying profitable delivering the mail. The majority of items delivered by the service has changed over its history from individual letters, to bills, to bulk mail advertising. However, the change in the Post Service’s customers has not been reflected in the way the Service operates.

There has been talk of ending Saturday home delivery of mail. It would be an immediate admission to what is no longer possible, but it does not go near far enough. It does not sufficiently increase efficiencies. It is merely a stop-gap measure to stem the bleeding associated with the failed current business model. What is really needed is a change in vision. What will the Postal Service of tomorrow be? Will it be a shrinking shade of its former self, or will it be a lean efficient money-making machine?

Any company operating in the private sector knows it must meet the needs of its customers, or risk going out of business. So, private companies continually update their business models to meet the changing needs of their customers. The USPS has not done this. It has lost sight of who its customers are and what they need. It no longer has a cogent business model.

Now, the US Postal Service already operates as two separate businesses with differing modes of operation. The Postal Service everyone thinks of is the traditional post office, with its service of General Delivery of letters and packages to all addresses in the country. The other, more recent, business done by the Postal Service is Express Delivery, the high-speed delivery of letters and packages. Most people don’t realize these two businesses operate simultaneously, but quite differently.

The business of General Delivery is a constitutionally mandated function of the federal government. This function was meant to guarantee communication across all of the states from within and without the US. To affect this, the Postal Service gives regular service, delivery and pick-up, to all US addresses, and charges rates which subsidize the costs of less profitable areas of operation. Even those areas with low populations have equal access to this form of communication, according to its governmental function. This service is operated as a virtual monopoly.

The Express Delivery business operated by the USPS has a completely different business model. Instead of offering daily service to all US addresses, service is strictly scheduled according to the need for deliveries. Pick-up service is by appointment or according to schedule from specified locations. The rates charged may be based on the cost of the individual service, though the USPS does advertise flat rates based upon the speed of service. It operates in a highly competitive field, with companies such as FedEx and UPS.

Obvious differences aside, the main difference between these business models is who is seen as the customer. Express Delivery correctly perceives the senders, those charged the fees, as the customers, while General Delivery incorrectly sees the receivers, those at the addresses, as the customers. How else could they justify daily service, regardless of need, to every address? Would you return each day to a customer making little or no use of your service, or would you instead focus on those paying for your service?

So, the obvious solution to General Delivery’s unprofitability is to end daily service to every address.

Instead of seeing the physical address visited each day as the customer, the service should focus on the people paying for delivery. The vast majority of mail is generated by companies and organizations sending large quantities of bills and advertising. They should be the daily focus of the Service’s attention. Luckily, those generating the majority of mail already have service based upon volume, either by scheduling pick-up or by dropping off their mail.

The service of mail pick-up and delivery to all other US addresses should remain regularized, but should be reduced to three times per week. The number of mail carriers would be reduced by almost half (sorry, guys). The miles driven each day would be reduced by half (without need of green technology). This one simple change would almost double the efficiency of the remaining carriers.

The actual customers of the service, those paying, could still receive daily service, while homes would still be serviced regularly. It would reduce how often people had to check their mail. The biggest inconvenience would be a one day delay in delivery of an item having no guaranteed delivery date. Those individuals who demand daily delivery of their mail may purchase Post Office Boxes for the privilege.

In the old days, it mattered if you received your mail on a given day, like the 1st or 15th of the month. Today, accounts are deposited electronically. All you may receive in the mail is a statement. If you pay your bills by mail upon receipt, you are unaffected. If you wait until the last-minute to pay, do it electronically or in person. If you need a letter delivered in town tomorrow, send it overnight or by courier.

The greater efficiencies gained by the reduction in unnecessary deliveries and its concurrent staffing will reduce the cost of General Delivery. The previously experienced cycles of increased postal rates followed by reduced traffic will end. The costs associated with an ever-growing population making ever less use of the current home pick-up service of mail will be lowered. It will allow the public to continue enjoying the regular home delivery of mail, subsidized by the Postal Service’s real customers.

Regarding Ezra Klein’s Charge of Extremism Against Rand Paul

Posted in Civil Rights, Free Markets, Government, History, Libertarianism, Racism by kevinsoberg on May 27, 2010

[Note: This is the third of three posts concerning Rand Paul and his post-victory foray into the land of the MSM. Let me tell you up front, I’m not a full-blown Libertarian. I do tend toward Libertarian thought, but I am most definitely very Conservative. I’m not necessarily a huge supporter of Rand Paul, and I don’t live in Kentucky. I say “Give the people what they want.” They seem to want him. Also, I am not a supporter of his father. He sometimes borders on “tin-foil hat” land (if you know what I mean?), and I don’t buy his argument about why he takes earmarks. However, I cannot stand the way Rand Paul has been attacked for taking a thoughtful and principled stand, and the way in which his views have twisted to mean something completely different from what they actually are. I felt that I had to say something.  So, here it goes…]

Ezra Klein jumped into the attack on Rand Paul last Thursday with his Washington Post article “Rand Paul may not be a Racist, but he is an Extremist” (http://tinyurl.com/28qhscb). In it Klein argued that Libertarian belief in minimal government interference in private matters is “extreme”; therefore, Paul is an extremist. But on a lighter note Klein says, “I take Paul at his word that he’s not a racist.” Well, that’s mighty big of you Mr. Klein. Hey, what say we do the same for Mr. Klein if someone makes a baseless charge against him, too?

I’ll start with Mr. Klein’s premise about Libertarian “extremism”. The part of Libertarian ideology which Mr. Klein can’t seem to wrap his mind around is the concept that “government cannot fix every problem.” So, if there are people behaving badly (but not criminally), as a good person, you act in personal ways to remedy the situation. If a business owner won’t trade with others for racist reasons, then a good person won’t trade with him. Yes, some may continue to do business with that person, but not everyone. His racism results in lost sales.

These lost sales create an opportunity for another to fill that part of the market left un-served by the racist’s self-defeating behavior. The good people and the discriminated against will frequent the new business, which will have a thankful and loyal client base. Other businesses will see the potential profits lost by this abhorrent behavior and may change their own behavior, if only to prevent another from entering their market. In either case, the market will provide the solution.

Yes, this takes some time, but nothing good happens overnight. That’s not the Statist philosophy, though. To the Statist, any problem can be rectified immediately by government fiat. To them government action is the quickest and most efficient way to achieve the desired results. Racist businesses – pass a law. “Unequal” housing – pass a law. Below national average wages – pass a law.

Instead of the “invisible hand” of the market, Mr. Klein and his ilk wish to use the “iron hand” of government to solve these problems. What they don’t seem to understand is that peoples’ attitudes don’t change with the pound of a gavel or the stroke of a pen. Mechanisms must be created and bureaucracies employed to police the government action created by that gavel or pen. People must fear their government for those actions to occur. Instead of the market having people make these decisions of their own accord, seeing them as a matter of self-interest, the government would have the people act as a matter of self-defense.

The scary part is that a person could be considered racist simply because he doesn’t believe the government should make stupidity a crime. Is it racism to believe in freedom of speech, even for racists? If it’s not, then explain how it’s racist to believe another may do as he wishes with his property. If a person chooses to make less money due to lost sales or taking a lower asking price because he is stupid enough to forgo a sale to another, for whatever reason, then it’s his life, his liberty and his property. He may do as he wishes with it.

Yes, some with racist or sectarian concerns have made use of Libertarian arguments to try to prevent any change in their circumstances. These same people were those who used the levers of State power to forward their racist agenda in the era of Jim Crow. Just as Hitler used government power to pursue a racist program, Southern Democrats (and the Klan) used government to repress minorities. Regardless of methodology used to achieve it, racism was the main purpose of their agenda.

The concern of Libertarians is that government power is coercive. Not only that, once unleashed the power is pervasive and difficult to control or retract. That power may then be used by the less good or evil to pursue their own ends. Those expanding the power forget they may not always be in charge. They might want to think of how it would be to be on the receiving end of government power before allowing its expansion.

Klein’s misunderstanding of human behavior is a symptom of his Statist mindset. His understanding of “civil rights” doesn’t take into account the differences between the public and private spheres. His default position is that government must act to “remedy” perceived “wrongs”. He fails to recognize that in a free society most interactions are within the private sphere and voluntary; therefore, outside the jurisdiction of government.

Only the government or those acting on behalf of the government may violate “civil” rights, as they have to do exclusively with the “public” sphere. An individual acting exclusively within the “private” sphere is incapable of violating another person’s “civil” rights. One individual may wrong another privately, but only in ways actionable under criminal and tort laws, if they were to violate another’s life, liberty or property.

Traditionally, government has only intervened in criminal matters, as part of its police powers. Matters of tort law have been left to the individuals, with the government acting as a “neutral” third-party. Once the government begins “prosecuting” individuals for non-criminal “offenses”, it loses its “neutral” status and becomes an advocate. Does anyone really want government dictating private behavior? Who makes those decisions, and where does it stop?

So, to answer Mr. Klein’s question: Yes, Woolworth could have a segregated lunch counter. Then you embarrass the hell out of them and go eat somewhere else. Just as you don’t counter disagreeable speech by censorship but by open debate, you don’t counter disagreeable actions by government force but by positive action.

Love of Markets Not Always Love of Big Business

Posted in Business, Capitalism, Free Markets, Free Trade, Government, Leftism, Morality, Politicians, Politics by kevinsoberg on March 27, 2010

It is widely purported, by those on the Left and fellow-travelers in the major media, that when the “free market” and “capitalism” are defended, “big business” is actually being discussed. This is not necessarily the case. Most would expect me to say emphatically that it is not the case, but I believe in telling the truth. Like other words and phrases, the “free market”, “capitalism” and “big business” have had their meaning distorted. There are those more interested in furthering their own aims than they are the truth. In this case, these deceivers fall into two groups: those opposed to free markets, and those opposed to capitalism.

Many on the Right tend use “free markets” and “capitalism” interchangeably because one is thought to be essential for the other. They are wrong to do so. Capitalism is a system that primarily uses the “profit motive” to distribute goods and services throughout an economy. The idea of the “free market” is the belief that an individual has the right to conduct trade with any other individual without government interference. Now there are other economic systems which allow profits, but only capitalism can truly be married to “free markets.” However, capitalism can exist without “free markets.”

All economic systems produce goods and services. People must be fed, sheltered and clothed. These can be done either by individuals or by collective enterprises. The bigger the economy and the more complex the products produced, the larger these enterprises must become. Economies of scale and concentration of expertise are required for large-scale enterprises to supply those things necessary for a growing, progressing human population, regardless of system. In most economic systems these enterprises are called “big businesses“.

Now, who are those opposed to free markets? You may be surprised to find some of the biggest opponents are businesses. Seems counterintuitive doesn’t it? How can any business be against an open market? Well, the purpose of any business is to maximize shareholder value. If a business can do this by restricting competition, then that is what it will do, if possible. The managers of a business are not ideological, their priority is profit maximization. People in business believe in the profit motive; therefore, capitalism; just not necessarily the free market.

Another group opposed to free markets is politicians. Politicians in all parties seek ways to get, hold and expand their power. One method for this is to restrict markets. These restrictions are alterable in any number of ways and their expansion or adjustments are opportunities for influence peddling to interested persons. All those affected by the restrictions, positively or negatively, have a reason to seek the favor of politicians. These politicians can get campaign donations, under-the-table deals, promises of future jobs, etc. and most important to them, their ass kissed.

Politicians live to have people need them so that they can exert power over them. “Big Business” is the perfect foil for the politician. These businesses can be extorted for favors while simultaneously used as scapegoats for all that is wrong with the economy (national or local), with employment, with financial markets, with health care, with transportation, with energy policy, with the environment, etc. This behavior leads to further attempts by these businesses to influence the politician, sometimes preemptively, against stop targeting them.

Microsoft is the perfect example of this phenomenon. In 1990s, Microsoft had the vast majority of the PC operating system software market, but had almost no presence in Washington, DC. However, its competitors began spending money on lobbying efforts in DC in an attempt to get the government to turn its attention to this financial giant. As a result, Microsoft was targeted by the US government for anti-trust violations. In addition to having their product market restricted, Microsoft began spending vast sums on lobbyist and now has a large, permanent presence in DC to prevent future attacks on its business. The only winners were the politicians and their campaign contributors.

Another example is Altria (formerly Phillip Morris Companies Inc), the owner of the tobacco company Phillip Morris USA (PM), which manufactures the Marlboro brand of cigarettes. Marlboro is the largest selling brand of cigarettes in the US, resulting in PM being the biggest tobacco company. In the ‘90s PM began lobbying the US government for the Food & Drug Administration (FDA) to take control of the regulation of the tobacco industry. Tobacco and alcohol manufacturers were purposely excluded from the Pure Food and Drug Act (1908) which established the FDA. PM wanted the FDA to regulate tobacco, because it knew the resulting limitations on product marketing would help prevent competitors from eating into their market share and boost their profits. PM spent $101 million on lobbying from 1998 to 2004. President Obama signed the law changing regulatory authority in 2009. Once again, the winners were politicians and their contributors.

Those who believe in Free Market Capitalism have neither a love nor hate for “big business”. We have a love for freedom and for the consumer. Businesses exist to produce things consumers want at a profit. The consumers are protected by the competition of an open market, which prevents any one company from permanently monopolizing that market. Government should act as a disinterested third-party. It should police the market only for anti-competitive business practices resulting in actual damages to consumers. It should not prop up inferior competitors, or target companies whose only crime is being successful. Unnecessary government interference has a detrimental effect on the market and the consumers.

Finally, there are people on the Left who do not believe Capitalism is a “moral” economic system. They protest against the meetings of the World Trade Organization and G-10. They hope to turn public opinion against the system by “exposing” the worst abuses of “big business”. They have every right to do so, and, inadvertently, their exposes can actually strengthen the market. Most are too ignorant to realize free market capitalism is premised upon “perfect knowledge” and the more we learn of how some companies operate the better for the market. So, keep it up guys. Just tell the complete truth more often. OK?