LP RELEASE: Privatize the Postal Service

March 26, 2002

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NEWS FROM THE LIBERTARIAN PARTY

2600 Virginia Avenue, NW, Suite 100

Washington DC 20037

World Wide Web: http://www.LP.org

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For additional information:

George Getz, Press Secretary

Phone: (202) 333-0008 Ext. 222

E-Mail: pressreleases@hq.LP.org

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Latest increase in stamp prices is proof

that it's time to privatize the Post Office

 

WASHINGTON, DC -- Instead of raising the price of first-class stamps to

37 cents, the federal government should lower mailing costs by opening

up the Postal Service to free-market competition, Libertarians say.

 

"It's time to stamp out the monopoly at the Postal Service, which costs

consumers billions of dollars," said Steve Dasbach, Libertarian Party

executive director. "The price of first-class mail will continue to

move in one direction -- up -- as long as it's a crime to compete with

this inefficient, government-created monopoly."

 

The price of a first-class stamp will rise to 37 cents from 34 cents in

June, once the plan announced on Friday by the Postal Rate Commission

goes into effect. The rate hike -- the third in 18 months -- will cost

consumers about $5.6 billion, according to the Direct Marketing

Association.

 

"The Postal Service claims it needs the rate hike to close an expected

deficit of $1.7 billion, and to offset the loss of business to so-

called competitors," said Dasbach. "But the truth is that the Postal

Service doesn't have any competitors in the delivery of first-class

mail -- and that's just the problem."

 

Federal law makes it illegal for FedEx, UPS, or any other private

company to provide first-class mail delivery. In addition, the quasi-

governmental agency is exempt from zoning laws, customs regulations,

and vehicle taxes that hinder private package-delivery companies, such

as FedEx and United Parcel Service.

 

"Imagine how much a Ford Explorer might cost if it were illegal for any

other automaker to produce an SUV," said Dasbach. "Or imagine how often

the price of milk or eggs would increase if only one grocery store was

allowed to sell them. How often can a business that has no competitors

raise its prices? As often as it wants -- which is exactly what the

Postal Service does."

 

Monopolies have no incentive to run an efficient operation, noted

Dasbach, because they can't be undercut by competitors.

 

As a result, productivity growth at the Postal Service over the past 30

years is just 11.1%, compared with 53.4% for all private companies,

according to the U.S. Department of Labor.

 

Even the Postal Service admits that it is woefully inefficient, said

Dasbach.

 

"For example, last year the agency announced that turning some air mail

deliveries over to FedEx would save $1 billion in air transportation

costs," he said. "That means FedEx can do the same job for less -- even

after paying the costs of taxes and regulations from which the Postal

Service is exempt."

 

And even former Post Office officials think it should be privatized,

said Dasbach.

 

"Former Postmaster General William J. Henderson said, 'I ran the Postal

Service. It should be privatized.' " he said. "When even the Postal

Service admits that its monopoly status is harmful to consumers, how

can anyone else disagree?"

 

Another byproduct of the Postal Service's monopoly status: Greed.

 

Last year the agency paid $197 million in bonuses to executives, even

though it ran a $199 million deficit. And it has forked over $900

million in bonuses over the past five years.

 

"Executives at private companies are rewarded when they succeed, but

postal bureaucrats are rewarded when they fail," said Dasbach. "With

this latest rate hike, the Postal Service will be rewarded for its

failures -- again.

 

"The only solution is to inject this ailing, inefficient government

monopoly with a healthy dose of competition," he said. "If the Postal

Service can prosper along with competition from FedEx, UPS, and other

private firms, let it do so. But if it can't, it's time for the federal

government to stop playing Postal Monopoly with the taxpayers' money."

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The Libertarian Party                                http://www.lp.org/

2600 Virginia Ave. NW, Suite 100                    voice: 202-333-0008

Washington DC 20037                                   fax: 202-333-0072

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