An Untouchable Monopoly: The United States Postal Service
By Sean Turner (05/23/03)
In 1998, the U.S. Justice Department filed an antitrust lawsuit against Microsoft, maintaining that the world's largest software maker held an illegal monopoly and stifled competition. The result was that Microsoft was found to hold monopoly power, and used it to harm competitors. This begs the ensuing question, "Couldn't then the Justice Department file a lawsuit against the Unites States Federal Government for its blatant monopoly status in postal delivery?"
The first official notice of a postal service appeared in the colonies in 1639 to handle the correspondence between the colonists and England, and among the other colonies. The establishment of a central postal organization in the colonies came after 1691 when Thomas Neale received a 21-year grant from the British Crown for a North American postal service. In 1789, following the adoption of the U.S. Constitution, the office of the Postmaster General was created, having at the time, only 75 post offices, and staff totaling just over 30 people including the Postmaster General.
Today, the United States Postal Service employs nearly 800,000 workers (mostly unionized), in roughly 38,000 post offices, delivering 200 billion pieces of mail annually. Its annual revenues of more than $65 billion would rank it number 11 among the Fortune 500 companies. Nevertheless, it is not its sheer size, volume, or revenues through which it earns its monopoly status. Rather, it is the unfair advantages it enjoys that private companies do not.
For instance, it pays no corporate income tax, no state or local property tax, no business or professional licensing tax and no business franchise fees. It can borrow from the Treasury at below-market rates, and it pays no dividends to shareholders. It is exempt from zoning, customs, and tax laws by which its private-sector competitors must abide. By law, it maintains exclusive rights to deliver first-class mail, and through laws known as Private Express Statutes, no private entity is allowed to deliver a package or envelope for less than $3 or twice the cost of a first class letter.
This taxpayer-funded, legally protected enterprise exemplifies the very definition of a monopoly, and yet it has somehow survived numerous attempts to dismantle it. It has become so brazenly abusive in its monopolistic status, that in 1997, it attempted to extend its reach to achieve legislation that would have granted it authority to purchase '' such other obligations or securities as it deems appropriate, if such investment is closely related to Postal Service operations as determined by . . . [its] Board of Governors.''
The rise of technology, from faxes to email to e-commerce, and the success of competitors like UPS and FedEx, have relegated the Constitutional provision of post offices by the Federal government to antiquity. To allow the existence of the United States Postal Service in its current form is inimical to the principles upon which this nation was founded. The time for eliminating this monopoly is long overdue. The laws that protect the USPS must be repealed, letting free market forces (i.e., the will of the people) determine its fate.
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