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Thomas Sowell
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Kodak and the Post Office

Comment

The news that Eastman Kodak is preparing to file for bankruptcy, after being the leading photographic company in the world for more than a hundred years, truly marks the end of an era.

The skills required to use the cameras and chemicals required by the photography of the mid-19th century were far beyond those of most people — until a man named George Eastman created a company called Kodak, which made cameras that ordinary people could use.

It was Kodak's humble and affordable box Brownie that put photography on the map for millions of people, who just wanted to take simple pictures of family, friends and places they visited.

As the complicated photographic plates used by 19th century photographers gave way to film, Kodak became the leading film maker of the 20th century. But sales of film declined for the first time in 2000, and sales of digital cameras surpassed the sales of film cameras just 3 years later. Just as Kodak's technology made older modes of photography obsolete more than a hundred years ago, so the new technology of the digital age has left Kodak behind.

Great names of companies in other fields have likewise vanished as new technology brought new rivals to the forefront, or else made the whole product obsolete, as happened with typewriters, slide rules and other products now remembered only by an older generation. That is what happens in a market economy and we all benefit from it as consumers.

Unfortunately, that is not what happens in government. The post office is a classic example. Post offices were once even more important than Eastman Kodak, and for a longer time, as the mail provided vital communications linking people and organizations across thousands of miles. But, today, technology has moved even further beyond the post office than it has beyond Eastman Kodak.

The difference is that, although the Postal Service is technically a private business, its income doesn't cover all its costs — and taxpayers are on the hook for the difference.

Moreover, the government makes it illegal for anyone else to put anything into your mail box, even though you bought the mail box and it is your property.

That means you don't have the option to have some other private company deliver your mail.

In India, when private companies like Federal Express and United Parcel Service were allowed to deliver mail, the amount of mail delivered by that country's post offices was cut in half between 2000 and 2005.

What should be the fate of the Postal Service in the United States? In a sense, no one really knows. Nor is there any reason why they should.

The real answer to the question whether the Postal Service is worth what it is costing can be found only when various indirect government subsidies stop and when the government stops forbidding others from carrying the mail — if that ever happens.

If FedEx, UPS or someone else can carry the mail cheaper or better than the Postal Service, there is no reason why the public should not get the benefit of having their mail delivered cheaper or better.

Politics is the reason why no such test is likely any time soon. Various special interests currently benefit from the way the post office is run — and especially by the way government backing keeps it afloat.

Junk mail, for example, does not have to cover all its costs. You might be happy to get less junk mail if it had to pay a postage rate that covered the full cost of delivering it. But people who send junk mail would lobby Congress to stay on the gravy train.

So would people who live in remote areas, where the cost of delivering all mail is higher. But if people who decide to live in remote areas don't pay the costs that their decision imposes on the Postal Service, electric utilities and others, why should other people be forced to pay those costs?

A society in which some people make decisions, and other people are forced to pay the costs created by those decisions, is a society where a lot of decisions can be made despite their costs being greater than their benefits.

That is why the post office should have to face competition in the market, instead of lobbying politicians for government help. We cannot preserve everything that was once useful.

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com. To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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Comments

7 Comments | Post Comment
We can look to Germany for a model. The German post office was privatized in 1995, acquired the express delivery firm DHL (not vice versa), sold off most post office buildings and operates from counters in retail stores. It has no monopoly on residential mail delivery and is facing competition in Germany for that service from others. But thanks to EU regulations it has broken the monopoly of the Royal Mail and delivers some mail in the UK. It is not burdened by legacy pension and other obligations incurred before privatization, which are the responsibility of a German government entity. Impossible in the U.S.?
Comment: #1
Posted by: A Ross Johnson
Tue Jan 10, 2012 3:29 PM
You believe that people who live in remote areas should pay more for Postal Service and for Utilities. People who live in remote areas are the ones who produce your food. Ranching and Farming are high risk and really hard work. What you really should want is for Ranchers and Farmers to keep producing. The least they deserve is to have good Postal Service and good Utilities. They do NOT have Lobby power. i agree with your comments on Junk Mail.
Comment: #2
Posted by: Edie Boulter
Wed Jan 11, 2012 2:43 PM
Edie Boulter has already expressed what I wanted to say, although I was thinking in much stronger terms. Scorning those who have "chosen" to live somewhere other than in the city, in order to produce the food we all consume, is nothing short of arrogant and silly. Unless you're a vegetarian, Mr. Sowell, the folks who produce the meat you eat aren't going to be able to do it in the lofty surroundings of Stanford or in Central Park. The U. S. Congress, in all its wisdom, decided to cut the Postal Service loose from the government's purse strings--but kept for itself the decision-making function. Correct me if I'm wrong, but I believe that private corporations make their own business decisions, without having to ask our elected representatives for permission to take necessary steps. Wake up and smell the fertilizer, sir.
Comment: #3
Posted by: Diane Barentine
Wed Jan 11, 2012 2:56 PM
Sure, people who live in remote areas should pay more for Postal Service and for Utilities. Nobody forced them to live there. They have their advantages (nature, quiet, animals) but also the disadvantages (higher fees for postal services e.g.).
If they don't like to live remotely, then sell the land and farm and become a bank clerk at the city bank. Low postal fees!
Do you also want others to pay for his extra gasoline because he has to drive a longer way to Walmart?

Burg in Thailand
Comment: #4
Posted by: Burg
Fri Jan 13, 2012 5:00 AM
You forgot about the $120000.00 free mailing the 435 theives and liars in
congress get each each year in free mailing. (Franken priviliges) Bet your
last dollar they will not allow private mail services. They would loose their
free (junk/garbage) mailing and you can bet they won't give up any of their perks.
Comment: #5
Posted by: Edward Evans
Fri Jan 13, 2012 12:14 PM
Saturday, January 14, 2012
Professor Sowell: I do not think the USPS (U.S. Postal Service) is being treated fairly by our government. It is required to pay the government about $5.5 billion each year to pre-fund its retirement pension fund. But the government does not allow the USPS to charge a survival wage for the majority of the mail it delivers which is called NONPROFIT mail. First class postage is 44 cents for one ounce & 64 cents for up to 2.0 ounces. The USPS is paid 5 cents for the same weights of Nonprofit mail. 5 cents to deliver a letter was the cost of living for the USPS to make enough money in 1967. In january 1968 postage was raised to 6 cents. 43 years ago the USPS made more money to deliver a first class letter than it is paid in 2012 to deliver a nonprofit piece of mail. Do you understand the USPS is not allowed to receive a survival wage for the work it is doing? How in the world do you think the UPS & Fed Ex could exist with payments or wages like this?
Joe Treovrs in Hercules, CA
Comment: #6
Posted by: Joe Trevors
Sat Jan 14, 2012 12:27 AM
The USPS has been more about hiring minorities and vets than about hiring quality candidates. It is full of "cronyism" and seniority levels that deprive useful changes that could modernize and provide efficiencies that would further their overall mission.
Comment: #7
Posted by: Dean Cripe
Sun Jan 15, 2012 10:19 AM
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