In the private sector, falling demand and cheap competition lead a business to conclude that it must find efficiencies, right-size, and adjust to survive. In the public sector, the same circumstances commonly lead officials to conclude just the opposite: raise prices.
Case in point: the U.S. Postal Service. Earlier this month, it announced plans to increase the price of a first-class stamp to 46 cents and raise the price of a postcard to 30 cents starting in January 2011. The proposed rate increases come as the agency faces a projected $7 billion shortfall for the next fiscal year.
Whether or not raising prices in a recessionary climate amid plummeting demand and in the Age of the Internet is a well-reasoned idea is yet to be seen-though I would strongly suggest it is not-but what can be said for certain is that the Post Office is in need of long-term solutions, like privatization, to help the agency solve its ongoing fiscal crises.
For some, the call to privatize the nation’s mail delivery service is unthinkable-after all, who would trust the “greedy” private sector with such an important task. But for others, the move to privatize the Post Office is commonsensical, as it has already proven a success in other countries, like Great Britain, where officials are “considering a 100 per cent privatization.” Profit, in this case at least, seems to be the right motivator for delivering the mail and offering a better product.
– Bill FixIntern, Center for Fiscal Policy