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To take advantage of network economies, the United States and other countries shield their postal services from competition in exchange for delivering mail to far-flung and poorer regions. Like transportation and communications networks that are often publicly owned or function as regulated utilities, a national service with standardized pricing promotes commerce and guards against the concentration of economic power.
Governments around the world have for centuries understood the benefits of postal monopolies (USPS 2020d). In addition to the competitive advantage the Postal Service has as an established network, it has a legal monopoly on mail delivery, shielding more lucrative delivery routes from competition to help it extend service to less populated and poorer areas, fulfilling its universal service obligation (USPS 2008b, 2020d). Since 1934, the Postal Service has also had a monopoly on accessing mailboxes, a monopoly that rival United Parcel Service (UPS) has lobbied to end (Sullivan 2019). Like road, rail, electricity, communications, and other networks that are often publicly owned or function as regulated utilities, a national service with standardized pricing promotes commerce and guards against the concentration of economic power.
The universal service obligation is a great equalizer. Though it costs more to transport letters and packages to and from far-flung and less populated areas, this difference is not reflected in the postage. You can mail a letter from Kotzebue, Alaska, to Homestead, Florida, with the same stamp you would use to mail it across the street in New York City. Regulated pricing and uniform service also help small businesses compete with large ones, fostering entrepreneurship and helping counter the concentration of economic power. Though companies can negotiate bulk discounts with the Postal Service, these are overseen by the Postal Regulatory Commission to guard against favoritism. Many services, such as Parcel Select Lightweight for parcels weighing under a pound, have a uniform price regardless of sender.
Postal banking is not an either-or proposition. It can be introduced incrementally and in partnership with other nonprofit financial institutions. Whatever the pros and cons of different approaches, shielding for-profit providers from competition should not factor into the discussion. The fact that the Postal Service may have a cost advantage over other providers should not matter as long as consumers, especially low-income consumers, benefit.
The real issue is whether the Postal Service should reflect egalitarian democratic values or profit-maximizing free market ideals. A functioning democracy serves as a counterweight to unequal resources even in a capitalist society, and voters may prefer a Postal Service with more equal pricing and services than would occur in an unfettered marketplace. In addition to the fact that a postal network does not operate in an environment where it is easy to assume that private-sector competition will lower prices and improve quality, there are many areas of society where most people prefer government or nonprofit providers over for-profit ones, including education and health care (Quilantan 2020; KFF 2020). Often these are areas where it is important that those providing the services be motivated by a sense of responsibility more than personal gain. Like public schools and hospitals, the Postal Service is a concrete reminder that while for-profit companies may make the best smartphones, civic-minded institutions are better suited for many other purposes, especially when public trust is paramount.
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