Symposium 2011: Over the past few decades the Postal Service and Amtrak have racked up billions of dollars in losses. Should we privatize them?

Cartwright:  With regards to Amtrak, I’ll put that in the infrastructure discussion from above.  We need to modernize our railways and add high speed rails.  Once that’s done, we can talk about privatization.

 

For the Postal Service, here’s an idea.  Let’s break it up and turn it over to Wal-Mart and Target and UPS and FedEx.  UPS and FedEx can handle the home delivery, and there would be an extra charge for that; you simply put extra postage on it for the home delivery service.  You can drop off the mail at a local FedEx or UPS store or drop box or at Wal-Mart or Target.  Wal-Mart and Target will close the post offices and relocate them into their own stores.  It’s sort of like the old days when you got your mail at the general store or the drug store.  They get rid of a huge amount of costs that the USPS deals with now, and it’s convenient for millions of Americans who shop at Wal-Mart and Target to get their mail when they make their trip to the store.  I guarantee you that these private enterprises would make the USPS work more efficiently and make it profitable.

 

Here again, the Congress isn’t going to do anything.  Hell, they can’t close up a few postal facilities because they’re afraid of the backlash from their constituents.  Preservation of their position is more important than doing what needs to be done.

 

Sydney:  This seems to be a good idea. The only question is, who will buy businesses that are losing billions of dollars? Maybe we need to look at the reason why they are losing billions of dollars. I imagine the Postal Service is losing money because no one is sending mail anymore, or at least far less mail. I think we need to make sure that there is a Postal Service in some form because people aren’t going to stop writing letters or sending Christmas cards any time soon. A private company might work out how to make the service more efficient.

 

Amtrak is more difficult. Apparently people are using the service in record numbers but Amtrak is losing money on long distance routes because of high fuel and labor costs. An option would be to ditch these routes but that would annoy a lot of people. Part of the solution needs to be cheaper fuel, or greater efficiency. Selling 49% of the company might help offset losses in the short term. At the end of the day privatization might be inevitable.

 

Michigan:  Who is going to buy a business losing billions of dollars?  Train travel is just one step above bus travel—slow, expensive, and not comfortable.  Put passenger cars on our existing railroads and lease them the Amtrak right of ways.  The USPS, here again without major changes who can make money on this service?  Do we need mail delivered six days a week?  If people need this service, let them pay for it.  The price of stamps and parcel post is not going to cut it.  We may have to go back and make people pick up mail at the post office.

 

RMC:  I like the idea of privatizing both the Postal Service and Amtrak.  Unfortunately, I think that as private companies without backing from the government they would probably fail.  I’m not sure they could attract investors or capital sufficient to sustain themselves.

 

Unlike Conrail that the government busted up back in the 1990s, there’s no other passenger rail service that could take over Amtrak.  Amtrak has limited ridership given that the tracks only go certain places.  It’s not like a commercial air service that can land in thousands of locations here and abroad.  Amtrak is confined to its rail and it’s not really a fast method of travel.  They do have the high speed one from Washington to New York, but that’s about it.  For most people, it’s not a convenient way of travel in this day and age.  We’ve looked at different scenarios for a modern day rail service, and it’s pretty bleak.  There is likely a market for high speed rail in certain areas, but it’s very limited and the infrastructure cost to get it up and going is so tremendous that the financial return likely wouldn’t be there to support the investment.

 

The USPS is pretty unique as well.  UPS and FedEx could divide up the USPS but they’re pretty different operations.  I think they could be integrated and made to work but the fundamental problem is that the USPS was slow to respond to the changes brought about by the ability to do so much online.  The internet has really taken a lot of business away from the USPS.  I venture to say that most everyone here has paid some bills online at some point.  That directly takes away from the USPS revenues.  In addition, the USPS has been slow in cutting costs.  The Postmaster General seems to come up with potential closures each year but politics gets in the way of closing facilities.  No congressman or senator wants to be known for supporting the closure of a post office in their district or state, so we have places that have post offices that aren’t profitable.  If the USPS were privatized, these locations would close.  One good thing that has come about is the move to end Saturday service.  That should help some costs, but unfortunately, the letter carriers have a powerful union that gets in the way of the USPS’s ability to make tough but good decisions on lowering labor costs.

 

For a couple years now, we all have probably seen the online predictions that the USPS is a brand that is going to disappear in the next five years.  Part of me wants to say that this is true but I really just don’t see the government letting the USPS go under.  I mean, we bailed out GM on the ground that it was an American icon.  Surely, we won’t see the USPS go away.  No, they’ll keep doing their one cent price increases every year or two.  Why not just go ahead and make the cost of mailing a letter seventy-five cents or something.  Couple this with actual closures and layoffs and we’d have a profitable system. That’s what would happen if the system were privatized.

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