The agency is $15 billion in debt, and its inability to lay off workers hints at a problem that may be the left's undoing
The US Postal Service is $15 billion in debt, its revenue is down, and its long term outlook is dismal: every year, Americans communicate more via digital technology and less by sending paper around the country. On the verge of collapse, is the agency laying off employees and cutting compensation? Quite the contrary. As reported by Devin Leonard in a lengthy Businessweek feature, salaries are rising and most USPS workers enjoy contracts specifying that they cannot be laid off, regardless of whether or not their employer can afford them. "In March, USPS reached a four-and-a-half-year agreement with the 250,000-member American Postal Workers Union," Leonard writes. "The pact extends the no-layoff provision and provides a 3.5 percent raise for APWU members over the period of the contract, along with seven upcapped cost-of-living increases."
An expensive but inflexible labor force is a significant drag on USPS, as on any organization. It is also another example of the public employee problem that threatens the future of the whole progressive project. A basic leftist goal is to persuade the American people that Ronald Reagan was wrong -- that given the proper resources, government can bring about solutions and isn't itself the problem. Various think tank fellows, Democratic strategists, and public employee unions are working to make that case. In the long run, however, strategic communication matters less than results. So long as public employees are highly paid, enjoy benefits more lavish than their private sector analogues, and work under contracts that hamstring the ability of their agencies to perform and adapt, Americans will eventually conclude that public sector investments are folly.
Mistrust of government can go too far. In California, we deregulated energy without sufficient care and oversight, and got rolling blackouts for our trouble. As the New York Times reported earlier this month, private prisons aren't necessarily cheaper to operate. Matt Yglesias suggests this general lesson:
The genius of the real private economy is that firms that are really poorly run go out of business. It's not that some magic private sector fairy dust makes the firms all be runs soundly. Lots of bad businesses are out there. But they tend to lose money and close. Meanwhile, well-run firms tend to earn profits and expand. The public sector doesn't have this feature. Just because a public agency is inept is no guarantee that it will go out of business. Resources are allocating according to political clout rather than any criteria of merit. It's a problem. But it's not a problem that "privatizing" public services actually solves. There's no magic private sector fairy dust.
There is a sensible point in there. What I want to tell you, however, is that there is magic private sector fairy dust. It's called the profit motive. It doesn't shimmer like glitter. It isn't a cure all, or even an unalloyed good: during wars, for example, private contractors with an eye on profit margins are incentivized to cut ethical corners even as they're entrusted to wield power over life and death.
But a desire to maximize profits and an aversion to losing money leads to certain efficiencies that ought to be exploited in less fraught enterprises. At UPS and FedEx, management has a powerful incentive to hold down overall labor costs, and to preserve the flexibility and adaptability of the respective companies. When USPS negotiates with the any of the four unions that represent its employees, the dynamic is completely different: management has fewer incentives to hold down costs, even as labor exercises substantially more clout due to is political influence.