The USPS and the Myth of Privatization

One of the most common arguments against government-sponsored companies or programs such as the USPS is that they are insufficient, expensive, and cost hard-working taxpayers billions of dollars. This is a common line of reasoning used amongst conservatives and libertarians alike to advocate against proposals such Medicare For All and other programs that would be run primarily by the government. The simple conclusion is that if the government can not run its previous or existing programs well, it would be disastrous to introduce new ones.

The truth is that there are many good and bad examples of government-run facilities, and there are good and bad examples for privatized industries as well. However, the USPS just happens to be a great example of an effective, government-run service that is also extremely popular amongst Americans.

Unlike most government programs, the USPS is self-sufficient, which means tax-payers do not pay a nickel in taxes to them. When you go to the USPS, you pay a fee for the package or mail you are sending just like you would at any ordinary business, and it is from that revenue that the post office operates on.

This does not mean that government programs that are funded entirely by taxes are bad. Many government programs such as Social Security are incredibly popular, with only 6% of Americans advocating for cuts in Social Security benefits.

So why so much hate for the USPS and other government programs?

A United States Postal worker delivering mail during the COVID-19 pandemic.
(AP Photo/Paul Sancya)

There has been a vicious campaign against “government” that began in the 1980s following President Ronald Reagan’s election. Catastrophic levels of deregulations and tax cuts were introduced with the facade that it would deliver economic prosperity. In reality, these policies only benefited the top 1% of society with little no benefits for ordinary Americans. Under Reagan’s presidency, funds for critical social programs such as mental health facilities were dried up, inequality exploded, labor unions were crushed, and the national debt tripled.

The justification for all of these actions was that government was the problem, and that privatization was the solution to all of our problems. This deliberately misleading claim still leads many to believe that the government is at fault for all of our economic problems, when in reality it was the very deregulation and tax cuts that have enabled corporations and financial firms to participate in risky finances at the cost of the people.

This is not to say that all private business is terrible. With proper regulations and strong workers’ rights, privatization can be extremely beneficial in certain industries. However, in industries where competition is nonexistent (natural monopolies), such as in energy transmission, it is often catastrophic. In California, the privately-owned energy provider, PG&E, deferred necessary maintenance and repairs for years, which led to catastrophic blackouts and fires throughout the state, all while spending millions on lobbying and securing record profits for its shareholders and executives.

What we see today with the USPS is merely a continuation of the decades-long strategy of blaming the government — the only entity the people have direct control over — for crises usually caused by the private sector. The fact that many of the USPS’ recent budgetary problems have been attributed to the fact that they barely control their own (very affordable) prices and are forced to pre-fund pensions over a 75-year horizon does not fit the narrative of those who seek to privatize industries for their own behalf.

Mail flow has been limited following the removal of hundreds of mail sorting machines by Postmaster General DeJoy.

The current USPS crisis can best be summed up in the words of popular linguistics professor and political dissent Noam Chomsky, who described the standard privatization technique: “Defund”, then when “people get angry”, hand it over to “private capital”.

About the author

Damjan Nastic

Hello, and welcome to my blog! I'm Damjan Nastic, an economics major aspiring to encourage democratic participation amongst my fellow students through this page. I hope my page can offer a different perspective on pressing issues throughout the world.

If you have any questions, please feel free to email me at [email protected]!

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