Lysander Spooner vs. The USPS

How State monopolies destroy innovation, hamper progress and burn capital

I gave a letter to the postman,
He put it in his sack.
Bright and early next morning,
He brought my letter back.

~ Return to Sender, lyrics by Otis Blackwell and Winfield Scott

This just in: The State still sucks at delivering the mail. But don’t worry, the worse the service gets, the more you’ll have to pay! 

According to the latest report from the Government Accountability Office, the USPS has amassed a whopping $87 billion in net losses from 2007 to 2020, along with $190 billion in additional debt and unfunded liabilities. Last quarter’s loss of $3 billion put the beleaguered (dis)service on track to notch its 15th consecutive billion-plus year in the red. Ouchie!

And it gets worse... a new paper by economic scholars Dr. Robert Shapiro and Isaac Yoder, from Sonecon, found that the USPS is leveraging its statutory monopoly on mail delivery to effectively subsidize its unregulated parcel delivery services... services that are already provided for by the free market.

An article in the Federal Times explains...

The Sonecon report notes the growing share of parcels compared to mail and that parcels now account for 39.0 percent of revenue and 60.9 percent of weight — meaning that unregulated parcels now occupy most of the delivery space postal vehicles. In fact, the postal service has announced a 10-year multi-billion dollar spending plan to buy new trucks that can accommodate its higher package volumes.

Yet, the USPS apportions only 8.8 percent share of its considerable overhead and shared costs to its unregulated package delivery services. By doing this, the postal service is able to make its unregulated services look more profitable while milking consumers to cover its mail services.

Effectively, the study suggests that USPS is artificially raising its monopoly costs while underpricing its unregulated services, which compete against couriers, FedEx, DHL, UPS and other package delivery services. Leveraging the monopoly to cover its unregulated services is wrong and not legal.

Such cheery news comes just weeks after the USPS announced it would be raising the price of its postage and shipping rates... just in time for the holidays. Oh, and they’re meanwhile lobbying both the House and the Senate for billions in financial bailouts, bailouts that will eventually fall to the American taxpayer to fund.

Meanwhile, as the USPS was busily shoveling (your) money into the great furnace of government-enabled ineptitude, its service was deteriorating to the point of being almost unusable. According to the Federal Times article, “single-piece First-Class Mail met its delivery commitment 93.5 percent of the time in 2009 but fell to 85.9 percent for the second quarter of 2021. Similarly, for its three to five day commitments, single-piece First-Class Mail met its delivery target 90.8 percent of the time [in 2009], but that fell to 57.9 percent for the second-quarter of 2021.”

(Taxpayer-subsidized package delivery, however, improved slightly... from 73.4 percent to 79.5 percent on time delivery.) 

How is it, you may fairly be wondering, that the USPS enjoys a “statutory monopoly” on non-urgent First Class Mail, including the exclusive right to put mail in private mailboxes, yet it bleeds money like no privately-owned business ever would…or even could? And that it has the gall to beg for handouts... from the very customers who are forced to overpay for its substandard “services” in the first instance?

American individualist anarchist, staunch neo-abolitionist and proud owner of one of history’s coolest beards, Lysander Spooner, thought he knew the answer to this question ~150 years ago. Put simply: It’s the government, stupid!

As now, postal rates were notoriously high during the 1840s, a direct result, inferred Spooner, of the USPS’s aforementioned monopoly status. Why charge less when there is no competition? Nobody’s going to undercut you…at any price. Similarly, why bother to offer better service? Nobody’s going to siphon off your customers. You’re the only game in town!

In response to the predictably outrageous rates and abysmal service, Spooner set about opening his American Letter Mail Company. He argued that the constitution (which he elsewhere referred to as the Constitution of No Authority, owing to its lack of implicit consent on the part of the governed), granted the state powers to establish mail…but not to exclude others from entering the marketplace too.

“The power given to Congress, is simply ‘to establish post-offices and post roads’ of their own, not to forbid similar establishments by the States or people,” wrote Spooner in his 1844 pamphlet, The Unconstitutionality of the Laws of Congress, prohibiting Private Mails.

Pressing on the issue of unnatural, coercive monopolies, Spooner continued…

“The idea that the business of carrying letters is, in its nature, a unit, or monopoly, is derived from the practice of arbitrary governments, who have either made the business a monopoly in the hands of the government, or granted it as a monopoly to individuals. There is nothing in the nature of the business itself, any more than in the business of transporting passengers and merchandise, that should make it a monopoly, either in the hands of the government or of individuals.”

Spooner’s pamphlet was published the same year his American Letter Mail Company went into business. The company had offices in Baltimore, Philadelphia and New York among other cities.

Of course, Spooner’s analysis of the market for mail wasn’t restricted solely to ethical grounds. He saw what all astute entrepreneurs see when they decide to go into business…an opportunity to profit, in this case born by the dismal service and high prices commanded by the USPS, then as now. The market — defined as the voluntary individuals acting within it — was crying out for a competitive alternative to the USPS. And Spooner gave it to them.

His mail company significantly reduced the price of stamps, undercutting the government’s 12-cent standard, and even offered free local delivery on some routes. Hooray for faster, cheaper mail, right?

Needless to say, governments aren’t typically fond of competition. It’s bad for “business,” they say, without the slightest hint of irony. That’s why it maintains and enforces a self-granted monopoly on things like counterfeiting and levying taxes and putting people in cages. (Don’t believe us? Try inking your own dollars... or kidnapping your neighbor because he didn’t hand you a portion of his annual income.) The case of Spooner vs. the USPS was no different and, after enduring years of fines and state-sponsored assaults on his enterprise, Spooner was finally forced out of business in 1851.

But the story of Lysander Spooner and his American Letter Mail Company is not entirely a sad one.  Through challenging the “statist-quo,” Spooner’s company proved what many at the time already knew: that the government is no match for private enterprise when it came to offering competitive prices for goods and services through its spontaneous ability to read and respond to the real world demands of the market. (Interestingly enough, the USPS actually ended up offering a 3-cent stamp in direct response to the challenge from the American Letter Mail Company. As with the current shenanigans, it was subsidized through government involvement... and was soon retracted after Spooner was out of the way.)

Something of a man before his time, embodying the true and individualist American spirit, Lysander Spooner dared question unnatural authority, rather than simply accepting the limits it forever seeks to impose on us. 

So the next time someone trots out that weary old trope, “Yes, but who would provide the [insert pet, state-sponsored service here] if not the government?” you can simply answer them, “Individuals would, my good sir…individuals, just like Lysander Spooner.”

Cheers,

Joel Bowman
October 2021 ~ Buenos Aires, Argentina