Policy Documents

Privatizing the U.S. Postal Service!

Michael Crew and Paul Kleindorfer –
January 1, 2000

In testimony before the House of Representatives Subcommittee on Postal Service on H.R. 22 we argued that the proposal for a form of price cap regulation was unlikely to yield significant benefits as long as the United States Postal Service remained a pubic enterprise. Over a year has passed and H.R. 22 has been revised. However, the Postal Service appears no closer to privatization. The purpose of this paper is to restate and expand the arguments for privatization that we made in the hearings and to examine some scenarios for the operation of a privatized Postal Service. In section one we provide a brief discussion of the current state of postal service, including developments in other countries and why change is required. In section two we examine why privatization should be an integral part of postal reform. In section three we will sketch our views about the direction that privatization the United State Postal Service (USPS) should take. For some our proposals will not go far enough, since they retain the regulated monopoly in modified form. Section four is by way of concluding discussion.