Sunday, November 14, 2010

Not Necessarily Post Awful

The following is a white paper of The Jacksonian Party.

Brought to my attention at Hot Air is the ongoing problem of the US  Postal Service operating in the red... well its been doing that for ages, really, but now its really starting to look pretty awful. So what is the answer to this ongoing sinkhole of incompetence caused by over-unionization and the federal monopoly on creating this service?

Well the US Constitution is pretty clear on the subject in Article I, Section 8 with the powers of Congress:

To establish Post Offices and post Roads;

This is a sovereign power held by the federal government, to create Post Offices and post Roads.  This was a big deal during the time of the Colonies as getting mail from town to town meant spreading the word of what was going on not just during the Revolution but before and after it.  Much of the discussion during the Framing of the Constitution was done via printed messages in papers that had to be carried between towns as part of a uniform service so that the conversation, in public, could continue.

The source of this being put in was Ben Franklin who, it must be remembered, ran his own post office service and he would be the first Postmaster of the Nation in 1775.  The US Post Office pre-dates the US Constitution, Articles of Confederation and the Declaration of Independence, so it is, in some ways, the founding office of the Nation as a whole.  Thus the importance of the Postal Service was one that was considered prime as, without it, there would have been less communication between the Colonies and the States and our Nation might even have failed without such good movement of mail between individuals.

Thus the power grant to the sovereign via the Constitution is a natural one as it is important for a free people to be able to communicate with each other.  Yet the basis for the postal system started out in private hands, those of Ben Franklin.  This is a monopoly power grant, yes, but does it naturally follow that it must be a monopoly service?  To answer that question it is necessary to step forward a few decades to another monopoly service that was created due to the monopoly power grant of the federal government during the Second National Bank Veto.

Congress has the ability to create services based on its powers, and the National Bank system was seen as becoming corrupt, crony and allowing for foreign interests to have indirect power of the US economy.  Over time those directing the system were seen as having more interest in running a corrupt system, with paybacks and guaranteed payout for holding stock and interest in the company, than they had in looking after the financial interests of the economy and seeing that it was a good service to all of the people.

Any similarities between this and the union run and captive USPS is purely intentional.  Or the modern day equivalent of the National Bank, which is the Federal Reserve.

Thus stepping back to 1832 and the National Bank we must keep in mind that President Jackson was speaking about a voluntarily created banking system made via a power grant from Congress, not a mandatory power requirement from the Constitution.  Yes, this means the Federal Reserve is a voluntarily made organization that comes from a voluntary power grant from Congress to get its service.  The USPS is created via a mandatory power grant to create Post Offices and post Roads to get postal service.  Now on to a few pieces of the Bank Veto Message (Source: The Avalon Project):

But this act does not permit competition in the purchase of this monopoly. It seems to be predicated on the erroneous idea that the present stockholders have a prescriptive right not only to the favor but to the bounty of Government. It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people from competition in the purchase of this monopoly and dispose of it for many millions less than it is worth. This seems the less excusable because some of our citizens not now stockholders petitioned that the door of competition might be opened, and offered to take a charter on terms much more favorable to the Government and country.


If Congress possessed the power to establish one bank, they had power to establish more than one if in their opinion two or more banks had been " necessary " to facilitate the execution of the powers delegated to them in the Constitution. If they possessed the power to establish a second bank, it was a power derived from the Constitution to be exercised from time to time, and at any time when the interests of the country or the emergencies of the Government might make it expedient. It was possessed by one Congress as well as another, and by all Congresses alike, and alike at every session. But the Congress of 1816 have taken it away from their successors for twenty years, and the Congress of 1832 proposes to abolish it for fifteen years more. It can not be "necessary" or "proper" for Congress to barter away or divest themselves of any of the powers-vested in them by the Constitution to be exercised for the public good. It is not " necessary " to the efficiency of the bank, nor is it "proper'' in relation to themselves and their successors. They may properly use the discretion vested in them, but they may not limit the discretion of their successors. This restriction on themselves and grant of a monopoly to the bank is therefore unconstitutional.

In another point of view this provision is a palpable attempt to amend the Constitution by an act of legislation. The Constitution declares that "the Congress shall have power to exercise exclusive legislation in all cases whatsoever" over the District of Columbia. Its constitutional power, therefore, to establish banks in the District of Columbia and increase their capital at will is unlimited and uncontrollable by any other power than that which gave authority to the Constitution. Yet this act declares that Congress shall not increase the capital of existing banks, nor create other banks with capitals exceeding in the whole $6,000,000. The Constitution declares that Congress shall have power to exercise exclusive legislation over this District "in all cases whatsoever," and this act declares they shall not. Which is the supreme law of the land? This provision can not be "necessary" or "proper" or constitutional unless the absurdity be admitted that whenever it be "necessary and proper " in the opinion of Congress they have a right to barter away one portion of the powers vested in them by the Constitution as a means of executing the rest.

On two subjects only does the Constitution recognize in Congress the power to grant exclusive privileges or monopolies. It declares that "Congress shall have power to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Out of this express delegation of power have grown our laws of patents and copyrights. As the Constitution expressly delegates to Congress the power to grant exclusive privileges in these cases as the means of executing the substantive power " to promote the progress of science and useful arts," it is consistent with the fair rules of construction to conclude that such a power was not intended to be granted as a means of accomplishing any other end. On every other subject which comes within the scope of Congressional power there is an ever-living discretion in the use of proper means, which can not be restricted or abolished without an amendment of the Constitution. Every act of Congress, therefore, which attempts by grants of monopolies or sale of exclusive privileges for a limited time, or a time without limit, to restrict or extinguish its own discretion in the choice of means to execute its delegated powers is equivalent to a legislative amendment of the Constitution, and palpably unconstitutional.

The USPS is not a purchased monopoly... well, it was let out to be run by a non-governmental organization, wasn't it?  That is the people running the USPS are not, necessarily, federal employees these days.  The bounty of Government to have Post Offices is currently restricted to one service, but that is more an accident of history than of actual intent via the Constitution.  One can imagine Ben Franklin not being the only one running a postal service before the Second Continental Congress and that there would be both competition for service and cooperation amongst services for delivery out of their local area.  This was standardized so as to allow the Continental Congress members to remain in contact with each other via a uniform system run by Franklin.

Like the National Bank run out of DC, which Congress has the sole authority to do things, the Post Offices are a sole power grant to Congress for the Nation, as a whole.  And yet this power also allows the Congress to set up as many Post Offices as are necessary to run the system, and does not limit Congress to a sole service: just as there could be many services to have a uniform standard with Franklin so, too, could that exist today.

Something like this was done with the award of Air Mail contracts by the US Government during the development of aircraft in the 1910's through 1930's.  The Smithsonian National Postal Museum has a page on this from which can be garnered the following:

The United States Post Office Department created the nation’s commercial aviation industry. From 1918 to 1927, the Post Office Department built and operated the nation’s airmail service, establishing routes, testing aircraft and training pilots. When the Department turned the service over to private contractors in 1927, the system was a point of national pride.

The Department’s assistance did not end in 1927. Early passenger traffic was almost non-existent. Mail contracts provided a financial base that encouraged the growth of the nation’s fledgling commercial aviation system. Companies used those funds to purchase larger and safer airplanes, which encouraged passenger traffic.

By the end of the 1930s, legislation had stripped all remnants of control of airmail service from the Post Office Department. The Department continued to award airmail contracts, but its influence over the industry had all but vanished. With the appearance of the Douglas DC-3 airplane, passenger traffic finally began to pay off.

Yes this service was important to early aviation and is now a part of the standard delivery of mail today.  It was done via a system started by the USPS and then handed over to private contractors to run.  This was not contrary to the Constitution but fully in accord with getting a standardized service for air mail: uniform service standards were set for private contractors to meet, just as standards were set for aircraft that could have reliable distance standards and meet uniform standards for things like engine failure (the one engine fails in flight yet plane gets to destination standard).

So what would privatizing the postal system today look like?

First Congress is still on hook for Post Offices: these are centralized gathering facilities and/or distribution centers.  This is the public set of buildings we know as the Post Offices to this very day.

Beyond that Congress can set standardized service requirements as part of an interoperable system run by multiple contractors who meet uniform standards for gathering and delivering the mail.  Note that any organization able to meet those uniform standards would become part of the system for service: there is nothing beyond that which Congress need do, and this would be a competitive system with well known uniform standards for all carriers to meet.

What are these standards?

  1. Ability to pick up and deliver First Class Mail and Packages and meet all standardized and special services which are part of the uniform standard.
  2. A time-based movement ability for said packages given certain geographic distances from Post Offices within the system (that is those individuals far away from a Post Office might have greater time lag to getting mail, but it would be no greater than today's current delivery schedule).  This can be done by a sole contractor or as an agreement system amongst a variety of organizations.
  3. Uniform interoperability, which would mean that any organization within the system must honor all other carriers letters and packages and coordinate between them for reciprocity of service.  There might be inter-carrier payments, but the individuals sending or receiving packages are not on the hook for those, only the up-front payment to get a letter or package into the system for their carrier.  Thus these are transparent to the users of the system for service.  It is up to the carriers to work out how this is done, Congress would have no say in that so long as the uniform standards for service are met for the system as a whole.
  4. All carriers would operate from Post Offices or at least have pick-up/drop-off agreements for them so as to assure letters and packages dropped off for them at the Post Office would get into the system for service.

Everything after that is up to the individual carrier to show they can become a part of the system and inter-operate with other carriers to deliver uniform service.

What varies with this?  Price.

Pricing is non-uniform for carriers and some carriers may offer relatively decent rates for some things (say First Class Letters) and pretty awful price for other things (packages, perhaps) and yet still must be able to pick-up/deliver said items as part of their service for the system.  Your response, of course, would be to choose a different carrier for those items so as to get the price you want for the delivery of them within a given time-frame for standardized service.  You would expect to pay a premium for special services, like over-night delivery, registered or certified delivery, etc.  As special services are a part of the current system they are part of the uniform standard, and carriers can adjust their pricing accordingly.

What also disappears is uniform postage in the way of stamps, although all carriers must honor the standardized service postage of all other carriers, including the special services that are part of the standardized service agreement.

What describes this sort of thing, currently?

Airports.  You have standardized pick-up/drop-off areas (the airport), uniform standards for all airlines to meet, and an interoperable system where individuals can get a set of services that then gets them tickets to various airlines as part of their itinerary which varies by time and price.

The Internet.  You have a uniform standardized service (TCP/IP), with various rates of speed, but has agreements between all carriers for interoperability, storage and forwarding of messages (which is transparent to the user), charging between carriers in the system (which is transparent to the user) and delivery of messages based on carrier speed for the local service agreement.  You pay for your local connectivity for this uniform service standard, thus you can pay more for faster speeds or less for lower speeds, or pay for bundles of options which go beyond the uniform service.

Such systems as these are not only workable, but create competition while having uniformity of service to a given set of standards for different organizations to work together and yet still provide variability of pricing.

Thus the ideas presented by President Jackson for how a National Bank power grant could be changed to be more amenable to the public, open up service and create competition are as relevant today, for the USPS and other parts of the federal government, as they were in 1832.  While the venues for the concepts change, the viewpoint on how sovereign powers can be exercised with greater openness to the benefit of all are timeless.

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