Why I hate the US Postal Service

No, really. I hate them.

A dollar to ‘verify my identity’?  For security purposes!?  All my financial institutions changed my address for free, and they seem pretty darn secure.  Give me a break.  Better yet, break up this tax-sucking monopoly that tries to pass for a public service outfit!

Now don’t get me wrong, there’s plenty of other things that those useless minions at my local post office do besides nickel and dime their customers under the guise of protection like 1) frown.  2) Put up friendly signs providing helpful guidance like ‘NO FREE TAPE” and 3) go on break when there’s a line of people out the freakin’ door waiting to mail packages!

Keep in mind that these same folks lost about $5.1 billion (B)  in 2007, $3 B in 2008 and anticipate a deficit of roughly $6 B in 2009.  To read more criticism and why we should allow private companies and the magic of the internet overtake the post office, read this. Go here to REMOVE YOURSELF FROM JUNK MAIL LISTS that make up over half of USPS’s business (at rate subsidized by all us taxpayers!)

If you weren’t hopping mad already, below are some more awesome tidbits from Wikipedia that make me want to jam my hand in a blender running at ‘frappe’:

- “Congress has delegated to the Postal Service the power to decide whether others may compete with it” [Pop quiz to readers: if you were a giant, ineffecient, money-burning monopoly, would you rather have competition or not? Hmmm...]

- “FedEx and United Parcel Service (UPS) directly compete with USPS express mail and package delivery services, making nationwide deliveries of urgent letters and packages. Due to the postal monopoly, they are not allowed to deliver non-urgent letters and may not use U.S. Mail boxes at residential and commercial destinations. These services also deliver packages which are larger and heavier than what the USPS will accept, and unlike the USPS assign tracking numbers to every package.”  [So, Fedex and UPS accept packages that USPS won't, and also assign *gasp* tracking numbers to every package so you'll know where they are (what a novel idea; good thing USPS plans to implement that by 2013...)  Now remind me why these private companies aren't allowed to deliver regular mail to our mail boxes as well??]

- “The USPIS has the power to enforce the USPS monopoly by conducting search and seizure raids on entities they suspect of sending non-urgent mail through overnight delivery competitors. For example: according to the American Enterprise Institute, a private think tank, the USPIS raided Equifax offices in 1993 to ascertain if the mail they were sending through Federal Express was truly “extremely urgent.” It was found that the mail was not, and Equifax was fined $30,000″ [WTF!?  So a company, of it's own free will, chooses to use FedEx instead of USPS, presumably because it's more reliable and/or cheaper, and it's fined!  That's like me buying groceries at the less-expensive store Safeway within walking distance of my apartment and getting fined by the expensive QFC a mile or two up the road!]

I HATE HATE HATE THE POST OFFICE!

Disturbing (but not altogether surprising) news about the financial bailout

No one seems to know where the $700 billion financial bailout went, what’s being done with it, and how much is still in the bank’s coffers to be used for who know’s what. Read about this below:

http://news.yahoo.com/s/ap/20081222/ap_on_go_ca_st_pe/meltdown_secrets

Now I can understand how normally, banks wouldn’t track dollars that came from one source versus dollars from another. However, in THIS case, the government fronted billions in taxpayer money (not private investment.) Therefore, I can’t imagine congress requiring anything less than full disclosure of how the money was going to be allocated and spent.

It appears that the rush to get money to the banks has succeeded in giving banks no incentives whatsoever to transparently disclose what’s being done with the money, or ‘where’ it’s at within each bank. If one made the assumption that these banks were all going to use this money for the best possible long-term usages for their firms, this lack of disclose might be okay. BUT, the fact that banks are in this mess due to poor financial decisions (and NOT “bad luck” due to the economic downturn, despite the fact that it exacerbated the situation), destroys that assumption.

While I do strongly believe that private firms generally perform better than government-owned ones (been to your local post office lately?), one thing that political trumpeters of the “free market” like to neglect are the conflicts of interest between firms and their management teams. Unfortunately, CEOs are often rewarded with compensation that focuses on the short term stock price (stock options and bonuses dependant on share price) rather than being aligned with the company’s long term future.

Warren Buffet, CEO of Berkshire Hathaway and arguably the greatest investor of all time, is a notable exception. His substantial net worth of many billions is almost completely investing in the company he leads. This long term ownership, combined with the fact that Buffett’s salary is a meager (for CEOs) $100,000 per year, with no fancy options deals, means that Buffett’s incentives are aligned with those of his long term shareholders.

Also, CEOs are generally paid more relative to the size of the company they control***. This creates the incentives to make fiscally irresponsible mergers just to “grow the empire.” And now, with the precedent being set of companies designated “too big to fail,” managements have even more incentives to grow the size of their firms. These incentives by themselves do not encourage firms to pursue social gains (either for consumers or shareholders) and therefore are undesireable.

Coming back to the financial bailout, it is very troubling that in an effort to quickly sustain failing companies within the financial services industry (without discussing whether that was the right thing to do or not), congress and the administration may have not addressed the threat of those firms failing in the future, throught poor use of the bailout money in the present. This lack of oversight may result in these same companies returning years later in similar predicaments. (Of course, that may have resulted anyway, even with oversight, calling into question the wisdom of the bailout, of which I’m not knowledeable enough to discuss.)

Hopefully failure of many of these companies down the road does not turn out to be the case. But, when one has no idea of what’s happening with the bailout money those firms received, how can we know one way or the other?

 

*** From nobel prize-winning economist Gary Becker (on the Becker-Posner-Blog.com): “For every 10 per cent increase in firm size, measured by the market value of assets, by sales, or by related variables, compensation increases by about 3 per cent. This “30 per cent” law held during the 1930’s, and has held for every succeeding decade, including right up to the present.”