Now, I am not going to debate the value of the USPS over time, but I will say that the USPS is leaning harder on its power in recent years. Why? As the USPS has lost HUGE market share to private delivery (UPS, FedEx), fax, and email services, its revenue has not grown as fast as its costs. In 2007, the USPS lost $5 billion.
So why am I writing about the USPS on a water blog? Because postage rates are going up today. Why are they going up? Because when the USPS loses money, it can raise prices and avoid cutting costs.
Aside: The USPS employs 785,000 people, which is only 1.7% less than 20 years ago. The only US company with more workers is WalMart (2.1 million worldwide), which has five times USPS revenue. That works out to nearly double USPS revenue/worker.
So, besides that parallel with water utilities (monopolies that can raise rates instead of cutting costs), there's another interesting parallel between mail service and water service: "postage stamp pricing" (the name is used in both industries).
PSP means that customers pay the same rate for delivery, no matter where they live. Put differently, PSP means that everyone pays the average cost of delivery everywhere -- not the actual cost of delivery to them. In postal terms, that means that urban customers are subsidizing rural customers. In water terms, that means that people in city centers are subsidizing people in the suburbs.
[Note how "equity" is flipped. With postal service, city people subsidize rural people, which is similar to rich people subsidizing poor people. With water service, people in the inner city (until recent trends, poorer people) are subsidizing rich people in the suburbs.]
But that's not the worst part -- PSP subsidizes sprawl because new connections only pay the average -- not the marginal -- cost of water. (I know of one exception where I live. People who live in the hills pay a "pumping surcharge" for their water.)
So that's the water angle. Now here are my suggestions on how the USPS can reform itself:
- Cut employment by delivering on alternating days.
- Sell a new service -- "no junk" -- that stops delivery of unwanted junk mail. I'd pay $20/year to stop junk. The US has 100 million households, and the USPS has $75 billion in revenue, so this is not a big number, but it would lower the USPS footprint by reducing weight, printing costs, waste, etc.
Bottom Line: Monopolies don't have to be efficient -- they just take your money.