So you think your business has problems.
Consider the plight of John E. Potter, the chief executive of the second-largest employer in America. On the one hand, he has a guaranteed monopoly for much of his business. On the other hand, monopoly or not, the combination of the Internet and the recession is absolutely crushing his company, just as it is for so many other companies across the country. His last quarter’s results, which were announced on Wednesday, revealed a loss of $2.4 billion. The business is on track to lose a staggering $7 billion in 2009, on around $68 billion in revenue. That’s practically General Motors territory.
What can he do to fix the situation? Surprisingly little. His employees have clauses in their union contracts that forbid layoffs. Nor can he renegotiate their gold-plated benefits, the way, say, the auto companies did when their backs were against the wall. Political pressure makes it nearly impossible to shut down any of his company’s 34,000 facilities, no matter how outmoded or little used. He can borrow money, but under the law, he can add only $3 billion in debt a year — an amount that isn’t going to come close to covering his losses.
Oh, and get this. Every year between now and 2016, he has to put aside over $5 billion to finance health benefits for future employees. You read that right: future employees. There isn’t another business in the country that finances benefits for employees it hasn’t even hired yet.
Welcome to John Potter’s world. He’s the nation’s postmaster general. Yes, that’s right: for the last nine years, he has run the United States Postal Service, which, since 1970, when it stopped being a government department and started becoming self-sufficient, has been the oddest of ducks. It is expected to operate as a business, turning a profit and so on, and yet it is still subject to Congressional oversight and all sorts of legal constraints, like that ridiculous health benefit prefinancing for future employees, which was part of a big 2006 postal reorganization bill. (Its main purpose, it would seem, is government accounting: those funds get counted against the federal deficit.)
The Foundry post, by the way, points out some of the reasons why one cannot consider competition between the Post Office on one hand, and FedEx or UPS on the other, genuine competition. Of course, the difference between the Post Office and a public option in health care is that the latter will be allowed to operate at a loss, whereas the Post Office is not a government department, as the above excerpt points out, and can only borrow $3 billion a year to hedge against losses.
The funny thing is that the article makes clear the fact that we don’t need the government or an agency still significantly controlled by the government delivering mail anymore. Indeed, one look at its finances makes it clear that the Post Office is not doing a good job of handling its own affairs. Meanwhile, we are considering a public option when it comes to the provision of health care, without even considering whether the public sector would do any better at keeping its books in balance than the Post Office has done.