Remind me, what is the government in the business of...

I fail to understand why the US Federal Government is in the mail delivery business.  In fiscal year 2011 the USPS lost $5.1B.  From 2007 to 2011 cumulatively the USPS has managed to lose over $25.3B.  How is this even possible?  I know the USPS talks about the decline in letter delivery but what about the incredible rise in package delivery with the advent on online retail?  The USPS say a year over year decline in revenue of -1.7% while both UPS and FedEx saw increases (as well as profit).

Would mail delivery look different under a free market system?  Most assuredly.  In what ways would it be different?  I have no idea.  However, I have every confidence that the free market to come up with a system requiring absolutely no taxpayer subsidy that would be profitable and would better suit the desires of those needing mail and package delivery services.

While admittedly UPS and FedEx are not perfect comparisons they seem like perfect places to start.  Despite having the highest revenue not only does the USPS not make a profit in 2011 they actually lose -$5.1B as mentioned above.  In terms of efficiency the USPS employed over 645K workers at the end of fiscal year 2011 generating revenue of just over $100K per employee - a metric significantly surpassed by both UPS and FedEx.  UPS and FedEx have figured out a way to make money in the package delivery business (both companies also have other ancillary businesses).

Quoting from the USPS annual report "financial results could quickly swing from significant losses to profitability under a less restrictive business model."  I couldn't agree more - I say we close shut down the business as the business model is clearly not sustainable.  What an incredible waste of resources that we continue to pour money into.

Data Sources
All figures in this post were culled from the respective 2011annual reports of the USPS, UPS, and FedEx.

• USPS (PDF)
• UPS (PDF)
• FedEx (PDF)