Starting August 1, the U.S. Postal Service will stop delivering mail on Saturdays as a cost-cutting measure. Your Netflix disc subscription just lost a sixth of its value. I think Matthew Yglesias gets it just right:
It’s a perfectly reasonable idea that will improve USPS’s budgetary situation with minimum disruption to the people who work there or the people who use the service.
That said it obviously doesn’t get to the core issue here. USPS is built around a cross-subsidy model. The idea is that a monopoly on the right to deliver daily mail will generate lucrative profits in most cases and those profits will allow the USPS to cover the cost of unprofitable routes thus fulfilling its Universal Service Obligation. And for a long time it worked great. In fact the profits were so big that the USPS workforce was able to help itself to relatively generous compensation packages while still leaving plenty of money to run the postal service.
But the monopoly has become less lucrative and that’s not going to change in the future. That’s squeezed the budget, squeezed postal workers’ compensation packages, and is now squeezing the quality of nationwide mail service. As a country, we need to ask ourselves whether providing subsidized mail delivery to low-density areas is really a key national priority. Without the monopoly/USO obligation it’s not as if rural dwellers wouldn’t be able to get mail, it’s just that they might need to pay more in recognition of the fact that it’s inconvenient to provide delivery services in low-density areas