Obama on Privatizing the Post Office

http://www.futureofcapitalism.com/2010/02/obama-on-privatizing-the-post-office

From the YouTube interview with the president:

from Aloha Tony, your home state of Hawaii. He says, "Mr. President, our deficit is higher than ever at $12 trillion. Will you consider allowing the private sector to buy and take over the most troubled government-run agencies such as the U.S. Postal Service?"

THE PRESIDENT: Bad idea most of the time. There are examples where privatization makes sense, where people can do things much more efficiently. But oftentimes what you see is companies want to buy those parts of a government-run op that are profitable, and they don't want to do anything else.

So, for example, the U.S. Postal Service, everybody would love to have that high-end part of the business that FedEx and UPS are already in, business to business you make a lot of money. But do they want to deliver that postcard to a remote area somewhere in rural America that is a money loser? Well, the U.S. Post Office provides universal service. Those companies would not want to provide universal service. So you've got to make sure that you look carefully at what privatization proposals are out there.

MR. GROVE: So bad idea most of the time?

THE PRESIDENT: Most of the time.

Mr. Obama is just wrong about this. FedEx and UPS do provide universal service in all 50 states. They sometimes charge surcharges to costomers in remote areas to recover their costs, rather than redistributing the costs from low-cost-of-service areas to high-cost-of-service areas and charging everyone the same price. And they charge a lot more money than the post office does — $20 for a letter rather than 50 cents. But they do provide universal service. The president's answer is revealing, both because Mr. Obama doesn't let the facts stand in the way of his answer, and because they answer seems to betray a disposition against private enterprise.

by Editor  |  Feb 3, 2010 at 11:28 am Related Topics:  President Obama receive the latest by email: subscribe to the free futureofcapitalism.com mailing list