Here’s a letter that I sent yesterday to the Baltimore Sun:
Jerrold Brotman is right to worry that government-run health care will be no more efficient than the U.S. Postal Service (Letters, August 22).
Worker productivity today is four times greater than it was at the end of World War II, and – with the advent of the jet engine, the Interstate Highway system, and other advances in transportation technologies – transportation costs are much lower. So a postal service responsive to consumer demands would today supply its services more efficiently and, hence, at lower costs.
Alas, however, the inflation-adjusted price of a first-class stamp is today 22 percent higher than it was in 1945.
Sincerely,
Donald J. Boudreaux
UPDATE: from Carpe Diem (via Coyote Blog).
Podcast RSS Feed
Full EconTalk Text
{ 3 comments }
Dr Boudreaux, but could that not be the result of a change in the demand curve? Today, there are all sorts of alternatives: faxes, emails etc. The volume of mail that people seek to send has dropped dramatically.
In a free market, the provider would have reacted to the reduction in demand by trying to cut costs, yet there is only so much the USPS could do, they must deliver to all sorts of out of the way places 6 days a week. Thus they aren’t really able to cut costs, and so jack up prices – hoping that an inelastic demand curve will save them.
Of course, the USPS does have a gang threatening its competitors too, if Federal Express does not charge a few dollars more than the post office for next day delivery, and attempts any form of first class mail delivery, this gang will kidnap its executives and after a show trial, lock them up in one of its many prison camps they have throughout the world.
“they must deliver to all sorts of out of the way places 6 days a week”
They must?
While I’m sympathetic to criticisms of government run enterprises like the post office, I’m worried that the graph in the UPDATE is a bit misleading. Why was 1919 used as the starting year? Just eyeballing it, I’ll bet the graph would look quite different if 1935 were the starting year.
That being said, I don’t care much about stamps – I use less than 2 per month. The graph is much more interesting in its comparison of gas prices to CPI.