The public option

It's not a "public option", and it doesn't compete. A competitive company is one which can be driven out of business by a more successful company. If the public option loses all of its customers to insurance companies, does anybody here think it will go bankrupt? Of course it won't. They'll increase its subsidy so it can lower its rates.

Anyone arguing that Russ should not compare USPS with its private competitors needs to acknowledge one simple fact: it is Barack Obama, not Professor Roberts, who argued that USPS is competing without harming FedEx and UPS.

Of course, those of us who have worked as a professional or manager in the package delivery industry know exactly how USPS has harmed FedEx and UPS. For three decades USPS was able to use its monopoly revenues from non-priority mail to subsidize its priority delivery and bulk delivery products. It is the latter set of products in which USPS competes in the "free" market with UPS and FedEx.

Decades of cross-subsidization of those competitive products led to key elements of the Postal Accountability and Enhancement Act about fully allocating costs. I've been unable to find evidence one way or another that USPS has stopped subsidizing its competitive products.

Since you spent the morning nit-picking I'll nit-pick too. Obama said that Fed Ex and UPS "are doing just fine". He never said they weren't harmed by USPS. To quote you, you should "at least verify your thinking before trying to rush in with a correction". I like the two paragraphs you close with.

"Obama said that Fed Ex and UPS "are doing just fine". He never said they weren't harmed by USPS."

You are so easily led.

"Baaaa baaaa."

Quiet, Danny.

"Baaa"

The private sector should be able to compete because the government option sucks? Obama should chose his words more carefully.

That's true the public option would be a drain on the economy IF it's not structured well. Fortunately we have a few non-profits that have paved the way. One health management company in Ohio has been providing great care and running slightly in the black. We need to apply this model or one like it to a gov't public option. http://cli.gs/z3AtaY/

I still don't see any recognition, well some, that marginal costs are important in the debate.

Politicians have no, or close to no, understanding of what if takes to run a business. The current measures that seek to "reform" health care all see to run to ruin over cost.

There is an easy way to estimate increases in cost.

Will the demand for improved health care increase or decrease?
.

You go girl. There just isn't enough plain economic logic going around right now, just a lot of emotion and debunked policy ideas.

But what do you mean by "loses money" Russ? They don't lose money, they purposefully charge less than what they need to cover their costs. It's a public service, that's how it works. I think the comparison to private companies is a false comparison. You act like the fact that the Post Office doesn't cover all of it's costs from user fees is indicative of some managerial failing. It's not - that's the whole point of it. You're comparing apples and oranges.

I think we should abolish the post office personally. But as long as it is around, I don't think we should (intentionally or unintentionally) confuse a public agency intentionally not covering all it's costs through users fees with "losing money". Apples and oranges.

"I don't think we should (intentionally or unintentionally) confuse a public agency intentionally not covering all it's costs through users fees with "losing money"."

Such rose-colored glasses on behalf of government. Spoken like a true believer. Your faith is exemplary!

danielkuehn: "They don't lose money, they purposefully charge less than what they need to cover their costs."

Since you did respond and not explain why you believe this to be true, I will go ahead and explain why your statement is not true.

The Postal Accountability and Enhancement Act gives the following objective to the USPS:

"To allocate the total institutional costs of the Postal Service appropriately between market-dominant and competitive products."

In doing so, Congress provided very clear direction about pricing the various USPS products:

"the requirement that each class of mail or type of mail service bear the direct and indirect postal costs attributable to each class or type of mail service through reliably identified causal relationships plus that portion of all other costs of the Postal Service reasonably assignable to such class or type"

The Postmaster General acknowledged this meant that USPS should price its products so that all costs are covered.

So, again, daniel, why do you believe that USPS "purposefully charges less than what they need to cover their costs."?

Thanks. Intuitively I didn't think that the Post Office meant not to cover its costs through user fees. You provide the proof.

To be honest, I did not realize this, I was curious and I did look it up and found exactly the same thing.

A week ago or two weeks ago I would have responded and told you that, and thanked you for pointing me in that direction. But since every time I've done that in the last couple weeks you've been a jackass and told me that I never admit when I'm wrong (even when I'm in the process of telling you I was wrong), I didn't think it was even worth responding to you this time.

And in future situations I probably won't respond to you. There's no point in arguing with a jerk. Feel free to keep pointing me in the right direction, because God knows we all need it and I'm no exception. I've learned a lot of new stuff. But if you're going to keep thinking that you're above reproach don't expect me to respond to you anymore.

Your arguments have a much better chance of being accepted by anyone who reads them if you will simply refrain from using terms such as "jackass" and "jerk".

I wholly agree. Sorry about that. You have acted like a jerk though, and I don't think that's too uncivil for me to say. Again - I don't want to take the kindergarten playground rules too far. But jackass is too much, and I'll keep the "jerk" to a minimum. But you're right - sorry about that. I hope this is an unusual thing for me - I think it is.

You don't even understand what your error is, do you?

You "corrected" Professor Roberts without even doing the minimal amount of research - research that would have revealed Professor Roberts was correct in criticizing USPS for losing money.

This has been a pattern for you, daniel, in commenting on this blog. Certainly Professors Boudreaux and Roberts will occasionally make errors in their posts. They are human just as we all are. But you should give them the respect they deserve and at least verify your thinking before trying to rush in with a correction.

It's not just factual errors - I don't really know of any factual errors they've made to speak of.

It's conceptual errors. Theoretical errors. In my opinion they make those regularly. For those who agree with them, they make those errors very rarely. The fact that I raise disagreements with them about their assumptions, their conceptualization of the problem, and their underlying economic theory is perfectly legitimate. If their departmental seminars are anything like every other university's, they get that kind of disagreement all the time from their colleagues.

My point is I wasn't making a "correction" here, I was raising a fundamental disagreement. That disagreement isn't disrespectful of them at all. And it's not fundamentally changed by the fact that I made a factual error about post office revenue. Unless I'm unclear on what your point was - how does that change my argument at all?

This is exactly why I avoided responding to you. Thanks for pointing that out - but just like in each of those other instances, my primary point remains even though I was wrong on that. And again, I appreciate getting pointed to new information, but I don't appreciate you acting like you're holier than everyone else. The fundamental point is that the post office is subsidized - if not by tax revenue, then by monopoly status. Russ can't get away with pointing to the mere existence of subsidy as an indicator of failure. He's ignoring the fact that private company and a public service are fundamentally different institutions. I don't see what has changed about that argument, johndewey.

Given the objective of the Post Office JD provided from the Postal Accountability and Enhancement Act, your fundamental point, "Russ can't get away with pointing to the mere existence of subsidy as an indicator of failure" does not stand.

Rather, it adds to Russ's point because it shows the Post Office cannot meet its objective, even with monopoly status.

I don't buy the false comparison between a public and private service angle on its face. A subsidy, even if intended, tells me all I need to know about the effectiveness of a service. It tells me that politics will continue to fund the subsidy even if the service is not effectively meeting its objectives for end users. Services offered in the free market don't have this luxury.

That's the fundamental reason why free market services tend to outperform government provided services over time. The free market cleans itself of poorly run organizations, while poorly run government organizations gain strength as long as they have politically desirable intentions or until the organization overreaches.

RE: "Rather, it adds to Russ's point because it shows the Post Office cannot meet its objective, even with monopoly status"

OK, good. I agree with Russ on the post office.

RE: "A subsidy, even if intended, tells me all I need to know about the effectiveness of a service. It tells me that politics will continue to fund the subsidy even if the service is not effectively meeting its objectives for end users."

You highlight brilliantly the danger of subsidies.

RE: "That's the fundamental reason why free market services tend to outperform government provided services over time."

But what is the service? I hear this on here with respect to education as well. If the service in question is providing a quality education to people that can afford it, the private market is leaps and bounds better than the government. If the service in question is providing some sort of education to all people, the government is leaps and bounds better than the market. Since neither of those definitions of the service in question is what most people have in mind when it comes to education, relying exclusively on one or the other isn't appropriate for most people. But the point is - don't blame a public service for not providing a service it wasn't intended to provide.

I diluted my whole post office point by making a statement about financing that I shouldn't have. I should have just said "even if Russ is right when he says the post office "loses money", that doesn't mean anything - it's possible for the post office to achieve it's objective as an executive agency and still lose money. The standards we use to judge Fed Ex aren't necessarily the standards we use to judge the post office, because they aren't delivering the same service." That's not an argument for the post office - I wouldn't make such an argument because I don't think we should have one. That's just an argument for how we should talk about whether or not we should have a post office (or a public option - which was really what Russ's post got down to).

danielkuehn: "If the service in question is providing some sort of education to all people, the government is leaps and bounds better than the market."

How do you know that? A private company - through competitive bidding - could contract with a school district or a community or a county to provide education to all children in that district or that community or that county. How do you know that such a private company would not provide leaps and bounds better education than would a government entity? If renewal of that contract were dependent on performance measures, why wouldn't that be incentive enough for the private company to provide a better education than would a government entity?

That's just outsourcing a government function. We do that all the time. That's what I do for a living - I do research for the federal government that it doesn't do in-house. It's a very sensible way of doing things, and I like to think I do better research than a lot of the research they do in-house for precisely the reasons you cite.

But in your example, it's still a government deciding to use tax revenue to pay for the education of all children in the district, regardless of their ability to pay for that service in the market. You have to have the government's coercion to provide education to all kids, just like you have to have the government's coercion to make sure everyone has health insurance. The whole point of the market is to balance supply and demand and not provide goods or services to people who cannot afford to pay.

RE: "why wouldn't that be incentive enough for the private company to provide a better education than would a government entity?"

I agree - it would likely be better. Which was exactly why I never said the government could beat the private sector when it comes to quality. Now I'm sure it's possible - I went to a pretty good public high school. But I wouldn't expect it.

I went to a pretty good public high school. - DK

Compared to what? Other U.S. public high schools? Japanese public high schools? Parochial or other private high schools? U.S. public high schools fifty years ago?

I'm betting that your alma mater only compares well to other U.S. public schools of this day. Versus all of my other examples, I'm guessing that your high school doesn't fare so well, and I'm quite sure that Virginia Beach Senior High circa 1950 had a curriculum far more demanding and challenging than VBHS offers today, and I'd go so far as to wager that VB-1950 would rival the University of Virginia today.

"it's still a government deciding to use tax revenue to pay for the education of all children in the district"

They call it education, and Danny believes it. It's a perfect system!

danielkuehn: "That's just outsourcing a government function. "

Yes, it is. And it's also an example of a market. It is the competitiveness of the contract renewal and bidding process which makes it far, far different from a government education system which currently exists.

In my scenario, the government may or may not be funding the education of schoolchildren. Government can grant local monopolies without funding a service. Or it doesn't even have to offer a local monopoly.

daniel kuehn: 'Which was exactly why I never said the government could beat the private sector when it comes to quality."

No, what you asserted was:

"If the service in question is providing some sort of education to all people, the government is leaps and bounds better than the market."

Private companies can provide education to all children just as electric utilities currently provide electricity to all homes in the geographic area for which they hold a license to do so.

It's much more stark than than, johndewey. Why does government have to provide or pay for education in any way? Do parents not inherently want the best for their kids? Are we saying that the only way we can encourage parents to educate their kids is to forcibly take their money from them and forcibly require their kids to attend the 'service' of public school?

I agree with you, but I'm not sure a discussion of this particular issue has any practical value. I think that every state in the union has long agreed that education of children should be funded by all households and not just by those households with schoolchildren. In the states covered by the Northwest Ordinance, I think it has been a federal requirement for over 200 years.

While I think the education funding issue cannot be changed, the actual operation of schools can be.

I agree also - the total separation of school and State we need is not going to happen any time soon. Too many people believe the ridiculous claim that government schools need more money or the even dumber idea that we under-invest in education. (What's the latest number, I think it’s over $10,000 per student per year if all spending is counted - we definitely over-invest in education.) If we cut government school funding in half money would still not be a reason for their poor performance.

Imagine the benefits (especially to poor people) of better schools and drastically reduced school spending. Policy changes that would introduce market forces into education may be possible and would help both reduce costs and improve quality.

Funny how similar that is to the situation with healthcare, and yet these retards in Washington (and their useful idiots among us) want the government to step even further in there!

"If the service in question is providing some sort of education to all people, the government is leaps and bounds better than the market."

What a tool! This is useful idiocy at it's finest.

The whole point of the market is not to provide a service to everyone - the whole point is to only provide it to people who can pay at a certain price. What is idiotic about pointing this out?

Truly poor people pay for the educations of their own children without the need for overpaid (at any wage) pie-slicers like you helping to allocate other peoples' stolen money:
http://www.cato.org/event.php?eventid=6015

"The whole point of the market is not to provide a service to everyone - the whole point is to only provide it to people who can pay at a certain price."

Standard. Diminish the free interactions we describe as "the market" to a harangue about some people getting too much while others are left with nothing. Just Critical Theory B.S. from someone who hasn't properly thanked his intellectual forefathers.

Couldn't have said it better myself, Shotworth!

daniel, do you have a very narrow view of what a market is? A market can be completely free of all government involvement. It can be loosely or tightly regulated by government. Governments may operate as consumers in a market. Governments may operate as suppliers in a market.

You seem to be contrasting a market free of all government involvment with one totally controlled by government. Those are not the only two options for education or for mail service. The latter is very close to what we have in education today - where government funds and operates almost all schols and where government forces parents to consume its services. But again, there are not just two choices.

It's idiotic because tyrants like yourself come along and declare what can and cannot be done by "the market", and do idiotic things like imply that educational needs would be unmet if not for the government. How dopey.

Re: "If the service in question is providing some sort of education to all people, the government is leaps and bounds better than the market."

That's pure assertion. Government has actively suppressed the education market for many decades, so you have no idea how education would have evolved as a private market - you're just guessing. (I've heard your arguments for why you believe as you do - they are completely unconvincing.)

Sorry for going OT...

The advantage of the private market is that it judiciously does not provide it's services to everyone. I wouldn't go too far down that rabbit hole, yetanotherdave. We usually like the fact that the market shuts some people out, because by doing that it efficiently allocates resources.

Every once in a while there's something that society doesn't think should be restricted to people who can afford to pay for it. We can disagree on that, but let's not pretend that the market can magically do everything. The strength of the market is precisely that it does a good job sorting things out when not everybody gets everything.

I understand your bias and don't need (or want) your advice. The simple fact is your statement about education is pure assertion. I think your reasons for believing your assertion are weak, simplistic and wrong; you think they're compelling. Either way, it's still just an assertion.

My thinking has nothing to do with rabbit holes, magic or pretending - unlike somebody who claims that society thinks...

"My thinking has nothing to do with rabbit holes, magic or pretending - unlike somebody who claims that society thinks..."

Exactly. Daniel imagines that all of 'society' met together and agreed that education must be paid for out of tax money. When was this big meeting, Dan? Were you present?

Every once in a while there's something that society doesn't think should be restricted to people who can afford to pay for it.

Even if that's true, do you think that taxpayer-subsidized education must be provided by government-employed, union labor?

Right now, everyone who owns property subsidizes education. If you do not like the product offered by the teacher's union, you can choose to educate your kids yourself, or enroll them in non-government schools, but you still have to pay the teacher's union to educate your kids.

daniel kuehn: "The advantage of the private market is that it judiciously does not provide it's services to everyone."

I'm not sure that would be the case, daniel.

As an industrial engineer at FedEx, I was once responsible for engineering the expansion of overnight delivery service to the remotest parts of Texas and other Southwest states. Other FedEx engineers were doing the same thing throughout the country. FedEx was forced to offer overnight service to all zip codes not because of competition from USPS. Rather, it was private company UPS advertising their superior coverage which motivated us to act.

As I remember it (20 years ago), FedEx offerred the same fee for overnight delivery of 2 pound packages everywhere in the U.S.

John Dewey was not acting holier than everyone else - just you. Of course, you see any challenge to your position as heresy, so your whining is not an unexpected response.

How am I acting holier than everyone else. I'm the only one in this whole discussion that has admitted I've been wrong about something!

And methinks, if you have a problem with me providing a counter-argument when you challenge my position on an issue, there's really no point in you commenting here. That's essentially what everybody does here - it's certainly what you do. When I challenge you, you argue back. It's sort of the whole point of the blog.

I meant that John Dewey was acting holier than you. See? You could have saved yourself a whole indignant diatribe.

After reading this thread, I guarantee you Daniel lives alone and is desperately lonely.

"what do you mean by "loses money" Russ?"

Hilarious!!!

And there is the other pattern with your posts, daniel.

To anyone who is aware of the Postal Accountability and Enhancement Act, and to anyone who, like me, worked in the industry for nearly two decades, it is obvious you did not know what you were writing about.

Daniel, you spent several sentences criticizing Professor Roberts for not understanding that USPS:

"purposefully charge less than what they need to cover their costs.

and for Professor Roberts argument:

"that the Post Office doesn't cover all of it's costs from user fees is indicative of some managerial failing"

Now that your incorrect thinking has been revealed, you should simply apologize to Professor Roberts. Instead, you are now claiming that you were right for a different reason. You try to argue that the entire first paragraph of your initial criticism was not your "fundamental point". That's very typical of your defensive posture when someone points out errors in your writing.

Be a man, daniel. Just admit when you are mistaken and move on.

See - this is your pattern. I've admited I was mistaken. I'm not sure what I have to apologize for. I usually apologize when I've wronged someone, and to me making an inaccurate point in a discussion isn't wronging anyone. I was tempted to just write "I'm sorry Russ", but honestly that's stupid. If you can't be involved in a discussion where people disagree and occassionally make inaccurate statements and can't just say "oops I was mistaken about that", then that's too bad. Quit trying to act like a kindergarten teacher, orchestrating the discussion - I have nothing to apologize for. I'm guessing in the future I'll continue to think Don and Russ are off base on a lot of things, and right on others - and I'll tell them both that. And I'll also make mistakes in the future. As long as I don't verbally assault anyone, don't count on me apologizing - but you can count on me to admit I was mistaken if I realize I was mistaken (as I always have so far when I've realized I'm mistaken).

You should quit telling other people to apologize, focus on providing good information when people make mistakes (as you've done), and be a little more circumspect about your own arguments.

Why do you believe that the USPS "purposefully charge less than what they need to cover their costs." Did you read that somewhere, daniel? or just make it up?

"But what do you mean by "loses money" Russ? They don't lose money, they purposefully charge less than what they need to cover their costs. It's a public service, that's how it works. I think the comparison to private companies is a false comparison. You act like the fact that the Post Office doesn't cover all of it's costs from user fees is indicative of some managerial failing. It's not - that's the whole point of it. You're comparing apples and oranges."

However

"I think we should abolish the post office personally."

No you don't, RDB.

Of course I do.

It's possible for me to simultaneously (1.) understand the difference between a public service and a private organization, and (2.) not think that everything under the sun should be provided as a public service. It's possible for me to not think there should be a post office but not get apoplectic when I think about the post office.

Daniel,

You can call anything you want a "public service" and justify whatever price you want and declare it above criticism by your logic. That's not how a card carrying economist is supposed to look at things, is it? Comparisons to alternatives are NEVER false comparisons. I'm pretty sure they taught you cost benefit analysis and opportunity cost at William and Mary. That's a lesson too valuable to forget.

The reason people become "apoplectic" is because efficiencies are prevented by law in the letter carrying market. How do you not see that?

Yeah, wow.... how inefficient... 44 cents to mail a letter from San Fran to New York or a small town in upstate New York.

Not bad - but competitors would make it more efficient. As Methinks points out, it's all about opportunity cost, muirgeo.

It's one thing for Muirdiot to miss the point, but et tu, Daniel? If it's subsidized it doesn't cost $0.44. It costs more than $0.44.

I didn't say it costs only 44 cents. I said it's "not bad".

You're on a rampage this morning, Methinks. Quit tilting at windmills.

I'm on a rampage because I disagree with you, child? Aren't you too old for temper tantrums?

No you're just throwing out these weird things to be mad at like me thinking the cost of mail delivery is 44 cents when I never said such a thing. What's the underlying issue here, Methinks? Did you not get your favorite kind of candy for Halloween?

"mad" at you? Child, you do amuse me so.

Basic English sentence structure, Methinks:

"things to be mad at" [space] "like me thinking the cost of mail delivery is 44 cents when I never said such a thing."

LOL. What did you say about windmills?

Dan is a slimebag who should run for orifice. Of course he tacitly approved murdork's statement, and then tried to ooze away from it. Methinks is right on target. Except that it's hard to hit the ooze.

No - not mad at me. Mad at figments of your own imagination that you think I've said.

It doesn't automatically justify it to point out that it works differently. By that logic, charities are always operating at a loss - they just give money away! But that's the whole point. It doesn't mean every public service is justified. Like I said, I don't see why the post office is all that necessary. Lots of countries are doing just fine without a public post office.

RE: "The reason people become "apoplectic" is because efficiencies are prevented by law in the letter carrying market. How do you not see that?"

What makes you think I don't see that? Why the hell do you think I want to see the post office privatized?

Actually, charities don't operate at a loss.

Also, I'm not forced to give to charities. I am forced to subsidize the post office. There's a difference.

I know you said you don't mind eliminating the post office. I can read and comprehend. I'm not responding to that portion of your post.


"What makes you think I don't see that?"

Because you don't think that people should make comparisons between privately provisioned goods and publicly provisioned goods. "I think the comparison to private companies is a false comparison." - DK.

RE: "I know you said you don't mind eliminating the post office. I can read and comprehend. I'm not responding to that portion of your post."

Oh I see!

Well in that case, I think it was dumb for you to say: "I'm... forced to give to charities"

I'm just not responding to that "not" portion of your post.

RE: "Because you don't think that people should make comparisons between privately provisioned goods and publicly provisioned goods."

Of course I think they should make comparisons. I don't think they should make false comparisons. If the whole purpose of two institutions are fundamentally different, don't judge them by the same standard. I don't storm out of an action movie because it didn't have good jokes. I don't complain about a Chinese restaurant that doesn't serve spaghetti and meatballs. Of course we should compare the post office to private companies, and in that comparison I think the post office comes up lacking. But I don't neglect the fact that it is intended to be a public service when I evaluate it relative to private companies!!!

Then, by your logic, we can declare everything a public service and justify the cost. Health care, for instance. We're back to square one.

The problem is that the declaration that it is a public service is arbitrary and meaningless, thus your argument that a comparison between the "public service" and the same good privately provided is false is also meaningless.

RE: "Then, by your logic, we can declare everything a public service and justify the cost. Health care, for instance. We're back to square one."

Where are you getting this?!?!?!?!?!?!?!?!?! Not every public service's costs are justified!!! Their performance just can't be measured with the same metric as a private business. It makes no sense!

Saying that something is a public service isn't the same thing as saying that' it's a worthwhile public service.

If you can't compare it to a private alternative because that would be a "false comparison", how do you decide which services are "worthwhile" and which ones aren't?

I don't know how many times I have to tell you you can and should compare it to a private alternative before you start to get this. You just have to be careful about what standard you use to judge each.

If you were to ask me if a man or a woman was subjectively more attractive, I wouldn't evaluate the man based on how big his breasts were. The same thing with public services and private corporations. You can and SHOULD make comparisons - but don't pretend that they're exactly the same thing or that they should be evaluated based on exactly the same standard.

When I compare to restaurants I don't complain that the Chinese restaurant doesn't have spaghetti and meatballs - but I still can compare them.

When I compare two movies I don't complain that the action movie doesn't have any good jokes in it - but I still compare movies.

Are you really missing this distinction?

I love your use of analogies which are completely not analogous to what we're discussing and then whining that I'm missing the distinction. A better analogy would be a whore working for the government and a whore working for herself. You arbitrarily decide that the whore working for the government should be evaluated by a different set of metrics. Why?

"...but don't pretend that they're exactly the same thing or that they should be evaluated based on exactly the same standard."

Mail is mail. Why shouldn't I compare privately delivered mail and mail delivered by the USPS?

How is privately delivered mail different from publicly delivered mail? Please try to explain it by actually explaining how the mail is different rather than in terms of women's boobs and chinese restaurants.

RE: "You arbitrarily decide that the whore working for the government should be evaluated by a different set of metrics. Why?"

If it's an arbitrary decision, then it's not a valid decision. If you ask "which one delivers the mail the fastest", obviously that metric should be the same. Using a different metric there WOULD be arbitrary.

If you ask "which institution should deliver the mail", you have to consider the purpose of each institution, and what you place value on - universal acces to mail carriage, efficiency, cost, etc. etc. - different people are likely to come up with different answers.

RE: "Mail is mail. Why shouldn't I compare privately delivered mail and mail delivered by the USPS? "

For the LAST TIME - you SHOULD compare them. The mail itself isn't different. What may be different is how people think mail should be delivered - whether it's important to guarantee that all people in the country have access to the service at the same rate. I don't think that's particularly important.

FOR THE LAST TIME, is it, kiddo? That adds so much to your argument, words cannot adequately describe.

So the issue is how mail is viewed? Mail delivery is as undifferentiated as the mail itself, so distinguishing the two did not add to your argument that the two cannot be compared.

"whether it's important to guarantee that all people in the country have access to the service at the same rate. I don't think that's particularly important."

I don't either. In fact, our conclusions about the relevance of a publicly run post office are not in any way different (that's not the issue here). However, everyone in the country does NOT have access to the service at the same rate right now. Rural routes are subsidized by taxpayers and people who send most of their mail locally. The rates are the same, but the cost isn't. Thus, implicitly, the rates are not the same.

Even if I value universal mail delivery (the argument for making mail delivery a "public service"), that doesn't justify declaring it a "public service". Private companies will deliver the mail universally for a price. The only difference between the public and private system is that the people using the more expensive service will likely bear the cost of it.

I say "likely" because Amazon has managed to provide unlimited two day delivery service to anywhere in the United States at a single rate. So, I think that the fake single rate thing can be privately provided. Which means, that no matter how you view the post office (public service or public BS), it can and should be compared to private provisioning.

I am convinced that you will cling to your arbitrary distinction, so I'll leave it here. I think my point has been made.

The private health insurance industry, which is publicly subsidized, has been quite successful killing a real public option. As it currently exist in all bills it will be available to less then 5% of Americans. So don't worry all you free marketeers. Private health insurance and it's lobbyist are prevailing and they will continue to raise your publicly subsidized rates at 10% a year ... good luck with that.
And if you keep pushing maybe you can break the public hold on first class mail and pay $1 per letter to a privately run postal service.

http://tinyurl.com/ljlya3

Muirgeo,

I submit that you currently have no idea how much you pay to send a letter. Only how much you pay for a stamp.

This applies also to the examples in your cartoon.

As it currently exist in all bills it will be available to less then 5% of Americans. So don't worry all you free marketeers.


That is absolutely 100% correct, and it is also 100% wrong. This is exactly what Nancy Pelosi wants you to think, but unfortunately she has no economic training, and should not be listened to (or anybody else in that building, either).

The small targeted segment (less than 5%, approximately) will quickly become very, very large. As Michael Tanner states in Putting Private Insurance Out of Business

That might be true if the new government-run program were going to compete on anything close to a level playing field. But, because the public option is ultimately supported by the taxpayers, the playing field can never be level. True, the bill does say that the new program is supposed to be self-sustaining, covering administrative and benefit costs entirely out of premium revenues. But remember that Medicare Part B was originally supposed to support 50 percent of its costs through premiums. That has shrunk to the point where premiums pay for less than 25 percent of the program’s cost.

More:

All of this means that the government-run plan would be significantly cheaper than private insurance, not because it would out-compete private insurance or because it was more efficient, but because it had unfair advantages. The lower cost means that businesses, in particular, would have every incentive to dump workers from their current health insurance plan into the government plan. And, if other provisions of the bill make insurance more expensive, as is likely, the incentive for employers to shift workers to the government plan would be even greater. Estimates suggest that nearly 90 million workers could eventually be forced into the government plan.

Muirgeo, for someone who supposedly works in the industry, you really need to bone up on your health care economics.

Well mesa I hope you're right about all that.

I’m sure you do.

The major problem with your strategy is it relies solely on ignorance and lying. Most of us have known all along that full government takeover is the objective.

The politicians are not creating a system of mandatory purchase from the health insurance industry because it is private, but because it is already public.

I think the arrow of causality is a little backward here – the USPS (monopoly) exists to provide standard, conforming service, which didn’t fit the bill of a large segment of demand. Along come UPS and FedEx, filling the void, though outside of the monopoly grant (I believe).

Given the rambunctious adversarial relationship between government and private health insurers, it’s highly likely that insurers will be “regulatorily scapegoated” out of existence, which is unnecessary in the postal delivery space, given the de jure monopoly.

Michael Tanner of Cato has a terrific piece about how the public option will undercut (and eventually drive out) private providers.

I link to it here.

I think Obama's cancellation of DC's education voucher program is one example of how a public option will try to undercut private providers.

Another wonderful example is NASA. Just as the government is looking at insourcing healthcare in order to drive down costs, NASA is looking at outsourcing the delivery of astronauts to orbit in order to drive down costs. Commercial, for-profit companies are close to realizing order of magnitude reductions in the cost of delivery people and objects to orbit.

The current US Postal Service ad,"If it fits, it ships" is a perfect example of the kind of thinking that has replaced critical thinking in the marketplace.

http://www.youtube.com/watch?v=jZ_jpyRHr5Q

There are fixed costs, variable costs and average costs. But that isn't where you make your money.

It is difficult for me to see where the Post Office can make money on the basis of its marginal costs if I, as a shipper, only rely upon those shipments whose costs are lower due to this one price fits all cost policy than other shipping vendors.

It may be that US Postal Service rates are lower between Portland, Or and Selma, Al than UPS or Fed-Ex when I ship 50 pounds of ball bearings.

But how can any enterprise make money when their marginal costs are higher than their marginal revenues?

Can't wait for the whole Public Option Health Care to start. When the marginal costs for supplying "health care" are greater than the marginal revenues for such "health care", we can only expect good things.
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I assume the reason why the post office can make this work is that most of their freight travels via ground, so their limiting factor is volume and not weight.

Most of the U.S. packages delivered by USPS and FedEx also travel by ground. Much of the remaining U.S. packages travel by ground for a large portion of their trips. For FedEx, it is only the priority express packages - and only those which cannot be trucked overnight - which must travel by air. A small portion of FedEx's standard air (2 day) packages must travel by air for one leg of their trip. None of the company's FedEx Ground packages and Fedex Freight shipments move by air. These last two make up over 50 percent of shipments by piece count and much more than 50% by weight.

I was a system form planner and an industrial engineer for FedEx for over a decade. Like all members of the FedEx management team, I also had to be aware of the operations of our competitors USPS and UPS.

Israeli forces storm into holiest place on earth

http://joshfulton.blogspot.com/2009/10/israeli-...