US Postal Service--Stranger than Fiction

The scenario is a typical one for many companies in the current economy: demand has fallen, people are using alternative products and services. The questions is what to do? For most companies, the answer would be to drop prices to stimulate demand and at the same time to reposition to attract customers back or create new ones. What about raising prices? That would defy all logic in business. What would be the sense of raising prices when customers already are not interested in the product? Wouldn't that just cut the demand still further?

Well, none of these scenarios make a bit of sense when we're talking about the government or agencies of the government. The demand for postal services has gone down, replaced by the Internet. The answer Postal Officials have come up with is to raise prices by 9%. Think about this increase--inflation is running flat, prices on everything are falling. But, the Postal Service raises prices by 9%. The Postmaster General estimated that this increase would cover the losses of the service and maintain service. The estimates are undoubtedly based on current demand, which will likely dip still further given the increases and further erosion of the traditional mail system by technology. So, there will clearly be another short fall due to continuing drop in demand with a call for more increases next year. This should not even be legal. It almost sounds like the Mafia: "we'll make you an offer you can't refuse".

We can be assured that when the USPS goes to Congress for permission, it will get the go-ahead. What would the alternatives be if they were turned down? My goodness, it would be to cut their costs to the bone; lay off workers, cut back on hours, cut prices of their products, etc. This is what one would expect from any business manager with a brain facing a similar situation. But, once again, this is the government. So, rather than cutting costs or laying off more workers or cutting hours or cutting the price of stamps to attempt to get more people to buy and use stamps, they will go in the opposite direction.

This is all stanger than fiction. It is beyond the logic of any first year business student. The whole country is suffering from the effects of the Great Recession, and the Postal Service decides to raise prices. Will this decision reverse the decline in demand for services? No. So, what will the Postal Service do next year when demand falls still farther? Well, it will raise prices again. This is the height of audacity--we'll do it because we can. If you don't like it, don't use the mail. Oh wait, you already don't use the mail? So what, then we'll raise prices again next year on those who do.

It will continue to work this way until the legal profession finally accepts documents as legal that are faxed or e-amiled. Companies are the ones forced to use the mail system. But, wait a minute, that would take a change of the law which means that it would entail governmental decisions made by lawyers to change things from which they benefit. Fat chance. So, the illogical and almost criminal decision by the USPS will impact businesses most, especially mid-sized and small businesses (who else usually suffers?).

To quote the wicked witch in the Wizard of Oz when she was melting: "what a world, what a world"!