GOVERNMENT MANAGED BUSINESSES- PART TWO
My original plan was to review our government’s management of the US Postal Service (USPS), Tennessee Valley Authority (TVA) and Amtrak for its business successes. After reading thousands of pages and many hours on the Internet I came to the conclusion that none existed. The posting last week suggested we might sell the postal service to Wal-Mart. I had planned this second article on exploring the possible sale of the USPS to say China.
My conclusion is that at this time it is highly unlikely that it would be possible to give the USPS away. It was just announced that the Obama 2012 budget has an $11,000,000,000.00 increase over 2011. It is estimated that the USPS will exceed its 2011 budget alone by over $8,000,000,000.00. The Postmaster General has predicted that the USPS will face a budget deficit of $239,000,000,000.00 over the next ten years even if services are reduced.
My reading provided me the facts that the postal service prior to 1971 required no taxpayer support of government subsidies. Facts indicate that the USPS was fairly well managed for its first 200 years. When you look at the last 40 years, something bad happened. I can’t even find the annual total costs of operating the USPS, the only facts that appear are how much they will lose. I am certain if I had a couple of weeks to peruse the Federal Budget I could possibly come close. To those who are critical of this missing the total figure, send me the number and I will post a revision. It really does not matter to anyone with a pinch of common sense if they understand the number one principle of business.
“If your expenses exceed your revenue something’s wrong.”
The US Congress along with the Judicial and Executive branches of our government are controlled by lawyers. When you think of it, our lives are controlled by well educated people who spent many years in our colleges and universities that have to become elected officials and lobbyist as they can’t find another job. The only business educated people in Washington are the staff support to the elected. To make the situation worse you are required to agree with the elected to keep your job. The recent disclosure of the average salaries of those in Washington D.C., compared to the average salaries elsewhere, prove my point. It is shameful that we have created this situation. Is anyone really ready to correct the problem? I am.
Let me create a business scenario to make some comparisons that a moron will understand. First we have to hire a lawyer to file incorporation papers and appoint a Board of Directors. Next we have to prepare a business plan and sell stock to capitalize the venture. To make it simple our plan is to provide toilet cleaning services. We will need vehicles, mops, brooms, rags, detergents and people to do the actual work. We estimate the wages, materials, operational and overhead expense and price our services to make a 10% profit. We become an immediate success and everyone is happy.
Every few years the government mandates a raise in the minimum wages, greedy employee’s vote to have a union and demand increases in wages, healthcare and pension benefits that costs more than the profit the company distributes to the shareholders. The next thing management does is just raise prices to absorb the new labor and fringe benefits demanded by the union. The competition has no unions to pay and you lose all of your customers. Unless the Board of Directors make major management changes the company folds and everyone is hurt but the union.
The USPS had this happen when our government allowed the employees to unionize some 40 years ago. FEDEX saw the opportunity to enter the shipping business and UPS and others worldwide joined the action that has stripped most of the USPS shipping revenue. Next Al Gore invented the Internet and “E” mail has reduced the amount of mail significantly. The Postmaster General just announced that letter carriers will deliver 150 billion pieces of mail in 2020. That is 26 billion less than they delivered in 2010.
The basic difference is that there is no competition for the USPS for basic mail delivery. They can increase prices at their will and/or just force the government to provide more of your and my money to survive. They have appointed a Board of Trustees, not elected, by the people. They can spend what they desire and we will pay whatever they ask for. Congress is the primary reason we have a government managed postal service and probably why it operates out of control.
What we can do next November is to vote the entire Congress out of office and start all over from scratch. Maybe the newly elected politicians would sell or give away the USPS. Just in projected figures from the Postmaster General it would save us at least $23,900,000,000.00 a year.
Remember the basic principle of business and that we are the shareholders that pay for all losses. I can tell you for certain that if Management (USPS) and the Board of Directors (Congress) lost money for over 40 straight years intelligent business shareholders (We the people) should have made significant changes a long time ago. Remember the fiasco when the federal government became owners of a brothel and bar a few years ago. It went belly up as they could not make a profit selling sex and whiskey, legally in Nevada. We allow them to manage the USPS, TVA and Amtrak and lose every year. Why?