In every circumstance where innovative reform has been tried, the price of sending mail has diminished while the coverage area for postal services has remained universal.

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Last week, the Postmaster General told Congress that the United States Postal Service (USPS) could lose up to $10 billion this year due to declining mail volume and rising pension costs.  To compensate, he wants to cut delivery services, sell over 200 post offices and receive billions from a taxpayer bailout.  Congress seems willing, but the experience of other countries suggests there are much cheaper ways to get even better service. 

No one disputes the need for postal reform; just the method for doing so. 

Over the last ten years USPS’s mail volume has dropped 20 percent since 2006 due to the rise of email and Internet transactions.  The legacy costs of USPS’s unionized workforce result in an annual funding deficit of billions as pension payments outpace revenues. 

Like their brethren in other public employee unions, USPS workers are not willing to share any sacrifices necessary to balance the books.  In fact, members of the American Postal Workers Union are demanding increases in compensation, and picketing members of Congress who dare to suggest reforms. 

Congress is aware of the problems, but as usual its reform bills are constrained by the existing framework. 

In the Senate, members Tom Carper (D-DE) and Susan Collins (R-ME) are fighting over whose ox to gore.  Carper wants to reduce service to rural areas.  Collins wants to reduce pension compensations for postal workers. 

In the House, Darrell Issa (R-CA) would give USPS the ability to end Saturday mail deliveries, among other reforms including selling advertising space on mail trucks and creating a board to shutter post offices that is similar to the base closure and realignment commission (BRAC) process used by the military. 

The theme is clear: In order to prop up a failing business model Americans will probably get saddled with the worst of all worlds – an omnibus reform bill that ends service to rural areas, halts Saturday deliveries and cuts pension compensations. 

But don’t worry; you can still buy a “forever” stamp whose ever-rising price is deliberately hidden from view. 

At least the bills mentioned above are taking Americans and their tax dollars seriously.  The same cannot be said for Senators Joe Lieberman (D-CT) and Claire McCaskill (D-MO).  During a Senate Homeland Security and Governmental Affairs Committee hearing, Lieberman said “we should be writing more passionate letters to those we love.”  McCaskill chimed in with support for a taxpayer-funded campaign to remind Americans that “you cannot get money by text message.”  (USPS confirmed at the hearing that it will in fact roll out such a national campaign during the holiday season.)

Before members of Congress get swept up in austerity fever, it’s worth noting that the experience of other Western countries shows how American taxpayers could get better service for less money with a few key changes. 

According to a 2008 study by researchers at George Mason University, Germany, Britain, Sweden and the Netherlands followed similar patterns for privatizing the postal service while retaining universal delivery coverage. 

The first and most important step in the process is to corporatize the state-owned postal system as a normal business.  Each country determined a level of public ownership to retain via shares. 

In exchange for the flexibility granted to the newly liberated postal service, the governments required universal delivery and set limits on the price of stamps.  Importantly, it was up to the postal company (and in some cases, licensed competitors) to figure out how to fulfill public policy for a profit. 

In every case, each country’s postal deregulation was successful. 

Germany eventually spun off its postal company, and has yet not needed to exercise its authority contract with a supplier to cover rural areas.  Competition to fill such niches produced the necessary coverage. 

In the Netherlands, the government-owned postal company recently told workers that it was growing its part-time workforce above its current 40 percent in order to create more flexible shifts and reduce costs. 

Like Germany, Britain reformed its postal service as a private company.  Sweden’s government-controlled firm faces competition from its partially-privatized cousin in Norway. 

In every circumstance where innovative reform has been tried, the price of sending mail has diminished while the coverage area for postal services has remained universal.  The key to successfully privatizing a postal system is separating the purpose of the postal service from the entrenched interests running it. 

To paraphrase the old saying, tell the private sector the rules of the game and entrepreneurs will play to win.