Postal privatization: why it never made headway in the US
The history of the postal service in the US dates back to the country's independence process
Since the 1990s, more than a dozen countries, most of them European, have privatized their mail services.
In Brazil, the Chamber of Deputies approved on Thursday (5/8), by 286 votes in favor and 173 against, the bill authorizing the privatization of the state-owned ECT (Empresa Brasileira de Correios e Telégrafos).
There will still be proposals for changes in the matter. Afterwards, the project goes to the Senate and, if approved, goes to the sanction of President Jair Bolsonaro (without a party).
The proposal prepared by the Ministry of Economy establishes the sale of 100% of the state-owned company. The portfolio expects the auction to be held in the first half of 2022.There are more than 34,000 branches across the country, connected by a network with 231,000 vehicles and 495,900 employees .
The contingent is more than five times the number of Empresa de Correios e Telégrafos (ECT) in Brazil, which adds up to 95,000 employees and is one of the state-owned companies on the list of privatizations of the Bolsonaro government. The kick-off was given at the beginning of the year: in February, the Executive sent the Bill to Congress and in April the Chamber voted on its urgency, opening space for faster processing in the Legislative.
The USPS is not exactly a state company, but a federal agency linked to the American Executive. Its date of creation is confused with that of the country itself - the first "postmaster general" (a kind of director general) was one of the patrons of American independence, Benjamin Franklin.
In theory, the Post Office is not financed by the taxpayer, but by the revenue from the delivery of letters and parcels. Turning a profit, however, has been an increasingly difficult task — the last time was in 2006, at least on paper. Since then, accumulated losses have reached almost US$90 billion (R$460 billion) in 2020.
Still, the agency has resisted privatization attempts for decades. The most recent move in this direction took place in 2018, during the administration of Donald Trump, and encountered strong opposition not only from Democratic politicians, but also from fellow Republicans of the then president.
Why?
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"The United States has a quirk," says economist Monique Morrissey of the progressive Economic Policy Institute (EPI) think tank.
Two types of conservatives co-exist in the Republican Party, she says. There are liberal, pro-market conservatives, those who defend the minimal state and other positions that are often confused with the prevailing party ideology, and there are nationalist and religious conservatives.
The latter live predominantly in rural areas, which are, in turn, heavily dependent on postal service deliveries of mail and packages.
"These people want it to remain a 'patriotic' public service, like the Armed Forces or public schools," he says.
Postman in Baltimore in 1906: Maintenance of Public Service is Defended by Democrats and Republicans
Thousands of small businesses in the interior of the country rely on the agency's infrastructure to distribute their products — especially with the fixed prices of some delivery categories.
"One of the great users of the Correios structure is a site called Etsy, where thousands of people sell handicrafts and offal."
As the prices charged by the agency are determined by Congress, many fear that eventual privatization will lead to a general increase, especially in more remote areas, which are less profitable for the private sector. Today, the USPS is required to provide universal service throughout the territory, from Florida to Alaska.
"You have Republicans who support (maintaining public service) because of small business and Democrats who support it because of unions, among other reasons. So there's this unusual bipartisan support in the United States," Morrissey summarizes.
poor and elderly
End of Podcast
The experts against and in favor of the privatization of the Correios, heard by the report, agree on at least one point: the service is safe and reliable.
This perhaps helps explain why the USPS is one of the top federal agencies rated by Americans.
A survey released in May 2020 by the Pew Research Center found that 91% had a favorable view of the agency — first on the list, ahead of the US Department of Health's Centers for Disease Control and Prevention (CDCs), which is on the front line against covid-19.
"It shouldn't come as a surprise that many Americans express some admiration for the Post Office. It is perhaps the agency most people have contact with here in the US. We receive packages and mail six days a week, the postal service is so pretty reliable overall," says Joel Griffith, a researcher at the Heritage Foundation, a conservative think tank that lent several of its paintings to the Trump administration.
Historian Ted Widmer sees at least two other reasons—one subjective and one more practical.
The birth of the postal service, in 1775, a year before the 13 Colonies declared themselves independent from the British Empire, is intertwined with the very history of the United States.
"It's linked to the idea of democracy, that ordinary people are able to run their own government," says the professor at Macaulay Honors College, City University of New York.
Service continues to be very important for the elderly and low-income families, says historian
And even though some Americans don't necessarily see the service as a symbol, many live with it as part of their routine.
"It's not like the Armed Forces—you may admire the military, but you're hardly likely to see them in action. A postman is someone who comes to your house every day, does a good, cheap service."
The internet has substantially reduced the amount of mail crossing the country, from a peak of 59 billion in 1996 to 15.2 billion in 2020, considering the so-called "first class mail", over which the USPS has a monopoly. Even so, emphasizes the historian, a large number of Americans still depend on the service.
"It's important for the elderly and the poorest — people who don't have a computer at home and who know that for 50 cents they can send a letter or document anywhere in the country."
And the damage?
The issue of billionaire losses of the agency is not a consensus among experts.
Morrissey says much of the losses that appear on the books reflect a requirement — in his view, draconian — passed by Congress in 2006 for the agency to make provisions for health and retirement benefits that will be paid decades into the future. By disbursing the obligations in advance, recording a profit would have become increasingly difficult.
Griffith, in turn, says that the agency pays salaries and benefits above the private sector average and that it needs to recognize these obligations in its financial statements.
The EPI economist also argues that, if on the one hand the circulation of correspondence has drastically decreased, the volume of addresses that the agency has to contemplate only increases with population growth. The principle of universality obliges the postal service to serve the entire territory — and, in a country of continental dimensions like the US, the cost is high, says Morrissey.
Both sides agree that the transformation in American communications and consumption habits has made it imperative to rethink the Post Office's business model if it is to survive financially — even if they disagree on what exactly should be done.
Universality obligation takes postmen to the most remote regions of the country
"The postal service's hands are tied today because of Congress, which prevents it from implementing many measures that would make it more profitable," says Griffith.
The Postal Accountability and Enhancement Act (PAEA), which imposed in 2006 the accounting recognition of future obligations with labor benefits, also placed a series of limitations on the activities that the postal service can perform.
In addition to deliveries, the most the Post Office can do is make photocopies, sell collectible stamps and process passport applications.
Today the USPS even delivers ice cream and live chicks, says Morrissey. So, making deliveries from supermarkets, for example, is something that could be done with the current infrastructure to expand the business – but this is prohibited by the PAEA.
Another alternative would be to offer basic banking services, similar to what happened between 1911 and 1967, when Americans could have small savings through the United States Postal Savings System.
According to data from the Federal Reserve, the American Central Bank, about 6% of the country's citizens do not have any type of bank account and another 16% are considered "underbanked", that is, they do not have access to sufficient financial services.
Without public banks, low-income families often have to pay abusive fees at private banks to cash checks for social benefits paid by the government.
"This also happened during the pandemic, with emergency aid payments," adds Morrissey. "It's a problem that people have difficulty accessing their own money and sometimes they have to pay a lot out of pocket."
Griffith, on the other hand, would prefer Congress to give "some leeway to adjust wages [down] to be in line with the private sector, simplify operations and maybe even cut delivery days from 6 to 5."
The researcher says that he, like the Heritage Foundation, believe privatization is the best solution, but admits that there is no "political climate" for it in the country.
In June 2018, the Trump administration even proposed a reorganization of the agency's operation to prepare it for future privatization. The proposal faced strong opposition from both Republicans and Democrats in Congress and did not go ahead. Still, the president managed to implement a series of controversial changes until his departure from the White House.
Trump and the mail-in vote
The USPS was still in the midst of the US electoral imbroglio last year.
Trump was a staunch opponent of voting by mail, provided for by American law and considered essential for Americans to be able to vote amid the covid-19 pandemic. The republican repeated, without evidence, that the modality increased the probabilities of fraud.
The opposition has accused Trump of deliberately trying to sabotage the postal service to undermine its ability to cope with a major operation like the elections.
The agency's inspector general announced in August 2020 the opening of an investigation to investigate complaints about a general increase in delays in deliveries and deterioration in the quality of service. In September, a group of Democratic senators presented a report pointing to "significant and increasing" delays in deliveries of prescription drugs by the Post Office.
USPS director general Louis DeJoy, an ally of Trump, said at the time that the objective of the changes implemented since the beginning of his administration in May was to increase the operational efficiency of the agency.
Woman protests in Washington with sign saying 'Deliver the mail/Depose DeJoy': Trump ally's administration has been criticized
Trump and Amazon
Another reason, says historian Ted Widmer, helped make the postal service a "target" for Trump.
"He hates Jeff Bezos," he says, referring to the founder of Amazon, who, like small businesses, also uses a part of the USPS structure to deliver, especially in the more remote regions of the US.
Bezos also owns The Washington Post, which has provided critical coverage of the former president's administration.
"Trump thought he could hit the 'enemy' by raising shipping costs for Amazon," he says.
The former president has repeatedly defended the need to increase the prices charged to the company on the grounds that the postal service would be subsidizing Amazon's operation - and therefore losing money.
Both the agency and congressmen repeated, however, that contracts with large private companies such as Amazon, FedEx and UPS are profitable. Values are confidential.
In a report on the matter in August 2020, Bloomberg noted that USPS package delivery revenue as a whole had seen a 50% increase in the quarter ended in June, the only division with a positive result.
Vehicle used for deliveries in 1914: total employees jumped from around 200,000 in the 1920s to 700,000 in the late 1980s; today approaches 500 thousand
Uncertain future
Morrissey points out that the current US president, Democrat Joe Biden, has a different view of the postal service. An eventual replacement of DeJoy, however, is not so simple, since the director-general is elected by a board whose members are appointed by the president - and the majority today are made up of nominations made by Trump.
"It remains to be seen what the nominations made by Biden from now on will do and how quickly they will be able to mobilize", says the economist.
Meanwhile, on May 19, a group of Republican and Democratic senators presented a joint proposal to reduce the value of mandatory provisions with health and retirement benefits by US$ 5 billion (R$ 25.6 billion) a year. The bill is similar to one that is already being processed in the Chamber of Representatives (the equivalent of the Chamber of Deputies).
If the texts are approved, the agency could see a significant reduction in the accounting deficit in the coming years.
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