- - Tuesday, June 19, 2018

ANALYSIS/OPINION:

Several months ago President Donald Trump “went postal” on Amazon, continuing his feud with Jeff Bezos, who is said to be the world’s richest man, and owner of The Washington Post, which the president frequently denounces as a fountain of fake news.

It’s serious business when a president singles out a company and accuses it of profiting unfairly from the seven-day per week package delivery of the United States Postal service just because he doesn’t like what a newspaper writes about him.

Keeping an eye on the postal service is always a good thing to do. It’s perpetually in the red and the prospect of a taxpayer bailout always hangs just over the horizon. One of the few post office endeavors that work right is its package delivery business, which Mr. Trump and other critics seem not to understand. Profits earned from delivering packages supports the rest of postal operations. Delivering a letter for 43 cents is one of them.

The rates that Amazon and other big shippers pay to the postal service have been reckoned as profitable and reasonable by the Postal Regulatory Commission, an independent federal agency charged with regulating the U.S. Postal Service. The U.S. Court of Appeals for the District of Columbia, the most consequential judicial panel after the U.S. Supreme Court, has approved the Regulatory Commission’s approach to oversight of the postal service.

The president, perhaps because he doesn’t like Mr. Bezos, ordered the creation of an administration task force to study the issue. A government “task force” always sounds more important and more competent than it actually is. According to reliable observers of the deliberations and investigations of this task force, the members have concluded that the price for shipping packages should be raised, and having concluded are now looking for the evidence to support the conclusion. (This is how a certain special counsel pursues his assignment to find American collusion with a foreign government to cook a certain presidential election, so the president should be familiar with the method.)

The econometric modeling needed to determine the correct price for moving a package from a warehouse in Seattle to the front door of a private residence in Peoria is difficult. Political pressure from the White House doesn’t make it easier, and could in fact make things worse.

This could be a matter of the president having been given inaccurate information and bad advice given in good faith about the price Amazon in particular pays to ship packages via the postal service. He called it a sweet deal for the company when it actually is a good deal for both the company and the postal service. Last year revenues from package delivery accounted for 30 percent of postal service revenue and contributed roughly $7 billion more in revenue than the cost of delivery. A healthy package business is just about the only thing keeping the postal service afloat.

Perhaps the postal service could raise prices on its package delivery business. But what many people, the president included, may not realize is that the highest price is not always necessarily the best price. A good businessman, particularly a businessman in the construction business, learns that quickly. A markup that’s too high above what the market will bear will drive business away from the postal service to private carriers, which already charge about what the market will bear.

Moreover, it won’t be the companies shipping products that pay the increase. The free shipping that customers have become accustomed to might come to an end, and the price of goods from e-tailers would be raised. The postal service, having lost a considerable part of its profitable business, would have to cut service or increase the price of the first-class stamp.

Mandating an artificial price increase for package prices is a loser for everyone. What he prescribes is a new tax on packages shipped by mail. The impact would be especially hard in the rural parts of the country where there are no realistic alternatives to the postal service, but there are plenty of voters. If history is a guide, “stamp taxes” are not very popular. His task force must keep that in mind.

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