About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

285 IRET Congressional Advisory 1 (2012)

handle is hein.taxfoundation/iretcgadv0282 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. July 30, 2012 Advisory No. 285 Foreign Postal Services Sell Many Nonpostal Products; Would The U.S. Postal Service Be Financially Stronger If It Did The Same? Executive Summary Electronic diversion, together with the Great Recession and its after-effects, have buffeted postal services throughout the world. Nevertheless, the majority of foreign posts in high- and medium-income countries have remained profitable in recent years, according to data from the Universal Postal Union (UPU). Meanwhile the U.S. Postal Service has racked up five consecutive years of red ink, losing $5.1 billion in 2011 alone, and it warns of worse deficits ahead. Previous IRET studies examined three reasons why USPS is ailing financially compared to most foreign posts: limited ability to control costs because of Congressional micromanagement, the financial stress of funding extremely generous retiree health benefits, and postal rates that are low by international standards. This paper investigates whether the Service's limited degree of nonpostal business diversification contributes to its financial problems compared to the majority of other posts. A striking fact is that many foreign posts are heavily involved in nonpostal commercial activities, while USPS remains essentially a postal operator - the largest in the world. In a study for USPS, the consulting firm Accenture looked at 25 foreign postal services that generate about two-thirds of foreign mail volume. Diversified products contributed 63% of the foreign posts' total revenue in 2008, up from 49% in 2003. At only two-fifths of the foreign posts did diversified products contribute less than 40% of revenue in 2008. Although Accenture's numbers overstate nonpostal products because they include package services, which are considered postal products in the United States, the share of revenue foreign posts obtain from nonpostal commercial products is clearly large and growing. Several of the main nonpostal business areas that have attracted foreign posts are finance, logistics, insurance, and Internet-related services. Accenture reported that foreign posts generally earn profits on their diversified products. Those numbers indicate that diversification is helping foreign posts' bottom lines. Has diversification also been good, however, for mail users, taxpayers, and national economies? The evidence suggests not. Contrary to the claim that nonpostal business lines subsidize mail service, which should hold down postal rates, the relatively nondiversified U.S. Postal Service has some of the lowest

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most