[crscore]Bernie Sanders[/crscore], Democrat presidential candidate, socialist senator from Vermont, scourge of bankers, Wall Streeters and 1 percenters everywhere, wants the Postal Service to get into the small-dollar loan market.
Those pesky payday lenders have begun to serve a growing public that can’t or won’t deal with banks and their stiff loan rules. As a result, loans, check cashing and small-dollar checking accounts – once solid contributors to the bottom lines of traditional banks with their various fees and overdraft charges – have disappeared from those bottom lines.
Sanders, who, despite his rhetoric, has been a good friend to big banking during his time in Washington – see Dodd-Frank, which enshrined too-big-to-fail and took other steps to lock in the advantages of giant banks – stepped up.
He now proposes the Postal Service to do for consumer loans what Amtrak has done for rail travel in the country: create what amounts to a monopoly, drive out potential competitors, then limp pitiably from congressional bailout to congressional bailout.
The people he and Sen. [crscore]Elizabeth Warren[crscore] (D-MA), who also supports the idea, claim to champion happen to form the customer base of the payday loan industry. Most earn $35,000 to $70,000 per year. Two-thirds are women. Only about half are white. And rather than get trapped in the horrible debt cycles Sanders describes, most take small loans to solve immediate crises and pay them back on time.
The average payday loan totals $338. More than two-thirds are paid on time or better than agreed, and only 11 percent are charged off. If Sanders’ and Warren’s banking friends hadn’t lost so much money to these lenders, one can’t help but wonder if they would’ve gotten involved.
The bigger point here is that the Postal Service’s job is not to compete with banks, delivery services, seafood merchants or online bookstores. It is to deliver the mail promptly. It relaxed its own standards in redefining ‘promptly’ and meets the new, less demanding standards even less than before. Even Sanders has called the new standards and the increased failure to meet them a “disaster.”
The Postal Service has a protected monopoly that enables it alone to access mail rooms or mail boxes, which it uses to deliver not only first-class mail, its protected monopoly, but packages, which gives it a huge advantage over competitors, such as UPS, who must locate every customer’s front door.
Yes, there is less such mail now than there was before – letters are down 10 percent over the last decade and probably will continue to fall as email and other forms of communication take hold.
But there are still 55 billion pieces of mail moving through the Postal Service annually. That’s easily enough to keep the Postal Service busy if only it would quit looking for quick fixes in areas already served adequately by the private sector and focus on delivering the mail on time.
The first step is to stop thinking of it as a business. It’s not a business. It is a government service, established in the Constitution, that has veered significantly out of its lane because of people who want to treat it like a business.
If it were a business, it wouldn’t have lost only $5 billion last year; it would’ve lost more than $20 billion, according to a new study by Sonecon, a Washington consultancy headed by a former Commerce Department undersecretary in the Clinton administration.
That’s because, if it were a business, it would have to pay property taxes on the land it owns in almost every town in the nation. It would have to license its ubiquitous delivery vehicles and pay property tax and other associated fees on them. Its vehicles would get parking tickets and have to pay them. It would have to pay fuel taxes and taxes and fees for road tools and other taxes and fees.
If its various side businesses were not propped up by the monopoly granted on home delivery of first-class mail, they wouldn’t be the profit centers their supporters claim they are either.
The Sonecon study found cross subsidies – subsidies granted along with the monopoly on home delivery of mail that benefit the side businesses that do compete with the private sector – added 10.8 percent to the bottom line of its international mail operation, 27.2 percent on priority mail, 29.3 percent for ground shipping and 30.1 percent for first-class package delivery.
Sanders says, and not without merit, the Postal Service can’t ever get straightened out because of all the congressional cooks in its kitchen. Some on the left, including a think tanker whose work was publicized recently in the Washington Post, are starting to suggest the side businesses be sold off to survive or not, and the Postal Service as conceived by the Founders be recommitted to its original mission – delivering the mail.
That is not the approach the stakeholders in the side businesses would support – they like having their bottom lines bolstered by monopoly protections and don’t, in the case of Sanders and Warren, want to lose the chance to throw a little social policy on the balance sheet as well.
But it is the approach Americans need to get the mail delivered on time. Which, after all, is what the Postal Service is supposed to do.