Megan McArdle put it:

[N]ow that monopoly is an albatross. The only people who really need the service are the people who it is incredibly expensive to serve: those in remote areas that are far from stores, and only spottily serviced by UPS, Fedex, and broadband. So average cost is rising fast, while rates can't. Congress has to decide whether universal mail service is valuable enough to subsidize, or whether it wants the post office to be set free to actually compete.

The other day, a well-meaning acquaintance implored his followers on Twitter to help the post office by sending a good old-fashioned letter to a friend or loved one. I didn't have the heart to tell him that this might make matters worse, since the USPS' problem is not that it processes and delivers too little mail, but that the cost of postage doesn't cover processing and delivery costs, especially if the mail is coming from or going to the sticks. But what about those folks in the boondocks? Can we really expect them to actually pay what the services they depend upon cost? Of course we can! Here's Josh Barro:

For some reason, politicians talk about living in rural America as though it were an involuntary disease whose sufferers deserve offsetting federal subsidies. But nobody is forcing anybody to live in a remote town in northern Maine. If you want to live there, you should pay a market price to have things delivered to you. If you don't like paying for that, you can move. It's not my responsibility to subsidize your postal service so you can live the rural lifestyle you enjoy at a below-market cost.

Suck it, country folk!

Sadly, not everyone shares this sentiment. And I assume the outright abolition of the USPS is out of the question politically. So what should be done?

At first blush, it seems sensible to allow the post office the leeway it needs to "work like a real business". So let it introduce variable pricing that takes into account its delivery costs. And let it slash its labour force and renegotiate contracts. Of course, that last part's not so easy to do. The management of a not-really-for-profit government firm will have neither the power nor the will necessary to turn the USPS into a lean machine. Thus, if it were to ask people to internalise the delivery costs of a first-class letter sent to or from remote towns in northern Maine, that would probably mean asking them to pay more than they would were they to slip the letter into a small box and send it FedEx. So why would anybody use the USPS? It seems to me taxpayers are going to subsidise the outfit no matter what. The real question is how.

My preference would be to lift the monopoly and shrink the USPS very gradually to, say, 20% of its present size (through a combination of buyouts, financed by the sale of USPS real estate, and a freeze on new hires) and transform it into a transparently tax-subsidized service (for households, not companies) that picks up and delivers mail once or twice a week for somewhat less than a private delivery service would charge. If you want to send a letter now, or want to send a piece of mail that gets where it's going fast, you can pony up and pay whatever DHL or FedEx or UPS or whomever is charging. Or you can wait for Wednesday, when that nice lady in the blue shorts looking forward to her very good pension comes by.

(Photo credit: AFP)