Lysander Spooner vs. the USPS

I gave a letter to the postman,

He put it in his sack.

Bright and early next morning,

He brought my letter back.

— “Return to Sender”, lyrics by Otis Blackwell and Winfield Scott

This just in: The state still sucks at delivering the mail. Shocker!

According to news across the wire…

(Reuters) The US Postal Service said its loss widened to $3.2 billion in the first three months of 2012 and repeated on Thursday its warning that it will likely default on payments to the federal government unless Congress passes legislation offering some relief.

“Of course sales are down,” we hear a few reckoners contest, “nobody uses snail mail anymore. It’s all email today. And Tweets and Facebook ‘likes’ and LinkedIn networking. Sheesh… Get with the times!”

Ah, but we are with the times. You’re receiving this in electronic format, aren’t you? Besides, FedEx isn’t in the email business. It still delivers packages. And its sales for the quarter ending February 29 were, at $521 million ($1.65 per share), more than double sales for the same quarter of last year — $231 million ($0.73 per share). And that, despite the fact that volume in its US express business slumped 4%.

Profits were up for UPS too, though not by as much. Net income for the world’s largest package company rose to $970 million, or $1 per share, from $915 million, or 91 cents per share from the same period last year. Revenue rose 4.4% to $13.14 billion.

And yet, the United States Postal Service can’t manage to balance a budget. USPS enjoys a “statutory monopoly” on non-urgent First Class Mail and the exclusive right to put mail in private mailboxes. (No joke!) Yet it bleeds money like no privately-owned business ever would…or even could. Why is that?

American individualist anarchist and proud owner of one of history’s coolest beards, Lysander Spooner, thought he knew the answer to this question 150 years ago. Put simply: It’s the government, stupid!

Postal rates were notoriously high during the 1840s, a direct result, thought Spooner, of the USPS’s aforementioned monopoly status. Why charge less when there is no competition? Nobody’s going to undercut you…at any price. Similarly, why bother to offer better service? Nobody’s going to siphon off your customers. You’re the only game in town!

In response to the outrageous rates and abysmal service, Spooner set about opening his American Letter Mail Company. He argued that the constitution (with which he didn’t necessarily agree on many issues), granted the government powers to establish mail…but not to exclude others from entering the marketplace too.

“The power given to Congress, is simply ‘to establish post-offices and post roads’ of their own, not to forbid similar establishments by the States or people,” wrote Spooner in his 1844 pamphlet, The Unconstitutionality of the Laws of Congress, prohibiting Private Mails.

Pressing on the issue of unnatural, coercive monopolies, he later continued…

“The idea, that the business of carrying letters is, in its nature, a unit, or monopoly, is derived from the practice of arbitrary governments, who have either made the business a monopoly in the hands of the government, or granted it as a monopoly to individuals. There is nothing in the nature of the business itself, any more than in the business of transporting passengers and merchandise, that should make it a monopoly, either in the hands of the government or of individuals.”

Spooner’s pamphlet was published the same year his American Letter Mail Company went into business. The company had offices in Baltimore, Philadelphia and New York among other cities.

Of course, Spooner’s analysis of the market for mail wasn’t restricted solely to ethical grounds. He saw what all good businessmen see when they decide to go into business…an opportunity to profit, in this case born by the dismal service and high prices of USPS mentioned above. The market — defined as the individuals acting within it — was crying out for a competitive alternative to USPS. And Spooner gave it to them.

His mail company significantly reduced the price of stamps, undercutting the government’s 12-cent standard, and even offered free local delivery on some routes. Hooray for faster, cheaper mail!

Of course, the government doesn’t like competition. It’s bad for “business.” That’s why it maintains and enforces a self-granted monopoly on things like counterfeiting and putting people in cages. (Don’t believe us? Try inking your own dollars or kidnapping your neighbor because he didn’t give you a portion of his annual income.) And so, after years of fines and state-sponsored assaults on his enterprise, Spooner was finally forced out of business in 1851.

But the story of Spooner and his American Letter Mail Company is not entirely a sad one. True, the government forced him out of business by leveling against him unpayable fines for breaking (fundamentally unconstitutional) “laws.” And yes, it forced him to shutter operations before he had the opportunity to fully litigate his own constitutional claims. But the joke is surely on the practically bankrupt USPS, which continues to run at a loss even now, a century and a half on.

Moreover, Spooner’s company proved what many at the time already knew: that the government is no match for private enterprise, neither in offering competitive prices and services or for being able to read and respond to the real world demands of the market. (Interestingly, USPS actually ended up offering a 3-cent stamp in direct response to the challenge from the American Letter Mail Company. Though with Spooner out of the way, it was short-lived.)

Perhaps most importantly, Spooner taught us to always question unnatural authority, rather than simply accepting the limits it forever seeks to impose on us. And, thanks to his example, the next time someone trots out that tired old line, “Yes, but who would provide X service (roads, schools, whatever) if not the government?” you can simply answer them, “Anarchists would, my good sir…anarchists just like Lysander Spooner.”

Joel Bowman

for The Daily Reckoning