Friday, November 26, 2010

Post Office budget woes, dematerialization, and economic reality

An article from today's Morning Edition (an NPR.ORG radio program) discusses troubles the U.S. Postal Service is facing budget problems. It has a deficit of $8.5 billion or more, and that's led to cutbacks across the country. It means local post offices being shut down, deliveries reduced, etc. The NPR article focuses on personal impact it's meant because of jobs lost due to the cutbacks, but what about the other angles not covered by NPR? Do we really need the Post Office in an era where the Internet has taken over communications? And what about the positive environmental impact from shifting communications to the Internet?

small_usps_truck.jpgObviously any business facing steep losses would have layoffs and reduction in business operation. The U.S. Post Office is run as a business, but is owned by the government and has different imperatives than normal businesses. Cuts to the specific Post Office they focus on (East Cleveland) will save the Postal Service $200,000, reduce transportation costs, etc. In a way this is no different than a department store chain, like K-Mart who went out of business a few years ago, closing stores and laying off workers. Except that this is one of those vital government services. The impact extends to East Cleveland's city budget, the workers losing their jobs collectively paid $100,000 in taxes, making it harder on East Cleveland to stay afloat.

Post Office spokesman Victor Dubina is quoted saying "The popularity of online bill-paying and email" have cut postal delivery rates back to 1960's levels. Tough choices have to be made and if they don't make tough changes required to keep the organization viable, then the whole of the Postal Service will collapse. Sounds like any business leader facing a revenue collapse and the need to shore up corporate finances.

Internet-map_0.gifThe move to Internet communications is Progress, in the form of electronic digitization of what used to be done with paper and delivered by humans driving postal trucks. A side effect of the Internet is this effect upon the Postal Service. If we are able to do our communications over the Internet then why does the Postal Service need to continue existing?

dematerialization.jpgThis is an example of De-materialization, namely the ability of electrically digitized communication to replace the consumption of physical materials. Using the Internet to send e-mail means you didn't write a letter, put a stamp on it, and send it via the post office. Likewise, online shopping means the mail order catalog retailers don't have to send you a physical book, because their catalog is on-line.

Many resource impacts we used to do using paper delivered manually by humans are now unnecessary because of the Internet. Supposedly this is a good thing, because of the trees that aren't being cut down by the paper that isn't being consumed.

Fox News is about to launch a "newspaper" delivered via iPad. While I have huge concerns because it's Faux News doing this newspaper, it's another example of dematerialization. Rather than get news via a bundle of paper printed every day for manual delivery by humans to our doorstep, it's delivered as bits to a convenient portable electronic device. Many newspapers around the U.S. have shut down despite some of them having 100 years or more corporate history in delivering news to their audience. Why? Advertisers and readers shifted to the Internet, long before Rupert Murdoch and his Faux News organization decided to launch their virtual newspaper.

Forest destruction Sinar Mas_0.jpgIt's wonderful and very green, these resources not being consumed by these digitized communications. Rather than kill forests to deliver news, it's done electronically. And as the gizmos offer a better user experience we can expect more of this. Why do any of this by printing paper (killing forests) for manual delivery through the postal service (burning fossil oil, polluting the environment, etc)?

However, there are still some things that must be sent via physical mail. The carrot cake your Aunt Bettie makes for your birthday, for example, can't be delivered electronically. More practically many kinds of legal documents have to be done on physical material.

The U.S. Postal Service is in competition with several package delivery services (FedEx, UPS, DHL, etc) and the USPS is not doing much to make itself relevant against those services. Obviously the popularity of FedEx etc indicates there is still value to stuff being sent to distant places. Enough value to keep FedEx/UPS/etc in business. The USPS woes are hence in part their own issue, that they haven't kept themselves relevant in the face of changing times. If the bread-and-butter of delivering bills and letters is dropping off because of "the popularity of online bill-paying and email," then shouldn't the USPS reshape themselves to serve their changing customer needs?

In the meantime - when someone clings to the existing way things are done, is that good or bad? Change has both positive and negative impacts.