Giving America the business

August 18, 2020

Michael Reynolds/EPA, via Shutterstock

By Paul Krugman

Opinion Columnist

The trouble with the Post Office goes well beyond the all-too-plausible fears that Louis DeJoy, Donald Trump’s very political pick as postmaster general, may try to disrupt voting this November. There are also widespread reports both from postal employees and from customers of unprecedented delays in mail delivery. These delays appear to reflect a flurry of cost-cutting measures that, on casual observation, seem to be doing a lot more to disrupt operations than they’re doing to cut costs.

But DeJoy, a Trump donor who came to his job from a private company that, surprise, made a lot of money from contracts with the Post Office, says that he’s trying to run the Postal Service like a business. And that’s certainly what a lot of conservative commentators say he should be doing.

My column today was mainly about the reasons the Postal Service shouldn’t be run like a business. Its purpose is to help bind the nation and foster citizen inclusion, not maximize profits. The thing is, the Post Office isn’t the only institution — the only piece of the economy — for which that can be said.

Over the past 40 years, ever since Ronald Reagan, much of our political spectrum has fetishized the virtues of the private sector while trashing the public sector. And hey, there are a lot of good things to be said about free-market competition. I wouldn’t want government officials running supermarkets or bookstores; there have been generations of experience with government-run manufacturing, and it has rarely gone well.

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But there are also areas where profit-maximization, especially if left unregulated, works badly and either public ownership or at least strong public regulation can work well. (Bad management can ruin a public system — but it can ruin a private corporation too.)

In fact, the past few decades are full of examples where privatizing and/or deregulating parts of the economy have inflicted a lot of harm.

In my column I mention the origins of the Parcel Post. If you didn’t know the history, you might ask why package delivery can’t simply be left up to private companies. Indeed, that’s how it worked before 1913, when there were four major private companies in the business of shipping goods from railroad depots to rural customers. Guess what? They formed a cartel and gouged farmers mercilessly.

Do you think that for some reason similar things can’t happen nowadays? Probably some of my readers are too young to remember the 2000 electricity crisis in California (at least I hope so!). But a large part of what happened there was that power companies and traders exploited a deregulated market to engage in price manipulation, deliberately cutting production to drive up prices. This isn’t hypothetical: we have traders on tape, telling power plants to shut down.

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I’ve been struck, by the way, by the extent to which that artificial energy crisis has been sort of erased from media accounts of the period; I’ve even seen retrospective articles about the crisis that somehow don’t even mention the market manipulation. It’s as if the contradiction between our free-market ideology and the reality of market abuse is too extreme to be processed.

In my column I also mentioned internet access, where America’s unwarranted faith in free markets has led to absence of competition and very high prices.

And then there’s health care. America has the advanced world’s most privatized, business-oriented health care sector. It also has by far the highest costs and some of the worst health outcomes.

The point is that while some things should be run like a business, a lot of things shouldn’t. And the mind-set that assumes that business-type attitudes are always superior has been proved false again and again.

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Quick Hits

I was going to use Eddie Lampert’s destruction of Sears as an example of how bad management happens in business too. But some other names also cropped up.

Sears was one of the two great mail-order companies that prospered during the great era of Parcel Post. The other, Montgomery Ward, met its doom earlier. But it did so for an unusual reason: bad macroeconomic analysis. Its CEO bet everything on the return of the Great Depression.

The U.S. only pretends to have free markets.

Businessmen who became president have a terrible track record, even when they were good at business. Trump is in a league of his own.

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