Re: [NTLK] [OT?] Spam?

Hello,

--- On Mon, 7/20/09, Dennis B. Swaney <romad@aol.com> wrote:

> And I'm confident the USPS won't be relinquishing
> that monopoly anytime soon, seeing as how UPS and FedEx have
> demonstrated an ability to deliver packages at competitive
> rates. I doubt they're going to be afforded the opportunity
> to try to do the same thing with First Class Mail. :)
>
>
> I hope that NEVER happens because then there would large
> rural areas where the private entity would not provide service.

Private firms have to be able to meet their costs. Government entities, on the other hand, have the ability to cost-shift (i.e. getting Peter to pay for something that Paul uses). But I think it's only fair to acknowledge that providing mail delivery to rural areas costs more money to provide because of the distances involved.

The fact that this greater cost is not actually reflected in the *rates* charged to those living in rural areas does not mean it isn't there: just that those costs are being absorbed by (i.e shifted onto) other USPS users.

Having relatively inexpensive mail delivery in rural areas is great for people who happen to live in those areas. But might not be so great for city dwellers who, very likely, pay higher rates for mail delivery in the city, seeing as how the higher costs for serving rural folks have to be borne by *someone.*

>Remember the USPS "monopoly" mandates that they serve everyone.

Right, *regardless of the costs involved.* Private economic entities, on the other hand, need to be conscious of the costs they have to account for, otherwise, they will soon find themselves out of business. They do not have the ability to cost-shift (i.e. make other people bear their costs) the way that government entities do.

> Yes, there are a few areas where they can't provide home delivery but
> not as near as as many as there would be if a private entity was making
> the decision.

I think it might be a stretch to say that a private entity absolutely would *not* provide mail delivery to rural areas. It might be more accurate to say that they would be willing to provide such a service, but that they would need to be able to meet their costs (and add on a bit more for their trouble) in order to be able to do so. That is, under a private entity, rural delivery would likely have higher rates due to the greater costs that have to be met.

Don't read any of this the wrong way: I don't have a problem with low prices. But *artifically* low prices are not good to have, simply because the costs are not being borne by those who incur them. The costs are, instead, shifted onto others and this, I hope we can agree, is not fair.

For example, so-called Standard Mail (the old "Bulk Mail") features very cheap rates. This is why so much junk mail ends up in your mailbox. But those rates are not low because delivering junk mail is, somehow, cheaper than delivering First Class Mail: they are low because the Direct Marketing Association (The "Junk Mail People") has lobbied for these low rates and gotten First Class Mail users to pay higher rates so that the DMA folks will pay lower ones (i.e. subsidize the DMA's use of the mails).

It's no coincidence that the Direct Marketing Association is a powerful lobby. Lobbies have the ability to get the government to cost-shift and this is not always a good thing for you and I.

> Oh, years ago I lived in a modern European country the size
> of the sate of Oregon. At that time, their equivalent of first class
> postage for a letter addressed internally was about 50% higher than the
> U.S. rate that covered the entire U.S, including the territories of Guam,
> American Samoa, and the U.S. Virgin Islands.

Yes, and it's not hard to see why such a state of affairs might exist: if it's a small country, the ability to cost shift is limited by its population. So if there aren't many people, the ability to cost-shift is sharply reduced. In the US, OTOH, there are roughly 300 million people on whom your costs can be inflicted upon by government fiat when it comes to postal rates.

Higher prices are not always "bad," but may simply reflect the fact that there is a *higher cost* involved in providing the good or service in question, d'you see?

>So I consider the $0.44 cost reasonable and the U.S.P.S. sufficiently >efficient.

As I pointed out before, it's impossible to say just how efficient the USPS is or is not because it does not have competition in its market space. There is nothing to compare it to in terms of efficiency.

If a private carrier could deliver mail for $0.25 per piece, is that a more efficient carrier? We'll never know unless the USPS gives them a chance. Likewise, a private carrier could end up charging *more* because, unlike a government entity, it cannot go to the taxpayers for more money if it does not meet its costs. So if the *true economic cost* of mail delivery to a given area is, in fact, higher than the current, possibly artificially low price, then postal customers in that area can probably look forward to paying higher prices (i.e. have the true cost of the service they are using reflected in the price they have to pay).

> But how does any of this thread apply to the Newton?

Well, you're asking, so I'm telling: Steve Jobs, being the head of a private-sector firm, is forced to manage his resources as efficiently as possible. And while we are all disappointed that he decided to ax the Newton, he has a finite amount of resources at his disposal and has a very limited ability to cost-shift (i.e. he cannot sell iPhones for $10,000 each because he must sell his products at a price a certain minimum number of consumers can meet and are willing to pay so that he, in turn, can meet his costs).

So at the time he made his decision regarding the Newton, he felt that taking resources away from the Newton division (i.e. people and brainpower) and spinning the Newton division back into Apple made the most sense in terms of maximising efficiency for his firm. It's the sort of choice that people who operate in the private sector have to make all the time.

And while those choices are not always popular with those who are affected by the outcomes, they have to be made nonetheless. I can only hope that this thread has made the "why" behind the "what" at least slightly clearer.

Or, to put it a different way: there is an "OT" in the subject line, so this thread does not necessarily need to relate directly to Newtons any more than a discussion concerning Poutine does. :)

Best,

James Fraser

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Received on Wed Jul 22 02:29:40 2009