Assorted links


Read the Thaler piece, one of the more sensible and straight-forward arguments I have heard recently.

Furloughs- so what? We have them at the U of Maryland right here in the DC area, and as the article notes they're having them at many other institutions now. Not that I appreciate it, but it's increasingly just a reality.

This market now has two main private suppliers, FedEx and UPS, and one public one, the United States Postal Service. When you have to send something overnight, which one do you use? Most shippers choose one of the private companies.

In my experience, this isn't true, or at least it is less true. And UPS is using USPS to deliver parcels in rural areas. And the commercial shippers use UPS and FedEx because they get pricing and bundling that individuals can't get (both run logistics operations where they run warehousing and order picking and packing integrated with shipping, depending on the shipper's needs).

Parcel Post was introduced about a century and a quarter after the beginning of the US Post Office - Ben Franklin was the first postmaster before the US Constitution. And it was done only after rural free delivery was instituted. Both services were wildly popular because no private sector alternative existed. Parcel delivery services did exist because there was a need and the Post Office didn't provide it - American Express was started in 1850 doing parcel delivery, but it found that parcel deliver was less profitable than financial services.

But the private parcel delivery services, built on a railroad backbone, (and railroads had been built with huge government subsidizes and preferences - cash plus free land for right of ways and as incentives to build to regions) had failed to serve the majority of the people, who at the time lived in rural areas.

So it was after more that a century of failure by the private sector to serve the public that the government introduced the government option: parcel post with rural free delivery. And the result was a big boost to the US economy with millions of people in rural areas now ready customers for speciality retailers located in the cities.

And it should be noted that the Interstate Commerce Act of 1887 was pressed and signed by a conservative Republican trust-buster, Glover Cleveland, because of the terrible performance of the railroad centric package delivery system that failed to serve the majority of the population, and in fact gouged them and selectively denied them service. One can easily make the case that the "public option" Parcel Post started three decades later was far more effective than regulation, even regulation by a conservative Republican.

But the article argues against the Congress acting on the will of the people, effectively arguing that the farmers who were half of the population, should have continued to suffer from poor delivery and high prices.

Air routes failed to develop without the subsidies to private parties to carry mail - in 1925, the Post Office started contracting out air transport of the new class of Airmail, looking for a FedEx by requesting bids from the private sector. So, the USPS using FedEx today is merely just the continuation of a practice started in 1925.

One reason is that governments are not very good at innovation.

So, basically, universal parcel post service at uniform prices to all delivered to rural addresses was not an innovation?

Transporting the mail by air was not an innovation?

Transporting packages and people by standard air routes was not an innovation?

Using competitive bidding for service from private companies to promote new businesses and new standard services is not an innovation?

Handing out free land and cash to create the incentives to build railroads to increase commerce and grow the economy was not an innovation?

Building government run, government subsidized freeways instead of relying on the private sector toll roads in order to promote development, commerce, and economic growth was not and still is not innovative? Ben Franklin was the one to call for the government funding of building post roads, but the actual article in the Constitution limited the working to designation of post roads, making it unclear if the government would build the roads determined to be needed by the post office.

So, the question is whether we want health care to be something that is delivered as the private for profit corporations decide as package delivery was run up until 1917, with the majority of the population getting poor service at high prices and with the majority of the population angry over the inequity, or do we want the government run public option that benefits everyone, as occurred after RFD Parcel Post?

And as US health care costs 17% of GDP, that is presumably 17% of GDP added to exported goods compared to 6-10% of the cost of exported goods from nations with universal health service that the US competes with. It is possible to shift the health care costs onto the citizens of the US in order to bring down the health care costs on exports, but that means good made in the US must sell for more than they are exported for in order to pay for the high US health care costs. But without the imports carrying a share of US health care costs, US manufacturers are going to be uncompetitive in the US, and thus not able to shift the export health care costs to US consumers. Clearly lower health care costs are needed for US business to be competitive in the global market. Just as with the post office starting the public option of Parcel Post, a public option in the US would very likely be a boon for the US economy, as well as serving a lot of under-served people in the US.

Gerald Cohen brings to mind a difficult question: what should one say about someone who is personally likeable but espouses an evil philosophy? We might think about the kind Nazi, but of course the common example is the kind Marxist, who gives candy to children but who would steal all the goods of their parents out of sheer spite over inequality. I really don't know how one ought to react in, say, an obituary. The problem is particularly sharp when it comes to those who were explicitly Communist.

This is a strong word I am about to use for someone who is far smarter than me, but I highly tempted to use the word 'naive' to describe Thaler's article. He is lucid, rationale and his economic analysis is first rate. As a ardent Democrat, I still see the rationality of his comments....right up until the end when he started talking about a compromise to be made with Republicans.

Republicans oppose all reform. I have yet to see them engage in some sort of give and take regarding various types of changes. They want to stop change because they, rightly, see it as a victory for Obama (bad for them). This is the common failing of many more Conservative writers I have read. They are describing a tug of war between people engaged in good-faith bargaining over the issue. However, if one side wants to 'kill' the issue, it is hard to see the advantage to Democrats with negotiating away something.

If anyone can point me to a sight which has Republican members of congress (Note: not smart Econ driven conservatives OUT OF Congress) who have publicly offered up some compromises, I would love to see it. Until then, there should be no compromise. What is the compromise between change and kill?

I highly tempted to use the word 'naive' to describe Thaler's article. He is lucid, rationale and his economic analysis is first rate.

I'd use the word "ignorant." As I noted before, his description of USPS vs UPS vs FedEx is just plain factually incorrect, and it ignores the history of package delivery in the US.

mulp writes: "So it was after more that a century of failure by the private sector to serve the public that the government introduced the government option: parcel post with rural free delivery."

The Post Office has had a legally-enforced monopoly on cheap general mail delivery since 1792. The most significant challenge to that monopoly prior to the FedEx/UPS era was Spooner's American Letter Mail Company, 1844-1851, founded on the realization that mail could at that time be carried at a profit for half what the Post Office was then charging. Since Spooner and others essentially weren't allowed to compete without the post office's permission, I'm not sure I'd call that a "century of failure by the private sector to serve the public".

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