It seems like the people who are eager to cut back postal service haven't thought very hard about the economics of network industries.
Take subways. MTA, the agency that runs the New York subway and bus networks, only recovers about 50 percent of its operating costs through fares. Normally, we'd consider a business that only captures half its operating costs as hugely value destroying and shut it down.
But the New York City economy, with its ~$1.3 trillion GDP, couldn't operate without its trains and buses. So obviously the value created by the system vastly exceeds the cash captured through fares. A paradox!
Good transportation and communications networks provide service to outlying and low-income areas not only for humanitarian reasons but also because it's useful for the rest of us for the network to be universal.
Minimum-wage workers might barely be able to afford a $2.75 subway fare but their employers benefit hugely from being able to hire people from outer burroughs. Stores benefits from foot traffic generated by subway stops.
Network can't and shouldn't try to capture the full value they create. Michael Bloomberg would probably pay thousands of dollars to ride the subway to work, but he only has to pay $2.75.
And this isn't just about transit. Pretty much every transportation or communication network gets regular subsidies to support low costs and broad access. Most roads are free to use. Airlines get periodic bailouts. Broadband companies get subsidies to serve outlying areas.
If a communications network is recovering 100 percent of its costs from customers, there's a good chance it's charging inefficiently high prices and/or serving inefficiently few users.
