Posting a Postal Economic Problem


Posting a postal economic problem can help us see opportunity.

 Sometimes a small reflection of a grand scale can help us see the whole.  The fiscal structure of the Western world is so complicated… the moral code so confused… the socio-economic communication so complex that it’s hard for we mere mortals to absorb.  Perhaps we can see it better and understand how to protect and profit from the confusion in this post on the Post.

A Ponsi scheme is based on using promises of the future to fund current obligations without any reasonable assumption of fulfilling the future promise.   When it comes due it demands even larger future promises that also cannot be kept.

When Bernie Madoff created $18 billion of so of future promises that could not be fulfilled they put him in jail for life.  Quite right.

So what should we think of this idea that generates revenue now and promises service FOREVER in a highly inflationary scenario?

THE FOREVER STAMP

When visitors come to our Florida home one of the first images that may puzzle them is the

essential-oil-lamp

bungie strap on our mail box at the gate.

essential-oil-lamp

We take in the mailbox at night.  I was puzzled as well by this strap when we bought the place and of course I removed it quickly and made the mail box nice and permanent.  I thought.

Not long after someone decided to start playing “whack a box” or “mailball ball” or “4X4 vs. mail box”.

I chatted with neighbors whom I belatedly noticed did not even have mail boxes!

Someone it turns out loves to bust up mail boxes.

Hmpf. Isn’t there something wrong with that I asked?

I checked at the US postal Service website and read this: The United States Postal Service is the one government agency that touches every American on a daily basis.  Through rain, sleet, and snow, Postal Service employees deliver more mail every delivery day, per capita, than most countries deliver in a month.

1st us postage stamps

First US postage stamps

The USPS website says: The story of the United States Postal Service begins in 1775, when the Continental Congress named Benjamin Franklin the first American Postmaster General.  Franklin and his fellow patriots saw a robust mail system as critical to the nation’s welfare.

I agree.  A country is as good as its mail!

The site goes on to say:  Protecting Yourself from Mailbox Vandalism

Rural area mailboxes are vulnerable to vandalism because they are usually isolated, located on public thoroughfares, and frequently not visible to the box owners from their homes. City residential mailboxes are vandalized to a lesser degree.

Mailboxes are considered federal property, and federal law (Title 18, United States Code, Section 1705), makes it a crime to vandalize them (or to injure, deface or destroy any mail deposited in them). Violators can be fined up to $250,000, or imprisoned for up to three years, for each act of vandalism.

Postal Inspectors recommend these actions to protect your mailbox and any mail that may be inside it: Immediately report theft, tampering or destruction of mail or mailboxes to your postmaster. You’ll be asked to complete PS Form 1510, Mail Loss and Rifling Report, or PS Form 2016, Mail Theft and Vandalism Complaint. The forms help the Postal Inspection Service determine whether your problem is isolated, or one frequently experienced in your neighborhood.

Obtain Label 33 from the Postal Inspection Service and affix it to your mailbox. The sticker warns that willful damage to mailboxes and theft of mail are crimes. Keep your mailbox in good repair, and make sure it’s properly installed. This may help prevent theft of the mailbox itself.

If you have information on mailbox vandalism, call the Postal Inspection Service to report it. Your cooperation helps apprehend violators.

I visited the postal people and their story… the reality…  was quite different from the website… semething like… “Give me a break there is nothing we can do”.

The postal inspectors are too busy looking after terrorists and money launderers and more serious crime than my darn mailbox.

That makes sense and this is not really that big a deal.  Taking the box in and out is not a huge inconvenience. This is one of those crimes where it isn’t worth pursuing the criminal… except for the “Broken Window Theory”. The idea behind this theory is to think about  a building with a broken window. If not repaired pretty soon it may have a few.  If these windows are not repaired, the message for vandals is break a few more. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires inside or use them for drug deals or other crime.

In the early 1990s the new commissioner of the New York Police Department, Bratton centered his attention on petty crime in an all out war minor crime justification before such action stemmed from the broken window theory.

Mayor Rudolph Giuliani came to power in New York City also during the 1990s.  The Giuliani-Bratton team moved the war on crime from the subways to the streets, instituting a policy of “broken windows”.

Bratton stated “We were going to fix the broken windows and prevent anyone from breaking them again. We are going to reclaim the public spaces of New York.”

The official crime rate dropped significantly in New York City, with murder decreasing by 72 percent between 1990 and 1998, while total violent crime went down by 51 percent.

Of course there is criticism of this theory when the strictness pendulum swings too far. There are some dragonian, totalitarian governments which proudly point out that they have no crime. We won’t go into that here.

Let’s focus on the fact that the Postal Service’s inability to cope with vandalism is a sign of not such good news.

Beating up on the Post Office and fighting petty crime are not the points here though. Vandalism has always been around.  I recall my grandfather telling me how he used to load his shotgun with rock salt to shoot vandals who used to tip over his outhouse.

The reflection of a basic problem is that the mail system in the US seems to be falling short and shorter and shorter…  as it costs more and more and more!  (Remember problems create opportunity as the founder of Fedex can proved in this case.)

The failing mail system is just a reflection of the system as a whole.

For example, although it is a Federal crime evidently no one out this way wants to be bothered with something this small.

I am not thinking much about the legal system either.  I had a bright idea… (or actually a friend suggested it).  Why not put a concrete block in the mail box.  A bone jarring thud might make the whacker think twice before smashing our mail box.  No! No! No!   My attorney explained that the poor vandals might hurt themselves in his process of trying to destroy my mail box.

I could be liable.

(He did not think much of the idea of  loading my shotgun with rock salt would work so well nowadays.)

Heaven forbid that I would want to do these playful pranksters any either.

So I decided to just live with moving the mail box but the problems do not stop there.   When twice a year we move our of Florida into the cool mountains and then back down, we have our mail forwarded.

This last year, (without any notice) the postal service changed the regulations on forwarding business mail.  They will no longer forward business mail to a residential address.  According to all the postal officials I spoke with this had something to do with the Bernie Madoff scam.  Perhaps he forwarded business mail to avoid detection.

For small at home businesses this presents a problem because our residential address is also our business address!  Plus in the confusion of this new regulation our postmaster took it to say NO MAIL FORWARDING. So they were not forwarding any of my mail.

I visited the post office and their solution was simple. They told me to falsify my mail forwarding document by showing my corporation as a person.   I wondered…”if the law change is meant to stop crooks… would they not do the same… falsify?  Doesn’t this make all small businesses who do this criminal and not stop the real crime?”

However this message is not about how bad the Post Office has become.  Nor my petty frustration over vandals.  These little things are tiny reflections of  a much bigger picture and problems that extend far beyond the post office and reach around the world.

If you read the postal service web page (as I have done), you’ll see the U.S. Postal Service proudly pointing out, again and again “The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations”.

What is not mentioned is  that the Postal Service has a borrowing limit of up to $15 billion from the Federal Financing Bank (FFB), an arm of the Treasury Department.

Loans? As in “borrow and repay”?

According to the law, they must repay the loans, but this May (2011) postal officials told a Congressional subcommittee that the Postal Service faces a financial shortfall and unless Congress intervenes the Postal Service won’t be able to pay some obligations, including a looming $5.5 billion payment due for retiree health benefits.

The officials said “the Postal Service finds itself in dire financial straits. Statutorily mandated payments due to the government at the end of September will not be paid,” he said, “unless Congress acts to refund overpayments of pension funding or ease the mandate to prefund retiree health benefits.”

In other words, they cannot repay their loans… cannot pay future pension obligations and want to raid existing pension contributions instead of expanding the loans they can’t repay.

In other words, the US Postal Service is falling shorter and shorter as it costs more and more… yet creates a huge loss!

However when the US Postal Service tries to cut back… wow…  citizens are outraged! Here in Ashe County, North Carolina… total population of about 25,000… I can reach a dozen post offices within 20 minutes or so drive.  Even without the cost of Federal bureaucracy and attractive (for the staff) pension, how can a business make a profit with staffing like that?

Here is the national… and global problem that this post office dilemma.  The US is not alone.  We have three children living in England and Postman Pat ( A Royal Postal Service legend) is letting us down as well.    For example, our Christmas packages that the kids mailed on time reached us in February.  This is not the first time that the mail failed.

The Western economy which has been the underpinning of the global economy for generations, is badly hampered by aging populations, greater dependency on energy as its price rises, increasing awareness of the Animal Farm factor in government and growing entropy as economy of scale is outweighed by the entropy of aging systems.

Rudolf Clausius, a German physicist and mathematician, coined the word, entropy and defined it as the increment of energy added to a body as heat divided by its temperature, during a reversible process.  As  a body grows larger its inner mass loses its ability to eliminate heat, and this reality of physics seems to apply to social system as well.

Governments, previously considered stable have grown deeply in debt and are decreasingly trusted.  Even the US sovereign debt  is at risk of a downgrade.  The big national systems fail as all of its underlying (such as postal systems) lose efficiency and increase cost.

Entropy, however, comes from the Greek language to mean transformation. Problems create opportunity and just as the problem of the US Postal Service created an opportunity for Federal Express and thousands of post office address service across the nation… so to does the current transformation which spends their time looking for solutions rather than worrying about the change.

Here are three ideas that may come from the current global social- economic transformation.

#1: Local Energy Generation.  One huge problem of postal… electrical… phone and delivery services is having to charge the same rate for delivery to areas of low population as areas of high population.  When push comes to shove, cities have the voting power and rural areas may lose some of the benefits they currently have.   System which deliver energy at a low cost in rural areas may thrive.  One share to watch is Honeywell International Inc. (HON).

windtronics

A private company, Windtronics, has licensed a far more efficient wind generator that uses a  “Gearless Blade Tip Power System” of magnets and stators surrounding its outer ring, capturing power at the blade tips where speed is greatest, practically eliminating mechanical resistance and drag. Rather than forcing the available wind to turn a generator, the perimeter power system becomes the generator by swiftly passing the blade tip magnets through the copper coil banks mounted onto the enclosed perimeter frame. This system addresses past constraints such as size, noise, vibration and output. WindTronics’ proprietary systems are breaking traditional technological barriers across multiple markets, for homes and businesses, for both energy generation and energy recapture even in moderate winds. The Honeywell Wind Turbine is the highest output, lowest cost per kWh installed turbine ever made (in class and size).

#2: Rural Courier. I am not aware of, (but am looking) for a company offering this type of service.  The idea is simple. A local rural delivery service that delivers in a limited area… perhaps even takes mail to the post office.  There is a good website that shows the rural delivery problem in pictures

#3: Reduce shipping of stuff. Look for (or be in) businesses that create local economies… flea markets and farmers’ markets are two examples.

One final note. The US mail may fail, but here is why we should not sell the USA short.

To understand the coming economic storm better, I have been rereading the six volume World War II by Winston Churchill.  In volume one, The Coming Storm, Churchill points out how British forces often excelled over German forces who were better prepared and better equipped because of their ability to adapt.  The British common law philosophy and approach to life is more flexible than the more rigid routines found in most nations.  The US exemplifies this flexibility… initiative… tolerance for failure and still has one of the best lifestyle.

According to an annual World Bank Study, the US is ranked.

world bank study

However if you look deeper, you’ll see that the reason many Asian countries do well is that the governments are focused on helping big business move and operate there.

World Bank sub studies show that the easiest places to start small businesses and start ups are, in order, Denmark, Canada, USA, Sweden, New Zealand, Ireland, Switzerland, Norway, Netherlands, Australia.

In times of rapid change, the start ups are those that shift the world.    The start ups create the innovation, the new richness and the new businesses that other governments then aim to attract.

The USA remains unique in that start ups are easy and the national economy is so huge.

Are there global economic problems?  Absolutely… so huge we can hardly imagine them, much less see the entire picture.  Hopefully the tiny reflection and the potential opportunities, we have glimpsed here helps us understand how to protect and prosper from change.

Gary

Learn more about how to survive and prosper in change with multi currency investing and global micro businesses at our Jne 24 to 26 seminar. Details are below.

 


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