Return to Sender

How State monopolies destroy innovation, hamper progress and burn capital

(Source: Getty Images)

Joel Bowman, mailing today from Buenos Aires, Argentina...

Welcome to another Sunday Sesh, fellow patron, that time of the week we reserve for making outlandish claims, telling tall tales and joyfully righting the ways of a weary and wayward world. Or something like that. 

We generally begin these weekend musings by casting a line into the bottomless well of human hubris, deep and murky, and seeing which politician we can drag to the surface. Warmongers... fauxgressives... inflationistas, do-gooders and pathological world improvers... they’re all in there, slithering around in the slime and the scum.  

But today, we take a break from baiting our betters. They’ll be there when we return, no doubt, dutifully destroying your currency, front-running your investments and making sure your kids know they’re racists at heart. All in a day’s work.

Besides, there are only so many Alexandria Occasional Cortex statements one can endure before one’s own cerebrum threatens to down tools and join the mindless picket line... 

And so, with the Great Causes firmly in the hands of the chosen few, we turn our attention from the “you didn’t build that!” class... to a man who actually did build that (only to have the state then promptly take it away). Hmm... there’s a lesson in there somewhere. Read on, below, for the uplifting tale of a great American hero...

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Lysander Spooner vs. The USPS

By Joel Bowman

I gave a letter to the postman,
He put it in his sack.
Bright and early next morning,
He brought my letter back.

~ Return to Sender, lyrics by Otis Blackwell and Winfield Scott

This just in: The State still sucks at delivering the mail. But don’t worry, the worse the service gets, the more you’ll have to pay! 

As Bernie Sanders was busy moaning and kvetching about the “obscene” profits netted by Amazon (among other private companies), for having the gall to offer superior goods and services to customers ready and willing to pay for them, nobody’s favorite government monopoly, the United States Postal Services, quietly announced they would be raising its own prices. According to CBS News:

The U.S. Postal Service said on Wednesday that it wants to increase postage rates this summer — less than one year after it last increased the price for a first-class Forever stamp. The new price would rise to 60 cents from its current 58 cents…

The higher stamp price would take effect on July 10, or 11 months after its postage rate increase in August, when stamps went from 55 cents to 58 cents. That means customers would be paying 9% more for postage compared with prices less than a year ago, or above the 7.9% rate of inflation in February. 

Before we go on, let’s give a little credit where it’s due. With inflation already at a 40-year high, it takes some grit and gumption to raise prices faster even than the government itself can debase its own currency. But then, the USPS is nothing if not proud of its long and storied history of waste, decay and general, Newman-like ineptitude. 

From Windfall to Shortfall

According to the U.S. Bureau of Labor Statistics, prices for postage in 2022 are 2,523.71% higher than they were in 1935, an increase that handily outpaced annual inflation over the same period. Expressed in depreciating dollars and cents, postage that would have cost you $20 back when Franklin Delano Roosevelt was in office today sets you back $525. Ouchie!

Surely such a state-protected price hike would translate into robust, “windfall profits” for the USPS, right? Well... no. Per the “service’s” own website:

The U.S. Postal Service today announced its financial results for the first quarter of its fiscal year 2022 (Oct. 1, 2021 - Dec. 31, 2021), reporting an adjusted loss of approximately $1.3 billion for the quarter, compared to an adjusted loss of $288 million for the same quarter last year. 

Wait, whaaaa?

Surely then, after nurturing such a colossal failure at its teat for so long, the feds are looking to wind down operations, maybe leave it to the competitive free market to sort out? Not according to the newswires…

(Reuters) - President Joe Biden on Wednesday signed legislation to provide the U.S. Postal Service with about $50 billion in financial relief over the next decade…

Struggling with diminishing mail volumes despite having to deliver to a growing number of addresses, USPS has reported net losses of more than $90 billion since 2007.

Hmm… how is it, you may fairly be wondering, that the USPS enjoys a “statutory monopoly” on non-urgent First Class Mail, including the exclusive right to put mail in private mailboxes, yet still manages to hemorrhage money like no privately-owned business ever would…or even could? And that it has the chutzpah to beg for quarterly handouts... from the very taxpayers who are forced to overpay for its substandard “services” in the first place?

American individualist anarchist, staunch neo-abolitionist and proud owner of one of history’s most badass beards, Lysander Spooner, thought he knew the answer to this question ~150 years ago. Put simply: It’s the government, stupid!

As now, postal rates were notoriously high during the 1840s, a direct result, inferred Spooner, of the USPS’s aforementioned monopoly status. Why charge less when there is no competition permitted? Nobody’s going to undercut you…at any price. Similarly, why bother to offer better service? With no private Amazon or DHL or FedEx alternatives to siphon off your jilted customers, why bother? You’re the only game in town!

“Social contract? I didn’t sign sh!t!”

In response to the predictably outrageous rates and abysmal service of his day, Spooner set about pre-empting Elizabeth Warren’s “you didn’t build that” diatribe by opening his very own American Letter Mail Company. He argued that the constitution (which he elsewhere referred to as the Constitution of No Authority, owing to its implicit lack of consent on the part of the governed), granted the state powers to establish mail…but not to exclude others from entering the marketplace too.

“The power given to Congress, is simply ‘to establish post-offices and post roads’ of their own, not to forbid similar establishments by the States or people,” wrote Spooner in his 1844 pamphlet, The Unconstitutionality of the Laws of Congress, prohibiting Private Mails.

Pressing on the issue of unnatural, coercive monopolies, Spooner continued…

“The idea that the business of carrying letters is, in its nature, a unit, or monopoly, is derived from the practice of arbitrary governments, who have either made the business a monopoly in the hands of the government, or granted it as a monopoly to individuals. There is nothing in the nature of the business itself, any more than in the business of transporting passengers and merchandise, that should make it a monopoly, either in the hands of the government or of individuals.”

Spooner’s pamphlet was published the same year his American Letter Mail Company went into business. The company had offices in Baltimore, Philadelphia and New York, among other cities.

Of course, Spooner’s analysis of the market for mail wasn’t restricted solely to ethical grounds. He saw what all astute entrepreneurs see when they decide to go into business…an opportunity to profit, in this case generated by the dismal service and high prices commanded by the USPS. The market — roughly defined as the collection of voluntary individuals acting within it — was crying out for a competitive alternative to the state’s open racket. And Spooner gave it to them.

His mail company significantly reduced the price of stamps, undercutting the government’s 12-cent standard, and even offered free local delivery on some routes. Hooray for faster, cheaper mail, right?

A Monopoly on Violence

Needless to say, governments aren’t typically fond of competition. It’s bad for “business,” they contend, without the slightest hint of irony. That’s why it maintains and enforces a self-granted monopoly on things like counterfeiting and levying taxes and putting people in cages. (Don’t believe us? Try inking your own dollars... or kidnapping your neighbor’s spouse because she didn’t hand you a portion of her annual income.) The case of Spooner vs. the USPS was no different and, after enduring years of punitive fines and state-sponsored assaults on his enterprise, Spooner was finally forced out of business in 1851.

But the story of Lysander Spooner and his American Letter Mail Company is not without redemption. Through challenging the “statist-quo,” Spooner’s company proved what many at the time already knew: that the government is no match for private enterprise when it comes to offering competitive prices for goods and services through its spontaneous ability to read and respond to the real world demands of the market. (Interestingly enough, the USPS actually ended up offering a 3-cent stamp in direct response to the challenge from the American Letter Mail Company. As with the current shenanigans, it was subsidized through mandatory taxpayer “contributions”... and was soon retracted after Spooner was out of the way.)

Something of a man before his time, embodying the true, individualist American spirit, Lysander Spooner dared question unnatural authority, rather than simply accepting the limits it forever seeks to impose on us. 

So the next time some dusty senator trots out that weary old trope, “Yes, but who would provide the [insert pet, state-sponsored service here] if not the government?” you can simply answer them, “Individuals would, my good sir…individuals, just like Lysander Spooner.”

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And now for some more Fatal Conceits...

Earlier this week, we spoke with our old friend and mentor, Eric Fry. 

Over the course of a freewheeling hour or so, Eric kindly shared his thoughts on how he came to work with Bill on the Daily Reckoning, Trades of the Decade (both old and new), how the Russo-Ukrainian conflict is accelerating the trend toward de-globalization and potentially a new “Made in America” era, plus two key indicators every investor should consider when screening for buying opportunities in the stock market...

You can listen to the entire conversation - or just read the transcript - for free, below. As always, feel free to share it with friend and foe alike...

Joel Bowman and Eric Fry on the (New) Made In America

And that’s it from us for another week. We’re off to Tigre Morado for a ceviche and perhaps a pisco sour or three. If you’re in town and looking for a legit Peruvian post-prandial, you can do plenty worse than this Palermo Hollywood locale. The food and service is great, and if lunch for two comes to more than $45, it’s probably because you’ve had one too many cocktails...

As always, likes, shares and comments in the section below are always welcomed. Tune in again tomorrow, when Bill returns with his regular missives.

Until the next Sesh...

Cheers,

Joel Bowman