Invisible Hands: The Businessmen’s Campaign to Dismantle the Post Office
January 24, 2012
The leaders of the Postal Service have made no secret of their plans for reforming the postal system. They have issued white papers, given speeches, presented “optimization” programs, and appeared before Congressional committees. The plans are clear: eliminate the layoff protections in union contracts; cut the career workforce by nearly half while tripling the number of non-career workers; reduce service standards for first-class mail; do away with Saturday delivery; give management control of workers’ benefit plans; consolidate away over 250 processing plants; and close 15,000 post offices.
What we don’t see very often are the players making this all happen. We assume the Postmaster General is making the decisions, but he is merely the front man. Behind him are the USPS Board of Governors, the mail industry stakeholders, and the corporate class as a whole. These businessmen (and women) prefer to keep a low profile, so we rarely hear from them in public. They leave it their surrogates — journalists and academics, politicians and pundits — to speak for them. But it’s the businessmen who fund the think tanks, endow universities, make campaign contributions, pay lobbyists, and run the news media. Yet for the most part, they are not to be seen.
In her excellent book Invisible Hands: The Businessmen’s Crusade Against the New Deal, historian Kim Phillips-Fein paints a very revealing picture of how the corporate class operates. Her theme is the way conservative businessmen worked behind the scenes to undo the New Deal. Believing all would be right if government stayed out of the economy and left everything, in Adam’s Smith famous expression, to the “invisible hand” of the market, these businessmen have spent decades working to weaken unions, eliminate social welfare programs, minimize government regulation of their companies, and diminish public services.
While the U.S. Postal Service is obviously not a product of the New Deal, that same conservative agenda is behind the attack on the Postal Service we’re witnessing today. Cutting the workforce, closing post offices and plants, and moving toward privatization through outsourcing and divestiture of assets — these are all part of an effort to shape the postal system in ways that serve the interests of an elite business class rather than the good of the country as a whole. The free-market ideology and greed for profits that drove efforts to undo the New Deal are basically what’s driving the “postal reform” movement today.
Power in numbers: The stakeholder associations
As Phillips-Fein explains, one of the most common methods for the businessmen to advocate for their agenda was to bond together. Recognizing the power in numbers, they formed associations like the American Liberty League (organized by the du Ponts) and the Foundation for Economic Education (founded with help from B. F. Goodrich), as well as giving new energy to existing organizations, like the National Association of Manufacturers and other industry trade groups.
In the same way, the mail industry stakeholders — the big direct marketing firms, the pre-sort companies, the periodical publishers, and so on — have formed their own organizations to advocate for their interests.
One of the most important of these groups is one operated by the Postal Service itself. The Postmaster General’s Mailers' Technical Advisory Committee (MTAC) consists of mailer associations and other organizations related to the mailing industry. Its goal is “to assist the USPS in determining the best course of action to improve service and postal operating efficiency.” The MTAC has a page on the USPS website (it’s part of the National Customer Support Center), and its meeting minutes are published there, albeit in a rather cursory form. But much about the MTAC is cloaked in secrecy.
The MTAC charter says, “A current list of member associations/organizations and corresponding representatives will be published at least quarterly.” Apparently there are 58 member organizations, but good luck trying to find a list of the MTAC members on the Internet. A few years ago, when the APWU asked to join the MTAC, it was denied membership, and it took a lawsuit and a year and a half before the MTAC finally relented. A few months ago, word came out that attendance at its meetings would be restricted.
The Direct Marketing Association (DMA) is, according to its website, “the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques.” It’s an international organization representing dozens of industries in almost 50 countries, including nearly half of the Fortune 100 companies. If you want to know who’s in the DMA, however, you’ll find that the membership directory is off limits — you have to be a member to see the member list.
The National Association of Presort Mailers (NAPM) is, according to its website, “a trade association composed of firms concerned with the present and future of postal worksharing.” Its primary purpose is to represent the interest of presort mailers and to develop workshare programs with USPS “to produce cost saving and service benefits to presort mailers and the USPS.” As with the DMA, if you’d like to see the membership list, you’ll need to become a member.
There are many other industry associations that are influencing the policies of the Postal Service, such as the National Alliance of Standard Mailers (NASM); DFW Mailers Association; Alliance of Non-profit mailers; Association of Priority Mail Users (APMU); Mail Systems Management Association (MSMA); Mail Order Association of America (MOAA); Parcel Shippers Association (PSA); National Newspaper Association (NNA); and Magazine Publishers of America (MPA).
The corporate stakeholders represented by these organizations are not monolithic in their views, and there’s a considerable degree of diversity and even conflict. The periodicals industry, for example, is usually more concerned about the timely delivery of their publications than the direct marketers are. And one wouldn’t want to lump the junk mail business together with newspapers and news magazines — delivering the news is one of the most important functions of the mail system.
But most big mailers are primarily interested in keeping postal rates as low as possible. They have generally supported the cost-cutting measures proposed by the Postal Service because they believe the cuts will keep rates down and their profits up. Back in August, for example, the DMA “applauded” the proposed cuts, and in the RAOI Advisory Opinion process, the direct marketing giant Val-Pak made a forceful argument for closing post offices because they lose money and consequently drive up postage rates.
Most of these stakeholders don’t care about post offices because big mailers present their mail at Bulk Mail Entry Units, and Saturday delivery is not a major concern either because ad mail would do fine with even three-day delivery (which the Postmaster General says is coming within fifteen years). The industry doesn’t care about having a blue collection box on every corner — over the past twenty years, half of them have disappeared, even as the FedEx boxes have become ubiquitous — and they don’t care how often the mail is picked up at those boxes. Their interests, in other words, are not those of the average citizen and small business. But they are one of the strongest forces shaping the future of the Postal Service.
Think tanks do the talking
One of the main themes of Phillips-Fein’s Invisible Hands is that the anti-New-Deal businessmen wanted to keep their activities hidden from the general public. Otherwise, it might look like their attack on unions and public services had selfish motives. They also wanted to give their views intellectual respectability. So they founded and funded think tanks and enlisted journalists and academics to write articles and produce studies extolling the virtues of the free market.
In 1943, Lewis H. Brown, president of the Johns-Manville manufacturing company, got several of his allies in the business community together and formed the American Enterprise Association to provide congressmen with legislative analyses that would promote private enterprise. Most of the money came from major corporations like GM, Ford, Con Edison, and du Pont, and the AEA ended up being investigated by Congress, which questioned how it could provide disinterested research with such sponsors.
The AEA eventually morphed into the American Enterprise Institute (AEI), one of the country’s leading right-wing think tanks. The AEI now publishes works like Saving the Mail: How to Solve the Problems of the U.S. Postal Service by R. Richard Geddes. Geddes advocates privatizing the Postal Service, and he shows up frequently in news articles about the plight of the Postal Service. The AEI is responsible for many other publications about the desirability of moving the Postal Service toward a more corporate model, such as this one by AEI senior fellow Kevin Hassett, encouraging the Tea Party to push for postal privatization as a means of fighting big government.
Another of the country’s well-known right-wing think tanks is the Heritage Foundation, founded in 1973 by conservative businessman Joseph Coors of brewery fame, with the help of contributions from Dow Chemical, GM, Mobile, Pfizer, Sears Roebuck, and Chase Manhattan bank. More recently, the Heritage Foundation has received generous support from the Lynde and Harry Bradley Foundation and the billionaire Koch brothers. (Harry Bradley and the Koch brothers’ father were charter members of the John Birch Society.) The Foundation has a long history of advocating privatization of government agencies, including the Postal Service. Check out its 1986 primer on privatizing federal services, and this long list of articles on its website.
The Cato Institute, the nation’s first libertarian think tank, was launched by the Koch brothers, who continue to fund it generously. According to the Center for Public Integrity, between 1986 and 1993 the Koch family gave $11 million to the institute. The Cato Institute holds conferences and publishes books and papers advocating the privatization of the Postal Service, such as “Restructuring the U.S. Postal Service,” The Last Monopoly: Privatizing the Postal Service for the Information Age, Free the Mail: Ending the Postal Monopoly, and Mail at the Millennium: Will the Postal Service Go Private?
The Koch brothers also founded Citizens for a Sound Economy, and one of its senior fellows was James C. Miller III, a well-known advocate of privatizing the Postal Service. Miller is a member of the Board of Governors of the United States Postal Service.
Citizens for a Sound Economy eventually split into FreedomWorks and Americans for Prosperity. According to the NY Times, FreedomWorks is “the Washington advocacy group that has done more than any other organization to build the Tea Party movement.” It received $12 million from Koch family foundations. Like the other Koch-funded organizations, it advocates privatization of the Postal Service.
How to break a union
In one of Invisible Hands’ most disturbing chapters, “How to Break a Union,” Phillips-Fein examines the war against unions in the 1950s, particularly the efforts of General Electric to destroy the electrical workers union. (In 1954, GM enlisted the help of a failed movie actor named Ronald Reagan to promote its agenda.) From the point of view of the conservative businessmen, organized labor posed a serious threat, not just in terms of how higher wages might impact their bottom line, but also in terms of power and prestige. They also worried that at election time union workers would be mobilized to press for better Social Security benefits, more government spending, and expanded public services. Unions embodied everything the conservative businessmen were against.
The animosity toward unions fuels much of what’s going on with the Postal Service today. The leadership of the Postal Service wants to get rid of the no-layoff clause in union contracts so that it can cut hundreds of thousands of jobs. In a USPS white paper released last summer, the Postal Service stated explicitly that it wanted to reduce the career workforce from 580,000 to 300,000, and since there was no way that could happen through “attrition,” postal management wants Congress to change the law preventing layoffs. The Postal Service also wants to increase the number of non-career employees from 38,000 to 125,000 — yet another way to undermine the unions.
The leaders of the Postal Service aren’t trying to reduce their labor costs just to deal with the postal deficit or to keep the big mailers happy. The corporate class as a whole does not like the good wages that unions make happen. Postal clerks average $25 an hour, while the sales associates and cashiers at Walmart average $8.50 an hour. Good wages at the post office help bring wages up across the economy, while poor wages at Walmart drive them down.
Since union contracts have made it difficult for the leaders of the Postal Service to reduce the size of the workforce as drastically and rapidly as it would like, they have used other tactics. Outsourcing, for example, is a great way to shift work from postal employees to non-union workers in private industry. The Postal Service now contracts out $12 billion annually.
At the top of the list of corporations enjoying a profitable relationship with the Postal Service — with $1.37 billion of business in 2010 — is FedEx, whose founder and CEO, Fred Smith, testified before Congress that “closing down the USPS . . . is an option that ought to be considered seriously.” FedEx has also campaigned against legislation that would make it easier for its workers to unionize.
Workshare arrangements with pre-sort companies are another way to give work to private companies that could be done by postal workers. The huge discounts that these companies are given are often far in excess of what the Postal Service saves by receiving mail pre-sorted, and they end up costing the Postal Service huge amounts of money. The postal unions have been fighting these discounts for a long time, but to little avail. They are a valuable tool for downsizing the Postal Service, and they help move things further down the path to privatization. (For more on presort companies, see the excellent thesis Understanding Postal Privatization by labor historian Sarah Ryan.)
Follow the money
One of the main tactics the anti-New Deal businessmen used to help keep themselves invisible was to support pro-business politicians like Barry Goldwater and Ronald Reagan. These days, with PACs and other modes of funding and lobbying politicians totally out of control, there are very few politicians who aren’t being overly influenced by the corporate elite. In postal matters, the two most prominent of these politicians are Darrell Issa and Dennis Ross.
Issa is the Congressman for California's 49th congressional district and chairman of the House Committee on Oversight and Government Reform. In 2011, his committee held hearings (videos here) and called as witnesses various individuals to testify that the Postal Service was heading toward catastrophe if radical reforms weren’t made. Issa’s Postal Reform Act would create an Authority empowered to restructure the postal system and a Commission that would recommend post office closures and consolidations to Congress. These measures would do essentially what the leaders of the Postal Service have been advocating, but the Act would put Issa and his allies in charge, effectively sidelining postal headquarters.
Dennis A. Ross is the Congressman for Florida's 12th congressional district and a member of the Tea Party Caucus. As chair of the Committee on Oversight & Government Reform, he held several hearings last year on the Postal Service, during which his witnesses attacked the postal unions, argued that the Postal Service needs to reduce “excess capacity” (i.e., post offices and plants), and called for changes in the law that will make it easier to close post offices.
Eleven of the 23 Republican representatives on Issa’s committee received financial help from Koch Industries in the last election. Issa himself was the largest recipient, with $12,500 since 2008. Not that Issa really needs the money. His net worth is about $450 million, making him the richest man in Congress. Ross received $12,000 from the Koch brothers.
It’s not just the Koch brothers who are contributing to the postal legislators. Pitney Bowes is $5.6 billion-a-year business employing 33,000 workers around the world, selling mail equipment and providing marketing through mail. It’s based in Stamford, Connecticut, so no surprise that it has contributed generously to the campaign of Connecticut Senator Joe Lieberman, chair of the Homeland Security Committee, which deals with postal legislation. In 2011, Pitney Bowes also contributed $10,000 to Darrell Issa and $10,000 to Senator Susan Collins of Maine, another key player in postal legislation. (If you’re interested in doing some detective work, Influence Explorer and Open Secrets are useful sites.)
Privatization, the Holy Grail
Phillips-Fein’s book culminates with the election of Ronald Reagan, who represented everything the conservative businessmen had worked for since the New Deal. Reagan made a stand against unions when he fired the striking air-traffic controllers, he made the tax code less progressive (remember Reaganomics?), he cut social programs like Medicaid and food stamps, and he slashed the budget of regulatory agencies like the Environmental Protection Agency.
Reagan also created a presidential Commission on Privatization. Its 1988 report Privatization: Toward More Effective Government recommended that the private express statutes, which mandate the postal monopoly, be repealed to allow competition in the provision postal services. That recommendation has not yet come to fruition, but the Commission also recommended that the Postal Service more actively pursue contracting out. Fulfilling that recommendation was facilitated by changes to the USPS Procurement Manual (also in 1988), which made it easier for management to outsource without worrying about “full and open competition.” Outsourcing has become one of the most useful tools for privatizing the postal system without an act of Congress.
Reagan, however, can’t get the credit for initiating the push toward postal privatization. That goes way back, at least until the 1960s, when a Democratic president, LBJ, charged the Kappel Commission to come up with ideas for reforming the Department of the Post Office. The Commission consisted almost exclusively of corporate executives, with retired AT&T Chairman Frederick R. Kappel as its chair. Its recommendations led to the 1970 Postal Reorganization Act, which “corporatized” the Post Office into the U.S. Postal Service.
It was no secret that turning a cabinet-level department into a government corporation would be a big first step toward the ultimate goal, privatization. In testimony before Congress, Kappel testified, "If I could, I'd make [the Post Office] a private enterprise and I would create a private corporation to run the postal service and the country would be better off financially. But I can't get from here to there."
For the past four decades, getting from “here” to “there” has remained the Holy Grail for the conservative business elite. All the books and articles put out by the think tanks and their scholars, all the lobbying and campaign contributions, all the organizing and behind-the-scenes networking— the goal has remained constant. The free market ideologues will be satisfied with nothing less than the privatization of the postal system.
In the meantime, the mantra is the same: The Postal Service needs to act more “like a business.” If it can’t be turned into a private corporation, it should at least act like one. If a post office isn’t bringing in a profit (80 to 90 percent of them don’t, at least the way the Postal Service runs the numbers), then close it. If career employees can be replaced by part-time casuals or contract workers, replace them. If there’s “excess capacity” in the system, get rid of it. If there’s a way to undermine the unions, drive down wages, degrade benefits, do it.
As for average citizens, they just don’t seem to be very important to postal management. They are not big customers. The services they might like to see offered at the post office — like an Internet connection or low-cost banking services — aren’t very profitable. Sometimes one even gets the impression that the Postal Service is intentionally alienating its regular customers — causing long lines by reducing the staffing at the windows, not being responsive to complaints, demoralizing postal workers so it's difficult for them to be courteous. Perhaps management thinks it's not so bad if people are dissatisfied with the Postal Service. Maybe it will make them happy to hear about plans to privatize.
Dismantling the legacy
In 1970, when the U.S. population was about 200 million and first-class mail volumes were not quite 50 billions pieces, there were around 43,000 post offices (including contract postal units). Today the U.S. has over 300 million people, first-class mail volumes are about 78 billion pieces, and there are around 35,000 post offices. While population and mail volumes have increased by more than 50%, the number of post offices has declined by almost 20%. Yet somehow we are expected to believe that there are too many post offices.
Almost every one of the country's post offices is a valued part of the community it serves. If you have any doubt about that, just read a few hundred of the thousands of news articles that have come out over the past few months, describing the frustration, anger, and sadness people express when they hear their post office may close.
While the focus has been on the 3,600 post offices on the Retail Access Optimization Initiative (RAOI) list, the Postal Service wants to close half the country’s post offices. The retail end of the business will continue to be moved to the “alternate retail outlets” the Postal Service claims that customers prefer — Wal-Mart, CVS, Office Depot, Costco, your local supermarket. There are already 50,000 alternative places to buy stamps — more locations than there are post offices. Though the Postal Service never labels it as such, this is yet another form of outsourcing and privatization.
The leaders of the Postal Service are committed to dismantling what they call — with considerable disdain — the “legacy” of “brick-and-mortar” post offices. The legacy hangs around their neck like an albatross, weighing them down and holding them back from progressing into a light and fluid post-office-less future. They say “brick and mortar” to make the post office seem old fashioned, passé, a nostalgic icon of a bygone era.
These leaders want the Postal Service be fashionably chic — like those European countries that are closing their village post offices as part of their privatization programs. Headquarters doesn’t like the way people get attached to their post office, or the way the workers in the post office give a face to the postal system and the government. The bonding to a place and the human connection make people care too much about what happens with the postal system as a whole, and that just gets in the way of what postal leaders are trying to do.
During the Great Depression, the federal government built over a thousand post offices, as well as many schools, libraries, and federal buildings. These buildings are usually an important place in a town, and many are on the National Register of Historic Places. Constructing these buildings put hundreds of thousands of people to work, but they had another purpose.
The New Deal wanted people to feel connected to their federal government, to have faith in its permanence, to see that it was a part of their community. Considerable attention was also given to the architectural design of the New Deal post offices, and most are adorned with beautiful murals depicting scenes from local history. They bring an element of culture to the community, and they remind people of their past.
Now the country is being told that we cannot afford to keep these post offices. Historic New Deal post offices are being closed and sold off, right and left. Just over the past few months, the Postal Service has closed and/or sold the historic post offices in Westport, Connecticut; Palm Beach, Florida; Ukiah, California; and Pinehurst, North Carolina. Over the coming months, the same will happen to the post offices in Venice and La Jolla, California. The historic post offices in Northfield, Minnesota; Athens, Pennsylvania; and Camas, Washington are also threatened. Many are closed without even a public meeting because the Postal Service is relocating postal services to another location and not actually "closing" the post office.
The Postal Service says these historic post offices are too big — the mail handlers and carriers were probably moved to an annex years ago, thus creating “excess capacity” — so now it doesn’t make any sense to hold on to them, and selling them would bring in much needed revenue. Maybe so, but there’s something else going on.
These post offices are a proud reminder of the great things our government and our postal system can do. These are indeed icons, symbolic of everything the conservative anti-government businessmen have been crusading against since the New Deal. Closing these post offices and selling them to private businesses, to be turned into real estate offices and restaurants and clothing stores, is yet another mode of privatization and sad proof that the attack on the New Deal continues to this day.
The whole thing is sad, really. Depriving workers of a decent salary and job security and the promise of a secure retirement, treating communities as so insignificant they don't even deserve a post office, transferring historic public buildings to private hands for private profits, putting the interests of the wealthy corporate elite above those of the country as a whole — it's more than sad, it's a crime. It won't be good if the nation's lawmakers permit it to happen.