The USPS Part Duh: The Netflix Paradigm

I had an add-on thought to my post from the other day about the United States Postal Service. While many of the “free-market solves all” types howl for the Post Office to be shut down in favor of for-profit private enterprise, I would wager many of them don’t realize (or don’t want to) how instrumental a postal service operated by the state can be for business. As one example of a government operation being instrumental in the creation of new, competitive businesses, I offer you Netflix.

You know Netflix. That company which ships out millions of DVD’s to any house or P.O. Box in the country, that company which in just one short decade gone from a tiny startup to the death knell for brick-and-mortar video rental places like Blockbuster, that company which took an impossible idea and made a profit out of it, that company wouldn’t be possible without the Post Office. You see, the fact that Netflix could get such cheap shipping rates on its millions of products every year is what made that business model possible. Do you really think Netflix could have achieved its success if it had to pay FedEx or UPS prices? It certainly couldn’t have been as ubiquitous, as we all know that UPS doesn’t really dig the whole P.O. box thing. The cost to ship that many tiny pieces to rural America would have likely restricted Netflix’s delivery footprint to reasonably-sized cities, cutting the potential market by a not-insubstantial percentage.

Does the USPS lose money on each of those parcels? It’s very likely they do. Without the state willing to subsidize shipping, Netflix could never have gotten off the ground, and certainly not for the cheap subscription prices they offered. This is the very definition of successful public/private synergy. The public gets a useful service for an affordable price, a business flourishes and grows, expanding employment for all those Netflix shipping centers. I fail to see where anyone loses here, except perhaps Blockbuster… who eventually had to offer their own Netflix-like service to remain competitive. That competition created choice for the consumer as well. These are all things the free-marketers pay lip service to but I often think they do not believe in their own ideals.

Will Netflix eventually discontinue their disc-delivery service? Of course. Moving bits is a lot more efficient than moving discs, without the touchy subject of pirating DVD’s. Will email eventually do away with the need for paper mail at all? Very likely. This is why I think the Post Office needs to shift their business model now, today, to prepare for that coming day. Go with me on this.

The Post Office has always been about moving information as well as goods, and providing such information delivery services to the taxpayer at an affordable price. Why not embrace the charge fully and become the public ISP? Such retooling would require serious effort, but in the end, the Post Office continues to do what it does best (ship information) and manage to keep up with the times. Their service could be the kind of no frills, low budget plan we see most ISP’s offer as a teaser rate for their real service packages. Offer cheap web site hosting as well. The harsh reality of the 21st century is that Internet connectivity is a genuine must for everyone, if for nothing more than email, customer service and job search. A public Internet service at the federal level would go a long way towards providing the common good of information equality for all.

The big telcos and cable companies would scream bloody murder, of course, claiming that such socialist public enterprises would undercut their for-profit companies. They are right, but considering how bad some of these companies are at providing the services they promise (*COUGHCOMCASTCOUGH*), some competition would be a good thing, especially competition they can’t buy out or bully out of the markets. Free-marketers keep telling us how competition is vital to a functioning market. So let’s let the USPS compete. I daresay even the Post Office couldn’t do as bad a job as Comcast has done.

In a free market economy, the state exists to help businesses thrive. The Post Office has done this with businesses like Netflix. Closing it now, or significantly curtailing its offering would be a low watermark for our government.

September 12, 2011 at 8:32 pm | Politics | No comment

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