May 23, 2007

Our ignorance is Canada Post's bliss

The post office is Canada’s most trusted institution? That’s the story reported over the weekend. It seems a poll by the Strategic Counsel puts Canada Post ahead of such revered national icons as … um, the RCMP? Er, the CBC? The (sigh) House of Commons?...

Tallest building in Wichita, in other words. Still, if pressed, I suppose I would be among those who said I “trust” Canada Post. I trust it not to open my mail, for instance. I also trust it not to deliver it before it’s good and ready.

A Strategic Counsel official speculated that the public esteem Canada Post now enjoys is a function of improved service. I rather think it is another example of Coyne’s Third Law: "The level of popular support for any public sector monopoly is the square of its decrepitude." Put another way, ignorance is bliss. The same lack of competition that makes us hostage to Canada Post’s shoddy service also blinds us to the availability of alternatives.

Or perhaps people trust Canada Post more the less they actually have to use it. Were we still truly hostage to the postal monopoly -- had email never been invented, nor private couriers -- it’s possible there would be more grumbling. People do have alternatives, that is, so long as those alternatives do not involve mailing a letter.

But in the area of Canada Post’s statutory monopoly, first-class mail, consumers remain as captive as ever. The post office congratulates itself on a 96 per cent “on-time” record, but it defines “on-time” in terms so elastic as to make lateness a real accomplishment: two business days across town, three within the province, four between provinces. So if, say, you mail a letter in Ottawa on Tuesday and it reaches Montreal the following Monday, that is “on time” in Canada Post’s universe.

By contrast, many other countries in Europe and elsewhere achieve comparable ratios for overnight delivery. Not coincidentally, these tend to be the same countries where the post office monopoly has been broken. Finland and Sweden have had competitive mail services since the early 1990s; Britain and New Zealand have since followed, while Germany and the Netherlands, already substantially liberalized, move to complete deregulation next year.

The results have been striking. In New Zealand, a recent study for the C. D. Howe Institute reports, “the proportion of letters delivered the next day has increased from 88 percent in 1988 to 97 per cent currently.” The privatized Dutch and German post offices have become world leaders in their field, expanding into other markets and providing competition for local providers.

So the question is why Canada should remain one of the few remaining bastions of state monopoly. Well, us and the United States, where, according to the president of the national letter carriers’ union, attempts to introduce deregulation have been stymied, thanks in part to “massive email protests” by the union’s 100,000 “e-activists.” (They’d have written letters, but there wasn’t time.) Call me Maude Barlow, but who wants American-style postal service?

Certainly there is nothing “natural” about the postal monopoly, or there would be no need for it to be spelled out in law. Indeed, it is only maintained by the most stringent enforcement: carry a letter for less than three times the prevailing postage, and you can do up to five years in jail. Lift that requirement and there would be no shortage of firms entering the market.

The standard case for monopoly, rather, is what’s known as the “cream-skimming” argument. Only a monopoly, it is argued, can preserve universal service at a uniform rate of postage. By charging the same price to deliver a letter to any address in the land, Canada Post forces its low-cost urban customers to cross-subsidize their high-cost rural counterparts. Competitors, on the other hand, would undercut the post office in the cities, leaving it to carry the money-losing rural routes.

But this imagined threat to universal service depends crucially on the assumption of a uniform rate. To undercut Canada Post, competitors would presumably have to be free to set their own rates. Why shouldn’t Canada Post be able to do likewise? Why should there be be a uniform rate? Few things cost the same in remote logging camps as they do in downtown Toronto: why should a stamp? Why should a single mother in Point St. Charles subsidize the correspondence of a stockbroker taking early retirement in Whistler?

To quote an old economist’s line: Redistributing income is the job of the government, not the post office. If there must be a subsidy for rural delivery, it should be direct and transparent, not buried in the price of a stamp. Indeed, the true price of this particular cross-subsidy isn’t the hidden postage tax -- it’s the political cover it provides for an indefensible monopoly. It isn’t just costlier stamps for city folk. It’s lousier service for everyone.

Links to this post:

18 Comments

Anonymous Anonymous:

Hmmm...Coyne's third law...got a list of them? ;-)

Oh, wait, forgot this was a Coyne comment post. Wait till he gets a majority, decentralise like they say to in the BNA, Liberals are satan, etc....

23/5/07 6:50 PM  
Anonymous Steve L.:

Canada Post does have a history of stamping out anything they perceive as potential competitors.

but i didn't know that postal service is a nationalized business in the US. that is pretty unusual.

23/5/07 7:24 PM  
Anonymous Quebecois Separatiste:

Coyne's First Law of politics: Never trust any politician who styles himself, however indirectly, on John F. Kennedy. (http://tinyurl.com/2rkjp5)

Now I can't find the second law.

But the third law is changing every couple of months:

Coyne’s Third Law of Politics: Any bad policy will be criticized most for the parts it gets right. (http://tinyurl.com/3chf2h)

Coyne's Irrevocable Third Law: "To know what a politician will do tomorrow, assume the reverse of whatever he is campaigning on today." (http://tinyurl.com/3ae57r)

And now we have a new one.

23/5/07 7:42 PM  
Blogger Iain G. Foulds:

... There is only one issue in the decision to end the government monopoly of postal services- is it right for the government to force it's intervention in the commerce and exchange of goods in our nation?
... All other peripheral issues are merely distracting- "fairness" of rates, efficiency of service, precedents of privatisation in other countries, etc.
... As always, we must learn to choose between the Marxist interventionist role of the state, or the role of the state defending the liberty and private property of the citizens.
... Unfortunately, it is unlikely that our prime minister will have the courage to end this government monopoly, as we have yet to see any conservative economic initiatives thus far...

23/5/07 7:54 PM  
Blogger Martin:

"Why shouldn’t Canada Post be able to do likewise? Why should there be be a uniform rate? Few things cost the same in remote logging camps as they do in downtown Toronto: why should a stamp? Why should a single mother in Point St. Charles subsidize the correspondence of a stockbroker taking early retirement in Whistler?"

Benjamin Franklin, the first US Postmaster General, made the answer to these questions very clear when he created the model for our regime: nation-building.

23/5/07 10:29 PM  
Blogger Iain G. Foulds:

... "Nation building" Of course! Where would we be without our wise government re-distributing income between individuals?

24/5/07 10:37 AM  
Blogger kyle:

amen, andrew!
my company recently sent some print materials to a client through canada post's express post service. not only did they not arrive three weeks later, but we were told that it would take an additional 15 business days (ie. three weeks) for a trace to determine what had happened to the package.
i've never found canada post particularly reliable, helpful, or friendly in my entire life and so was astounded to read that they are considered the most trustworthy. i'm guessing that people were either thinking nostalgically or feeling generous when responding.

24/5/07 11:35 AM  
Anonymous An American Passing Through:

@Steve L "but i didn't know that postal service is a nationalized business in the US. that is pretty unusual."


sometimes I wonder what libertarian paradise/purgatory (depending on your political leaning) y'all think actually runs down here

24/5/07 2:54 PM  
Anonymous Anonymous:

"Where would we be without our wise government re-distributing income between individuals?"

Probably with massive social discontent, with radicalized faction gaining the acceptance of the poorer end of the spectrum and destroying any sense of social peace.

24/5/07 4:11 PM  
Anonymous Gord Tulk:

So, Andrew, as I understand it you favour a fully-liberalized postal system - i.e. a user pay system.


Any guesses as to how much a Mother's Day card sent from Iqualuit to Ramea NL (look it up on google maps) would cost under such a system?

This is the price point where principle loses to politics in my opinion. The postal system should be deregulated to the maximum extent possible, but someone should still be able to stamp and post an envelope for a reasonable price (perhaps even less than the going rate) anywhere in Canada and see it delivered to it destination within a reasonable interval of time (say one week within Canada).

Yet even that service (or portions thereof) could be contracted out to the lowest cost provider.

Just make it one of the bedrock pieces/advantages of being a part of this confederation.

25/5/07 1:18 AM  
Anonymous Deborah:

Andrew Coyne’s column (“Ignorance is Canada Post’s bliss” from May 23, 2007) is merely a “one size fits all” analysis backed up with fuzzy reasoning.

Surely if Holland’s postal service has substantially liberalized, he contends, so should Canada Post. Newsflash: Holland’s landmass fits into Canada 240 times and is one of the flattest countries on the planet.

Could it be the Canada Post Act, passed unanimously by the House of Commons, gave people a post office suited to the demands of a large country with a low population density? No, says Coyne. The post office monopoly was broken in Sweden, Germany and New Zealand and should be in Canada.

Before jumping on the deregulation bandwagon, consider Sweden, which has had a competitive mail service since the 1990s. Private companies deliver mail, mostly in the urban areas, allowing large businesses in urban areas to enjoy lower postage fees. However, postage fees for small business and individual citizens have gone up dramatically, in rural areas and urban areas.

In fact, these postal services Coyne is so fond of all have one thing in common: their postage fees are higher than those of Canada Post, despite these countries’ smaller sizes and higher population densities. The only exception is New Zealand Post where regulatory restrictions prevented increasing postal rates. But it’s easier for New Zealand Post to keep fees low - they happen to own the country’s largest bank.

Luckily, not owning a bank has not stopped Canada Post from offering the second lowest basic postage fees in the G8, turning a profit for 12 straight years and paying an $80 million dividend to the government last year alone.

Ignorance is indeed bliss.

Deborah Bourque
National President
Canadian Union of Postal Workers
www.cupw-sttp.org

25/5/07 11:16 AM  
Blogger The Dark Canuck:

To add to the consumer dissent stories about Canada Post: I recently moved back to Canada from Japan and I live on the top floor of an apartment building. My wife, who is Japanese, regularly recieves packages from her family in Japan, and three times now we have recieved delivery notifications in our mailbox, with the 'called but no one answered' box checked. My wife, who looks after our 2-year-old daughter, was home all three times and no one called or knocked -- and the caller ID bears this out.

Last week I recieved an incorrectly addressed package notification (once again 'no one home' box marked but my wife spent all day in the apartment) and it was up to me, out of the goodness of my civic-minded heart, to physically go to the post office and return the slip so the intended reciever could eventually get the package. When I told the postal worker that my wife was at home and this could have been sorted out easier and more efficiently if the postal worker had actually done his/her job, I was told 'It's Canada Post. We're lazy'.

Japan, on the other hand, is in the process of privatizing it's postal system and my father-in-law, who runs his own business, recieves daily visits from postal workers asking if there any packages or mail to be sent. I can't remember the last time I saw a Canadian postal delivery worker in person -- growing up in the suburbs, I'm used to those metallic boxes. The fear in Japan is that private delivery companies, which offer competitive rates and guarantee fast delivery, will kill the Japanse post office in the open market.

Also, in Japan, if you're not home when a package is delivered (and they do actually go to your door and check) you can call the post office and set up a time to have it delievered again. In Canada, however, the attitude of the Post Office seems to be we should be lucky that they bother to deliver the mail at all.

25/5/07 11:31 AM  
Anonymous Steve L.:

Deborah Bourque is definitely on to something there.

we not only need a privatized postal sector, we need a privatized postal sector that doubles as a bank (perhaps not necessarily the biggest bank for the country, but another bank certainly won't hurt). that's killing two birds with one stone, if i've ever seen such magnificence in policy. freeing up the postal sector AND sticking some competition up against the overfed oligopoly pigs in the Canadian banking sector. what's not to like?

25/5/07 4:34 PM  
Anonymous James O:

Andrew,

Ignorance? Perhaps, but not with much of crowd I have run with the past several years.

When I was in University, many of my friends came from abroad. A package mailed from their respective countries to here followed a certain pattern - Package was mailed, it arrived in Canada within two or three days of being mailed, then sat in a warehouse for three or four days before it was "delivered" (Sorry! Nobody was home). For half of the journey these packages sat gathering dust, before the intended recipient was able to retrieve them. But then, when a package was sent from Canada...

I too lived in Japan. It would take a week for a letter mailed from there to get to my fiancee back home. But three weeks for a letter from her to reach me. A package took over two months to get to me. Today I am living in the UAE, and asked my family to forward on some important personal effects. This time I made sure I would have a tracking number so I could monitor the progress of the package. It was "mailed" on March 10th, and according the Canada Post website, finally got around to heading towards me some ten days later, on the 20th. It is now May 27th, and I have been reading the same message for over two months - "Enroute to destination." As I sit and stare at my monitor each morning during this depressing daily ritual, I cannot help but wonder if I will see these precious items again.

Magellan could have sailed from there to here, and probably have gotten most of the way home in the time I have been waiting so far. But what recourse do I or my family have? To FedEx a package, or send it by UPS would be prohibitively expensive. The subsidization of Canada Post effectively ensures that courier services can charge premium prices as there are no alternatives for standard mail delivery.

Most international students and new Canadians will tell you that they do not usually send anything by mail, they send things with someone they know. Just as remittances bypass our banking institutions, and which are inefficient, ineffective and overpriced for this service, the informal courier service bypasses our "most trusted" national institution.

In the end perhaps it is my fault. I foolishly thought that it would be okay to mail these things through the old CP, but fool was I in the end.

You know, the thing is... why should I have to be so cynical in the first place? Why should the course of wisdom be to presuppose that Canada Post would fail in it's task? Why should I have to hope and pray that our government supported mail monopoly will (Please God, oh please) just do this one little thing, after which I will not bug them any more. Why should failure be the mode and not the anomaly?

James

27/5/07 4:50 AM  
Anonymous meech revisited:

Can't agree with you on this one. If universal postage pricing is a subsidy from urban to rural Canadians that has to be stopped, then a century's worth of infrastructure to get rural Canada's resources into the hands and mouths of its urbanite population is essentially no different. Seaways, railways, highways, power lines, and billions of dollars countless forms of subsidies by all governments just so a bunch of folks downtown can eat.

Letter mail is pretty basic form of human communication. For a guy who regularly mocks the inability of our federation to function as a country it's strange you'd be so nonchalant about it.

1/6/07 10:48 AM  
Anonymous Anonymous:

So much misinformation! You should be ashamed for outright lying!

"my company recently sent some print materials to a client through canada post's express post service. not only did they not arrive three weeks later, but we were told that it would take an additional 15 business days (ie. three weeks) for a trace to determine what had happened to the package."

For xpresspost items, you're able to open a trace withing 24 hrs of the expected delivery date and are guaranteed a call back within 5 business days.

"My wife, who looks after our 2-year-old daughter, was home all three times and no one called or knocked -- and the caller ID bears this out."

Your wife never leaves the house? Has shower? Is busy changing poopy diapers? Have you ever called the customer service line to get the situation rectified? If you have a particularly lazy lettercarrier, the customer service line is more than willing to send messages out to their supervisors.

"A package mailed from their respective countries to here followed a certain pattern - Package was mailed, it arrived in Canada within two or three days of being mailed, then sat in a warehouse for three or four days before it was "delivered" (Sorry! Nobody was home)."

When a parcel from abroad enters canada, and held in "warehouse" it is more often than not an item that is being inspected by canada customs. And yes, that includes lettermail.

"It is now May 27th, and I have been reading the same message for over two months - "Enroute to destination"

Some countries do not have compatible tracking systems to that of canada post/usps/royal mail, if any international tracking systems at all. Unfortunately Canada Post isnt able to force countries to update their internal systems.

Really, instead of griping and complaining or spreading false information, the logical next step is to talk to someone who has some sense of what the real answer is. Educate yourselves!

7/6/07 12:00 AM  
Blogger The Dark Canuck:

Your wife never leaves the house? Has shower? Is busy changing poopy diapers? Have you ever called the customer service line to get the situation rectified? If you have a particularly lazy lettercarrier, the customer service line is more than willing to send messages out to their supervisors.


-- I did send a message, about a month ago, and I'm still waiting to hear back. I've called four times, and every time I do, I'm told to wait 5 business days. After 5 business days, I call again and am told to wait another 5 business days. I've worked this call into my weekly routine for the past month, while I'm sure the crack team of Canada Post investigators are right on top of. I'm assured that the supervisor has been e-mailed (even Canada Post doesn't trust its own system, it seems) and will be contacted soon. I can only deduce that Canada Post either doesn't care or is so swamped with complaints in my area that I'm somewhere down the list.

Even Canada Post's own employees recognize the crappy service -- see the part of my previous comment where the worker admits to Canada Post being lazy.

And of course my wife does leave the house, but as I mentioned, every time someone calls from the lobby, it's recorded on my telephone's call display, and every time we've received a delivery notice with the 'no one at home' box checked, there hasn't been a call listed on the call display.

If I had never lived in a foreign country, I would just shrug my shoulders and live with whatever Canada Post offers. Having had the experience of living in a country where customer service and accountability seem to matter some government agencies, it seems that I'm spoiled to expect a basic level of competence from Canada Post.

Also, why post anonymous? Should we just assume that you work in a building with lots of red trucks outside?

26/6/07 2:45 PM  
Anonymous Anonymous:

who really delivers our mail?I was very disturbed to find out that my landlords were putting my mail in my mail box.I know they do not work for canada post.The returned mail sits on a ledge in the lobby for anybody to see and take.I don't know about anybody else but I know I do not want my mail for every body to steal and snoop at to their discretion.

17/7/08 3:41 PM