My EWOT for this week is about an article I read a couple days ago by the Wall Street Journal. The article talks about how the US Postal Service just ended its fiscal year with a $5.1 billion loss and that as a result, the US Postal Service "could regain its financial footing by cutting annual costs by $20 billion by the end of 2015."
Clearly, this means that the US Postal Service will be forced to reduce jobs in their industry, which is one of the only ways the independent government agency can cut annual costs and save money.
This led me to think about some of the stuff we have learned in Economics this semester, namely the effect the influx of technology has on an industry.
To begin, it is clear that one of the reasons why the US Postal Service is struggling is because less people have a need to send paper letters. The reason behind this? Because of the influx of new technologies such as better telephones, more efficient/secure E-mail, etc.
Thus, less people are buying stamps/paying fees to to send letters so the means of income for the postal service is reduced.
The cutting of annual costs will undoubtedly cause jobs to be lost. I am just waiting for people to come out and say something such as "this is horrible! Look what is happening in our economy due to these new technologies! So many jobs are being lost! This is a result of our struggling economy! Now we are poorer!"
This is a common rationale for jobs being lost due to technology, as we have learned in economics this semester.
But, this couldn't be farther from the truth. While the influx of new technologies has indeed costed people their jobs, we are richer because of it. Jobs aren't lost- rather the composition of jobs has changed.
Sure, there may be less jobs in the postal service, but think about how many new jobs will be created to produce cell phones, increase email technologies, etc.
Not to mention, think how much wealthier we are now. Email, for example, is ultimately free from monetary cost- all you need to do is have internet access and a computer, which many people have in our country for other reasons than just sending emails. Thus, people nowadays don't have to spend money on sending letters because they can get what they want by sending an email, which is free.
Now, people don't need to spend money on stamps and thus we as a society have more money in our pockets to spend in other industries on things we value.
Also, those who lost the jobs as a postal service worker can now go work in other sectors to be more productive where they can be of more use. This also makes us wealthier because new, innovative things may be created as a result of transferring these jobs into other industries.
All of the above explains how these job losses in the postal service are actually a good thing: they might be bad for those who lose their jobs initially, but for us as a whole society, we are much better off.
The article can be seen here: http://online.wsj.com/article/SB10001424052970204190504577040350312660374.html?mod=e2tw
All of your economics here is correct, and things would happen this way except for the fact that..
ReplyDelete<>
except for the fact that this is not going to happen. You see, there is very little more nauseating in the world of economics than the USPS. In a free market economy, companies that lose $5 billion in a year usually aren't around for long. But since the postal service is run by the government, it is ILLEGAL for any other postal business to exist except for USPS. That is, the postal service is a monopoly, and the government continues to subsidize them even though they lose billions each year.
Most likely USPS will probably not fire its workers, because what about the jobs! What is on the table, though, is to cut Saturday deliveries.
My parents were out walking my dog a couple weeks ago in DC where there are a lot of protests.. and someone came up to them asking my parents to sign his petition. He was actually a postal service worker, and wanted my parents' signatures to petition against cutting sunday delivery and against cutting postal service workers' benefits.
In conclusion, it is absurd that the government forbids any private company from competing with USPS. Next time someone criticizes the free market in front of you because "capitalism leads to monopolies," just politely point out to them how the postal service is a monopoly run by the GOVERNMENT.. you would never see such a monopoly or such a loser in the free market like you do here with the government.
it didn't copy the quote of yours that I pasted-- the big space in what I wrote was supposed to have the 2nd paragraph of what you wrote, in which you said that the postal service will have to reduce their jobs.
ReplyDelete