Thursday, October 29, 2009

The United States Post Office

I think that the Post Office under charges for first class stamps. I am talking about the regular stamps you use to send a single regular letter, or in most cases a bill.

Here is my reasoning: Once, a few years ago, I was spending an evening with friends and we ordered out for sandwich delivery. Upon looking into my wallet I discovered all I had of any value was $2 in cash and four $0.37 stamps. I announced my cash situation to the group and asked if anyone would cover me. One offered to do so, and because I am the kind of person that does not like being in debt (even for $4, and even knowing I will pay it back tomorrow) I asked my friend if he would accept the stamps as payment of the debt. He asked essentially if the stamps were of the current value saying, "I put one of these on a letter and it will get delivered?" I replied, "Yes," and he agreed. So essentially I exchanged $3.48 in value (plus delay and uncertainty and lack of interest) for a $6 sandwich(plus tip).

The next step in my reasoning is what my father always told me about collectibles but extends as a rule to the entire economy. Something is only worth what you can get someone else to pay for it. The inverse of that principle is best exemplified by Starbucks, which has gotten people to pay ridiculous prices for coffee.

If you stop and think to yourself about what the Post Office actually does and their relation to the reality of communications technology, the Post Office really offers a premium service. If you need to get an original physical document or object to another location, that is a premium service given that it is such a rarity. The problem with that is that it is a rarity and if the Post Office raises their prices too much too fast then they will have fewer customers and those customers will be sending fewer things.

I really think the value of a stamp is somewhere between $1 and $2. What actually charging that value would mean to the operations of the Post Office is another matter. Unless situations like the one I described above start becoming common, where stamps are being exchanged as currency for three times their value, I think it is unlikely we will see large increases in the cost of a first class stamp.

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