Passages in quotes from a column by Herbert Grubel: –Return this monopoly to sender–in the National Post, January 21, 2010.
At the risk of being parochial, I will talk about Canada Post, although the concepts apply to any government-mandated “service”, anywhere.
“Canada Post is a dinosaur that has lived far too long. Only a monopoly protected by government can treat the public the way it does. On Jan. 11, the cost of stamps for a first class letter went from 54¢ to 57¢, for an increase in 5.5% over a year in which consumer prices rose only half that rate. Since 1971, when a stamp cost 7¢, the cost of mailing a letter has jumped by 714%. General inflation was only 443%.”
“Canada Post publicly justifies its record of price increases by reference to a decrease in the volume of business, the cost of mechanization and the need to serve more customers. No one really knows whether this explanation is valid. Its operation and accounting are simply too complex.”
A decrease in volume of business leads to an increase in consumer costs–only in government mandated and protected monopolies. The operation and accounting are so opaque than no one can understand them. Typical of a government operation. True costs will never be known.
“However, we do know from history that when governments remove the protection of monopolies, costs drop and consumers are served better. There are many reasons for this result, but again history shows that the end of the monopoly is accompanied by the loss of power by unions to extract high levels of compensation, to protect employees from the consequences of poor performance and to prevent the introduction of labour-saving technology. Management also becomes more efficient and willing to resist union demands because government policies no longer permit higher costs and poor service to be passed on to consumers.”
Note that the unions, the producers, come before the consumers.
“Canadians have the right to buy their goods and services from any supplier who offers them the best price and service. The government has no right to force Canadians into buying first class mail services from the monopoly Canada Post. It is time for genuine competition in this market.”
That’s quite logical, but it won’t happen. I do predict that the increase in postal rates will continue as will the non-delivery of parcels. Most of us have nothing to do but go down to the local post office to pick up things we pay to be delivered. And that’s just one of the ways contingencies work.
Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies
