Post office 'not happy' with stamp price decrease; but they should be ecstatic!

Here's a basic economics pop quiz for our readers: 

Prices go down when:

   a. A bureaucrat says so
   b. The feds "stimulate" the economy
   c. An industry is bailed out by the taxpayers
   d. Competition is allowed to flourish.
   e. None of the above

The answer is, as it always is in a free market environment, d.  But when the market isn't so free -- as in the case of our postal service -- the answer is e, and very rarely.

According to CNN Money:

The price of mailing a letter will fall for the first time in nearly a century this Sunday.
And the U.S. Postal Service, which was ordered to cut the price by its regulator, is not happy about that.
USPS said the decline in the cost of a postage stamp, from 49 cents to 47 cents, will cost it $2 billion this year, and make it more difficult for it to compete and provide the service its customers demand. ...
The Postal Regulatory Commission, the independent government agency which oversees the USPS and its pricing, acknowledges the Postal Service will lose $2 billion due to the decrease. ...
... To help make up for the [recession] shortfall [USPS] got permission to increase rates in 2014, raising the price of a stamp by 3 cents to its current 49 cents. But that increase was only meant to be temporary, and it has to give up 2 cents of that increase this year. 

Read more: http://money.cnn.com/2016/04/08/news/companies/stamp-price-decrease

So let's review the facts: The Postal Service got permission to raise the price of a stamp a few years ago; and instead of filling the financial hole they were in, the USPS found itself even deeper, posting a $5.1 billion net loss in 2015.

Anyone knows that there's not only a generational disconnect with mailing actual paper envelopes, but email, parcel services such as UPS and FedEx, couriers, social networking, texting, ad nauseum, all nibble at the toes of a drowning postal service. And rather than shift the business model to be more competitive (the occasional innovation such as single-rate mail boxes and scheduled pick-ups aside), the post office continues to struggle. And it gasps for air even in the age of Amazon and eBay.

Since the Civil War, there have only been three price decreases in the cost of a stamp -- usually only a penny or two. Most government websites listing the history of postage stamps will stop at the Civil War because the last time the Postal Service seriously reduced prices and changed its business model to keep up with consumer demands was before the War Between the States.

In 1844, anarchist Lysander Spooner established the American Letter Mail Company believing strongly that the government should not be doing what the market can. His conviction was that a stamp should cost no more than 5 cents at the time. And he got his way, but not until proving it by inventing his own delivery system and beating the U.S. Postal Service at their own game.

Though dissolved in 1851 after several lawsuits by the federal government, the American Letter Mail Company's legacy changed the way we get our mail and reduced the cost to the consumer/taxpayer, as demonstrated by the below chart:

Price of stamps and delivery:

USPS: 1816 

Less than 30 miles ... 6 cents

30-80 miles ... 10 cents

81-150 miles ... 12.5 cents

151-400 miles ... 18.5 cents (later 18.75)

401+ miles ... 25 cents

American Letter Mail Co.: 1844 (first year)

6.35 cents/half-ounce (no mile-limits)

20 stamps for $1

Free local delivery 

USPS: 1845 

Less than 300 miles ... 5 cents

300+ miles ... 10 cents

USPS: 1851

Less than 3,000 miles ... 5 cents (3 cents prepaid)

3,000+ miles ... 10 cents (6 cents prepaid)

Given, the American Letter Mail Company was more limited in its geographic area (New England, mostly), and the challenge to the postal service's monopoly (via an act of Congress in 1825) was squashed in federal court, Spooner proved that letters can be delivered more efficiently and cheaply. And back then the Postal Service responded with lower, more uniform prices and greater flexibility and simplicity.

Today's post office would do well to take a note from history ... and Economics 101.

Spooner (pictured) never got a stamp ... but you can make your own, now. 

UPDATE:

Since we're Texas, we were asked what the prices for Republic of Texas and Confederate stamps would be during the timeframe in the price comparison above. Here's the best we could find:

Republic of  Texas Post Office Department ("Texian Post Office"):

1836-37 (Spanish currency)
20 miles or less ... .25 centavos
50 miles or less ... 12.5 centavos
100 miles or less ... 18.75 centavos
200 miles or less ... 25 centavos
Further distances ... 37.5 centavos

1837-1845 (Texas currency)

40 miles or less ... 12.5 cents

100 miles or less ... 25 cents

Longer routes ... 50 cents (plus ship fees if they apply)

Note: The Republic of Texas did not typically use stamps and envelopes, but hand-signed folded letters. Envelopes were introduced in 1845, the last year of the Republic.

Confederate States of America Post-office Department

1861-1865 (Confederate currency)

Drop-letters and circulars ... 2 cents

Less than 500 miles ... 5 cents per half-ounce 

500 miles or more ... 10 cents per half-ounce

Note: The U.S. Postal Service continued to deliver mail to the seceding states until June 1, 1861, during a relatively smooth transition. Later exchanges between the nations often required the running of river blockades and smuggling, which added to the cost and scarcity of stationery, stamps, and other postage materials.