Michael Taube: How Canada Post Could Be Saved by a 19th-Century American Philosopher’s Privatization Model

A Canada Post parcel delivery vehicle parked on Wellington Street and Parliament Hill in Ottawa on May 5, 2022. (The Canadian Press/Sean Kilpatrick)

Commentary

Is this the beginning of the end for Canada Post?

I’m far from the first columnist to have ever suggested something like this. The fate of this Crown corporation, founded on July 1, 1867, as Royal Mail Canada, has been the subject of debate for years. Its faint pulse has nearly flatlined on a few occasions, too.

Nevertheless, to borrow a line from the brilliant investor Sir John Templeton, “This time is different.”

Canada Post has turned into a financial sinkhole. On May 3, it reported an enormous loss of $748 million (before tax) in 2023. Its accompanying news release outlined several factors, including being “negatively impacted by the post-pandemic surge in parcel delivery competition, the ongoing erosion of Transaction Mail, and continued growth in addresses and delivery costs.”

Putting COVID-19’s effects aside, which wasn’t something Canada Post could control, the other two factors have been highlighted many times in the past. If these issues are still a problem in 2024, then it’s clear they’re not going away—and will only get worse.

“If they don’t become competitive within five or six or seven years, they will go the route of Blockbuster Video,” Ian Lee, an associate professor at Carleton University’s Sprott School of Business, told Global News on May 31. “Why? Because those losses are going to get bigger year after year.”

Exactly. Although Canada Post isn’t funded by taxpayers, the federal government is involved in the approval stages of several components, including its corporate plan. Considering the fact that it’s now lost roughly $3 billion over the past five years, Ottawa should recommend to Canada Post that it switches over to a full privatization model.

What could this potentially mean? There should be competitive rates for postage stamps, packages, and overnight courier services; cost-cutting measures related to wasteful spending on unsuccessful programs and initiatives; examining ways to recreate or reimagine rural delivery and super mailboxes in the suburbs; and making a formal break with its labour union to more effectively employ and utilize staff.

If Canada Post ever takes a full plunge into the privatization waters, there are models to follow. I’d strongly suggest examining Lysander Spooner’s privately run post office.

Spooner was one of the 19th century’s most fascinating political thinkers. His ideas fit within several ideologies, including libertarianism (both right-leaning and left-leaning), anarchism, and the odd-sounding free market socialism. He was a lawyer by trade, an abolitionist, and a pro-labour movement and natural rights advocate.

His most ambitious project was launching the American Letter Mail Company in 1844. It was a direct competitor to the United States Post Office (now United States Postal Service) monopoly, which frustrated him due to government interference, extensive regulation, and high postage rates. As Spooner wrote on Feb. 28, 1844, in the American & Commercial Daily Advertiser, his business model would “give the most extensive facilities for correspondence that can be afforded at an [sic] uniform rate of postage.”

His paper, “The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails,” brilliantly outlined his pro-free market, pro-competition position. Spooner believed the “power given to Congress, is simply ‘to establish post-offices and post roads’ of their own, not to forbid similar establishments by the States or people.” He also argued there “is nothing in the nature of the business itself, any more than in the business of transporting passengers and merchandise, that should make it a monopoly, either in the hands of the government or of individuals.”

The American Letter Mail Company established offices in major cities like New York, Baltimore, Boston, and Philadelphia. It offered significantly lower rates for stamps than the Post Office. Agents travelled with the letters by train and boat, and passed them onto messengers who delivered them to different households. The business flourished and customers were thoroughly satisfied.

The U.S. government was furious, however. They tried to eliminate their competition by any means possible. Stamp rates were lowered from 18 3/4 cents (cost of sending a letter from Boston to New York) and 25 cents (from Boston to Washington, D.C.) to 12 cents. The American Letter Mail Company’s rates, which were 6 1/4 cents for postage per half-ounce and 20 stamps for a dollar, were reduced even further. Spooner even offered free local delivery to boot.

The matter was soon thrown into the courts. Spooner fought valiantly, but his financial resources dried up. His company closed in 1851.

While it was an unfortunate end to his once-thriving business, Spooner’s experiment was a success. He proved that a privately owned mail company could offer affordable stamp prices and more efficient services in a truly competitive marketplace. That’s what Canada Post could potentially do, and, based on its escalating financial losses, should do.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.