Saturday, March 26, 2011

Macroeconomics and the Mailing Industry

The mailing industry is an industry that depends on strong consumer demand.   Whether we are talking about transactions paid through the mail, advertising, or parcel delivery, mail volume will rise or fall depending on consumer demand.   The industry will likely prosper if consumer demand grows and will face even more challenges than it does now if consumer demand falls.  That is why the current debate regarding fiscal policy and the macroeconomic effects of that debate fiscal policy is so important to the industry. 

A recent article in the National Journal nicely summarizes the opposing viewpoints as expressed by the Joint Economic Committee Republicans and the Federal Reserve Chairman  Benjamin Bernanke and a number of economists including Chad Stone of The Center on Budget and Policy Priorities.  

When I first read the Joint Economic Committee Republican report, I was struck by one prescription that the National Journal summarizes as follows:   "The paper predicts that cutting the number of public employees would send highly skilled workers job hunting in the private sector, which in turn would lead to lower labor costs and increased employment. But “lowering labor costs” is economist-speak for lowering wages." Cutting the wages of college educated Americans did not seem like a good way to increase the demand for the products and services that are advertised or delivered by mail especially as the customers of the mailing industry are facing higher fuel and food costs to begin with.

As the National Journal article concludes, "Ultimately, the argument comes down to what policymakers see as the key problem in the economy. Is growth slow because businesses and consumers fear higher taxes or because businesses don’t have enough demand for their products to expand? Republicans are arguing the former, but many economists — and the bond market — believe the latter is closer to the truth. Moody’s bond-rating agency warned on Thursday that the U.K. is in danger of having its debt downgraded due to worries about slow growth resulting from consolidation."

This is not a debate that the mailing industry would normally get involved in.   However, it may be worth the time of industry firms to spend a little time thinking about a very complex economic issue to make sure that Congress chooses the economic approach that best aligns with the industry's interests.  It is my opinion that the industry would be better served by an economic approach supported by the bond market than one developed by politicians.

1 comment:

Anonymous said...

Conservative "think tanks", created by and supporting the world view of a broad swath of individual billionaires, corporations, and Conservative organizations have been pumping out rhetoric and conservative slanted material for decades now. The National Review is one of a handful of "house organ" ONLINE/Print media sources for "the Conservative Party Line"...and quoting from this publication, you get to hear what "big money" wants you to hear.

With the LARGE MESS this country is in and with WHO the perpetrators were who brought us to this point, utilizing JUST SUCH CONSERVATIVE VIEWS AND METHODS, my question is why would anyone want to continue to listen to THEIR WORLD VIEW as a solution to ANYTHING right now?

The problem that the Postal Service has is that A CONSERVATIVE CONTROLLED CONGRESS AND PRESIDENT enacted a modification of the Laws concerning the USPS, forcing the Postal Service to PRE-FUND retirement and healthcare costs of FUTURE RETIREES, to the tune of over FIVE BILLION DOLLARS A YEAR...interestingly enough, this is very nearly what the USPS needs to break even every year.

The answer is SIMPLE MATH really, if you stop this CONGRESSIONAL CASH GRAB that is "milking" the Postal Service and switch back to "CURRENT ACCOUNT" ACCOUNTING for USPS retiree financial obligations(THE POST OFFICE IS THE ONLY ENTITY THAT MUST DO THIS) the Postal Service financial problems will be solved.

The Conservative quest to change government and government services to a "private capital" model is not necessary nor is it in the BEST INTERESTS OF THE AMERICAN PUBLIC... The Post Office Department has been around for CENTURIES providing Americans with a national post and continues to perform this service 24/7 for ALL Americans.
The "Mailing Industry" would like to treat the USPS as a PUBLIC ADJUNCT of THEIR BUSINESS and this is not what our FOUNDERS had in mind when they created this great "Post Office" for America.