Friday, 24 June 2011

Thoughts on the Canada Post Lock-out

Let me start with a real-life allegory for the current Canada Post situation.

My dad is a retired fire fighter, and this is one of his stories. My dad's crew gets a call, and arrive to find a residential driveway gloriously engulfed in flames. It was a gasoline fire, so a chemical suppressant had to be used. In discussions with the homeowner, the following series of events transpired. The homeowner had a motorcycle that had some tough grease stains on it. As a quick solvent, he was using gasoline in an open container with a rag to remove the grease. The container got knocked over and spilled the gasoline all over the driveway. Because gasoline destroys pavement, the home owner then lit the gasoline in an attempt to save his driveway. Needless to say, that did not work.

How does this relate to the Canada Post lockout? First you start with a imperfect solution, i.e. using gasoline to clean grease or having a monopoly service with unionized employees. Something bad then results. And then, another imperfect solution is imposed that makes things worse. In this case, the 'make things worse' is back to work legislation (H/T Adam).

Like many homeowners, the strike is affecting me in a notably unpleasant way. I am no longer receiving my bills in the mail. But, in a perverse use of the term 'logic', as the payee I am still responsible for paying those bills or I will be billed late fees. How I determine what I owe is never fully explained. Especially since calls and e-mails are going unanswered.

This is a topic of constant debate amongst the parents while picking up their kids at school. Suffice it to say, it is THE topic of debate. Sadly to say, all the blame is on the Canada Post employees (next most hated group after lawyers perhaps?) even though they were in fact locked-out by Canada Post. It isn't the fault of the Canada Post employees that I am not receiving my bills, in fact, we have a series of imperfect solutions all coalescing into a massive cock-up of stupid proportions. This situation may have started with the rotating strikes, but it does not end there, far from it.

First, as many have pointed out, why do we still have a government monopoly in charge of mail delivery?

Second, (and to my mind, the larger issue) why do we still receive bills THROUGH THE MAIL? E-mail with attachments has been around since ninety-nighty-fucking-two. But when I investigate e-billing, I either get a summary bill with just the total I owe, and/or I have to set up an authorized pre-payment where the money automatically comes out. Well I work for private industry, and I don't trust it. I want to receive a fully itemized bill that I will pay when I am ready. I pay all my bills electronically, but I cannot receive them electronically. For that, they have to come in the mail. That is frakked up beyond measure.

How or why companies, municipal departments and other agencies are all universally blindingly incompetent at this, I cannot fathom. The cost savings of e-mailing a PDF bill would be worth it alone. Add in the fact that I no longer have to shred them and it is win-win for everyone concerned.

If companies smartened up, this would further diminish the value of Canada Post and force more organizations to come up with multiple options less dependent on a single supplier. As individuals we are told to diversify our retirement portfolios to reduce risk, but for some unexplained reason, we are still dependent on Canada Post for a few crucial services.

I have never been a big union guy, and I will union bash with the best of them. But I will do it when I am sure it is richly deserved. In this instance, it ain't the union that is at fault. It is a series of antiquated processes that have to be rethought, and the solutions are quite simple when you spend half a minute considering it.


ADHR said...

Utilities are legally entitled to deliver their own bills. They don't have to use Canada Post. As far as I know, there's nothing stopping other entities -- say, insurance companies -- from hiring their own people to deliver their own mail. Most don't bother because they rather like using the government monopoly.

Catelli said...

Hand delivery has its own issues. The City of Cambridge recently took over the billing of water usage. Apparently it was more cost effective to hand deliver than mail deliver. But many people do not have mailboxes by their door. So bills will just left on the front stoop. Then they'd blow away, get wet, etc. Has been a big problem out here.

sunsin said...

The problem here is exactly the same as with public schools. It's all very well to say there should be competition in delivering these services, but true competition is impossible since there's part of the market that no one really wants to serve but has to be served nevertheless. Private schools, by and large, skim off the best students and leave the state to take care of the less gifted. They are thus essentially parasitic, dependent on the state schools they sneer at to prevent the socially disruptive consequences of large numbers of completely uneducated citizens. A private competitor to the postal system would be parasitic in the same way, gobbling up business in the big cities and leaving the government to carry the bag in one-horse towns.

It always staggers me to see this type of cream-skimming called "free competition." Yeah, if the hidden costs are paid for by Joe Public. There is no free competition without a roughly level playing field, and that does not exist in many areas -- education, health care, and the postal service, among others.

ADHR said...

I forgot you folks outside Toronto don't have door-to-door delivery. One option, I guess, would be to compel Canada Post to allow other carriers, for a fee, access to their centralized mailboxes. The other would be for non-Canada Post carriers to get off their butts and install their own mailboxes. (Free enterprise and all that good stuff. ;) )

That said, competition can work, even if there's a market segment that no one wants to serve, through effective regulation. Bundle the part that no one wants with the part that they do. You could apply this pretty broadly: for transit, say, a private operator would be compelled to offer a certain level of service across the city, but could offer more frequent service as desired -- thus ensuring everyone has some access to transit, and more profitable areas are better served.

This may mean that no one actually wants to compete with the public monopoly, but even Milton Friedman was okay with that, IIRC. (He opposed public monopolies enforced by law, not public monopolies enforce by the logic of a well-run market).

Catelli said...

What Adam said. The far north and other remote communities already have their mail delivery contracted to private enterprises, and there are other instances where Canada Post has contracted out services too. The private market is already involved, ironically in those areas considered not economical for private enterprise.

Ken Breadner said...

Hold a sec--is Canada Post profitable, or isn't it? If it is, do we really want to kill it? I agree wholeheartedly that for the vast majority of us, snail mail is outmoded. But just because private enterprise CAN do something, doesn't mean it necessarily should.

ADHR said...

Profitable ($281 million in 2009, according to Canada Post's own numbers). That said, if the regulations are cannily written, the government could end up making more money off a private company. Depends on how the company is taxed, as well as any other fees it has to pay.

Catelli said...

And, just because a monopoly is profitable, that doesn't mean we should keep the monopoly. In this case, the impact of loss of service through that monopoly has to be factored in as well.

However, the gradual decline of postal service, in a perverse way, does argue for keeping it a monopoly. Who would want it now anyway? Would there be a dramatic increase in fees as it turns into a specialty service to make up for the loss of revenue? But that line of thinking doesn't help Canada Post's long term prospects either due to diminishing returns even as a monopoly.

As organizations get smarter (IF organizations get smarter) alternative means to postal service may well be discovered regardless, competition through alternative means rather than direct competition.

ADHR said...

Although, profitability is a reason to be cautious about breaking the monopoly. Giving up revenue shouldn't be done lightly. (One wishes Rob Ford would get that.)

I tend to think Canada Post will always stick around, although possibly in reduced capacity as (particularly) businesses find other ways to communicate with their customers.

I wonder, though, about the wisdom of farming out too much of our communicative abilities to private firms. There is no public email; Twitter is private; couriers are private. Is this wise? I'm not sure, but I suspect we'll have to find out the hard way.

Christopher Parsons said...

I largely agree with your position, Catelli. I certainly think that many of the 'issues' stemming from the rotating strikes were worsened significantly by the employees locked out (rotating strikes seems perfectly reasonable to me) and have huge issues with the federal government legislating the parties to arbitration: I fail to see how management lost in any sense, and only see this as an attempt to bust a union. Ah well...

As for should the post be privatized: I think that there are key things (*cough* public safety and communications and health *cough*) that shouldn't necessarily be expected or demanded to run at significant profits given that they are cornerstones to the democratic state. So long as its breaking even (or, at worst, running a *very* small deficit) I see no reason why we *have* to privatize the service.

Catelli said...

Yeah, the only real justification for privatization is redundancy. If keeping the postal service running is more important, then multiple providers are needed.

I will point out that many health services are private, in the sense that every doctor is his own privately run company (or a collective under a health services company). The government pays for our use of these services, but they are privately run. With effective regulation and oversight services can be safely delivered.

ADHR said...

Well, there's a few different issues here.

One is whether there should be a monopoly on services like healthcare and the post. Another is whether the private sector should have involvement in a given service (and what involvement that should be, of course). A third is whether and to what extent private sector involvement should be allowed to make a profit.

There aren't easy answers to any of them, but I don't really see why a postal service monopoly makes sense. I can see keeping the private sector from making too much of a profit, but I don't see the argument for not letting them get involved at all. Healthcare is a good analogy here: healthcare providers are (as Catelli notes) private entities, who are nonetheless prevented from making vast profits, and none of whom has a monopoly. And it seems to work pretty well -- not perfectly, but pretty well. One way to improve it might be to have some public involvement backstopping the private entities -- so, for example, folks who can't find a doctor in private practice could have one provided for them by a public hospital or medical clinic.

Why not something similar for the postal service?