It now seems the proposal will not materialize. Congress passed legislation last month, which President Barack Obama signed, that obligates the USPS to maintain six-day delivery. The USPS may still alter the kind of mail it delivers on Saturday, with plans to eliminate first-class mail delivery and pick-up service while continuing delivery of packages and pharmaceutical drugs on Saturdays.

Officials with the USPS have warned that a $47 billion bailout, which taxpayers would fund, may soon be necessary if it is not given more freedom to change course. Everybody knows that the Postal Service needs to cut costs (or increase revenue), but Congress is standing in the way. This is all part of a broader pattern: It is precisely this inability and/or unwillingness to confront economic reality that made the sequester necessary.

One of two scenarios seems likely: Service will be cut to avoid bailing out the USPS or Saturday service will continue at the price of funding a bailout. This is a false alternative, one that the free market would not present. The proper course of action — privatizing and abolishing the monopoly status of the USPS — would yield a twofold benefit. Companies would compete with one another to not only keep their costs sustainable, but to continually improve their services. Moreover, if one such company failed to maintain financial solvency, it would simply go out of business. In short, these forces would function to keep customers satisfied without putting their property at risk (through taxpayer-financed bailouts).

The dilemma about the USPS is totally unnecessary and such situations can be solved if we keep the government out of business and out of our pockets.

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A book co-authored by Arthur Rubinfeld, known as the “architect behind Starbucks’ expansion,” outlines the logic underlying the company’s growth strategy. With a target market comprised of “urban professionals, high-income individuals from the age of 18 to 45,” Starbucks sought to conquer the country’s major metropolitan areas. Demographic considerations, the intensity of competition, city-specific macroeconomic conditions, and a number of other factors, determined the pattern of expansion.

The areas surrounding Kansas City are home to a multitude of Starbucks coffee shops, which form something of a ring around the city itself. This same distribution is not evident in other Midwestern cities such as Saint Louis, Oklahoma City, Omaha, and Indianapolis. We can learn a lot about certain areas from the behavior of private enterprise.

My colleague Patrick Ishmael and I intend to explore this phenomenon in greater detail. We wish to better understand why Starbucks has chosen to focus disproportionately on Kansas City’s peripheral markets. As Rubinfeld’s volume makes clear, a substantial amount of research goes into determining how capital can be most profitably distributed. Accordingly, there is almost certainly a strong rationale under-girding Starbucks’ behavior in Kansas City. Perhaps further investigation can teach us some important lessons about the business climate in the City of Fountains.

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There is nothing wrong with a business manipulating its prices and practices when it is confronted with a budgetary dilemma. But there is something wrong when it fails to adequately serve customers while the state prohibits competition. In the private sector, businesses compete to provide the best for the least. In the case of the USPS, however, customer satisfaction can simply be sacrificed for financial health. After all, why worry about quality customer service when a competitor cannot put you out of business?

The least weak argument in favor of public mail delivery is that private enterprise could not profitably serve rural areas. For example, my grandfather often patronizes the post office in Centertown, Mo., a small town in Cole County. He prefers it to the one in Jefferson City, as there is never a wait. My guess is that the privatization of the USPS would spell the end of the Centertown branch, as well as countless other small town post offices across the state. Or perhaps they would remain, but mail delivery to and from such remote locations would be significantly more expensive.

Public support is likely necessary if many rural areas are to maintain their post offices, but this is not a justification for such support. Many things are relatively expensive for rural dwellers (e.g., Internet, gas to get to the grocery store); others are comparatively cheap (e.g., land).  The reverse is true for urbanites. What sense does it make to subsidize something simply because it is comparatively expensive in a given area?  The bottom line is that living in a particular locale comes with its unique set of costs. The most sensible route to take is to stop artificially reducing the cost of mail service in rural areas; let those who remain in these areas face the commensurate costs.

Privatizing the USPS, in short, makes both practical and moral sense.

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Hence, we observe one of the more unsettling hallmarks of statist intrusion into the market: the spectacle of multi-billion-dollar corporations successfully offloading costs onto everybody else. German sociologist Franz Oppenheimer referred to this as the “political means” of wealth acquisition, a process involving “the unrequited appropriation of the labor of others.” This is to be contrasted with the “economic means” of earning wealth, which stems from the “equivalent exchange of one’s own labor for the labor of others.” The former is only made possible by the latter; one cannot confiscate that which has not been created.

Walmart is in an interesting category. It often benefits greatly from public money, but it is also on the receiving end of hostile state regulation. This is also problematic, not least because the company has proven itself to be a force for positive change.

But that is beside the point. A free market, properly conceptualized, is nothing more than the institutionalization of voluntary interaction among economic actors. It constitutes the only politico-economic system that legally enshrines the rights of consumers and producers to live in accordance with their values. And such a system has immensely greater potential to improve our standard of living than any state-administered subsidy program for politically connected enterprises.

The post Shrewsburying The Free Market appeared first on Show-Me Institute.

But we must not ignore the shopkeeper’s opportunity cost of fixing the window, namely those products and services that she had to forgo. The businesspeople selling these forgone items take a hit as a result of the broken window.

I was reminded of all this while reading a recent report from goodjobsfirst.org. One section outlined the subsidy programs offered to incentivize private enterprise to move from Kansas to Missouri. The Show-Me Institute’s Patrick Ishmael and Michael Rathbone have expressed concern about such programs over the past few months (here and here).  In 2012, Freightquote moved its headquarters from Lenexa, Kan., to Kansas City, Mo., which landed the company $64.3 million in tax incentives. In 2011, North American Savings Bank received almost $6 million in subsidies to relocate to Missouri. Velociti benefited from $1.6 million in corporate welfare for moving to Riverside, Mo. The list goes on . . .

Such programs are defended on the grounds that they bring much-needed jobs to the state, but one cannot ignore the means by which they are financed. The government is not an exogenous entity, magically creating wealth out of nothing. (Trillion dollar coins notwithstanding.) To provide anything, it must first take from others. This confiscated wealth constitutes revenue that would have otherwise been spent, invested, or saved in the private economy. Accordingly, it is not a stretch to contend that the state creates jobs only by means of destroying them. Bastiat’s sage advice unfortunately seems to have been lost on many of our public officials.

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