Most of us no longer want to refrigerate our food with blocks of ice delivered by horse cart, operate a hand crank to start our cars, or live our entire lives by candlelight. New technology has made relics of much that were once accepted parts of our daily experience. This is, for better or worse, the natural progression of our world, and this trend has only been accelerated over the last decade or so as the technological curve has turned into a rocket ride.
How we communicate has also changed—quite dramatically—and these changes have thrown all that was once predictable and stable about information gathering and dissemination onto the scrap heap. My college students look at me agog when I describe going to the undergraduate library, leafing through drawer after drawer of index cards, and tromping through the stacks looking for books shelved according to the Dewey Decimal System before heading back to my dorm room to type—on an actual typewriter—the essay I had due. What a horrible world, they all agree, that must have been.
We could likely have a lively debate on this point, but I am certain that many would agree that no predictable and stable component of the old information order has suffered quite so much as the United States Postal Service, an icon of American life dating back to Benjamin Franklin. Once a central facet of our personal, social, and economic lives, the Post Office has been left gasping by email, text messaging, electronic bill payment, and Federal Express. Days now pass when my home mailbox remains stubbornly empty, and much of what does arrive seem quaint artifacts of a time gone by. The Post Office has now suffered seven consecutive years of net losses, $5 billion in just this last fiscal year alone. Clearly, something must be done very soon.
However, the least likely solution to saving the system is the one now being proposed: that the Post Office become a national bank for those now “locked out” of traditional banking services. Am I the only one who just broke into a cold sweat at the thought of “Obamabank” joining Obamacare on the list of our most misbegotten government programs?
The Postal Service did, in fact, operate a banking system in the first half of the last century—one that had to be shut down due to mounting losses. However, the statutory authority to run a bank is still on the books and, given that market forces are killing the Post Office’s traditional mail and package business, some now ask why not just diversify? After all, those pitching this idea in Washington must think, how much expertise could it possible take to manage a bank in a fast-moving, globalized financial marketplace? It cannot be much more complicated than selling stamps.
Setting aside the highly questionable idea that postal workers can be retrained to be bankers, it is also worth examining the logic driving consumer advocates to press for this proposal: The federal government has an obligation to provide banking services to those who are unable—or unwilling—to open a commercial bank account.
There are three basic reasons an individual may need to use fee-based check cashing services instead of a commercial bank. First, that individual may have already left a string of bad checks, overdrafts, and disaster in their wake at other banks, so they are considered to be at risk of doing the same again. Second, that individual might, unfortunately, be living from paycheck to paycheck and be content to simply cash their check and avoid the possibility of minimum balance fees that would eat into their already insufficient earnings. Finally, it is certainly well-known that those who make their livelihoods from what might politely be referred to as the “underground” economy have a multitude of good reasons for avoiding the paper trail created by a traditional banking arrangement—remember that, in the end, they got Al Capone for income tax evasion.
What do all three of these groups who are “locked out” of commercial banking services have in common? Simply put, even if they could be convinced that traditional banking services could be of advantage to them, they comprise the most challenging possible cohort of potential bank customers. Is this the population you want to set loose on America’s most inexperienced bankers?
Unfortunately, reeling in this group of customers would probably be dependent on either some sort of government guarantee to cover the losses that will inevitably result—and I cannot imagine any taxpayer has an appetite for writing more bailout checks—or legislation designed to siphon more lucrative business away from commercial banks in order to balance out the revenue lost serving a very high risk population. Each of these options carries its own drawbacks, and both would continue our recent history of either making us collectively responsible for someone else’s mistakes or offering a loosely defined “public good” as the justification for more government intrusion into private businesses.
Moreover, one can only imagine the potential for mischief if we put control of a huge pot of money into the hands of political appointees and career government bureaucrats. Perhaps I am entirely too cynical—or simply sadly realistic—but it will likely be very difficult to resist the temptation to use a federally controlled neighborhood bank backed by the United States Treasury for insider loans, patronage jobs, and a financing-of-last-resort for all variety of “worthwhile” projects that are high on hopes and low on viability. I suppose we all would like the government to do more to create jobs, but I am certain no one wants to create more employment opportunities for Special Prosecutors and F.B.I Agents.
If the Post Office can be “saved” through greater workplace efficiencies and mail and package services that are competitive on their merits, I am all for it. Failing this, the only option is to treat it the same as any other failing business and allow it to fade away.
Also published in The News-Gazette (news-gazette.com) April 6, 2014