Rain or shine, the monopoly must end

The current strike at Canada Post (perhaps you hadn’t noticed: it started last week) presents a curious spectacle: an all-out struggle for control of a company whose main line of business—carrying bits of paper from one point to another—is rapidly disappearing.

It isn’t just email, which has reduced the letter to more or less the same function that telegrams once performed, something you send on formal occasions but otherwise wouldn’t think of using. Nearly everything that Canada Post once charged to carry is being vaporized. Cheques are giving way to electronic funds transfer; catalogues to online shopping; CDs, DVDs and books to iTunes, Netflix and Kindle.

And yet, notwithstanding a 17 per cent plunge in volume per address in the last five years, it still carries 11 billion pieces of mail a year. Some customers in particular—small businesses, charities, rural and elderly correspondents—remain dependent on “snail mail.” For them a strike is an inconvenience, and even if some take the opportunity to make the switch to electronic transmission—never to return—for many others the post office is their only choice.

Which is to say, no choice: the monopoly Canada Post enjoys on the delivery of letter mail is not by virtue of its sterling service, but by statute. Sections 14, 15 and 50 of the Canada Post Act make it an offence for anyone else to carry a letter for less than three times the prevailing postage rate. You can go to jail for it.

Once upon a time, that meant a great deal. As Canada Post had a monopoly on its customers, so the postal workers’ union had a monopoly on Canada Post. Empowered with the right to strike in 1967, CUPW set out to extract as much of the monopoly “rents” (what economists call “loot”) as it could for its members. Over the next two decades, the union went on strike 10 times, and was rewarded with an array of wages and benefits of which other workers could only dream.

Rather than confront the union head-on, post office management adopted a series of cunning business plans. At first, they lost buckets of money, as much as $1 billion in a single year, and passed the costs on to taxpayers. Then, when that was no longer politically acceptable, they passed it on to their customers, in the form of higher prices and less service. Weekend delivery is but a fond memory, of course, but over much of the country households no longer receive any delivery: instead, they are required to pick up and deliver the mail the last mile, or miles, themselves.

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Source: Maclean