Lysander Spooner on why government monopolies like the post office are inherently inefficient (1844)

Found in: The Unconstitutionality of the Laws of Congress, prohibiting Private Mails (1844)

The American legal theorist, abolitionist, and radical individualist Lysander Spooner (1808-1887) started his own mail company in order to challenge the monopoly held by the US government. He perceptively noted that, in the absence of competition, “government functionaries” had no incentive to innovate or provide good service:

Economics

Universal experience attests that government establishments cannot keep pace with private enterprize in matters of business — (and the transmission of letters is a mere matter of business.) Private enterprise has always the most active physical powers, and the most ingenious mental ones. It is constantly increasing its speed, and simplifying and cheapening its operations. But government functionaries, secure in the enjoyment of warm nests, large salaries, official honors and power, and presidential smiles — all of which they are sure of so long as they are the partisans of the President — feel few quickening impulses to labor, and are altogether too independent and dignified personages to move at the speed that commercial interests require. They take office to enjoy its honors and emoluments, not to get their living by the sweat of their brows.

Thoughts

Appalled by the constitutional matter of the government claiming a monopoly in the provision of a particular business enterprise (the delivery of letters), as well as by the gross inefficiencies he saw in its operation, Spooner came to some surprisingly “public choice” like conclusions about the behavior of government employees.

Without the incentive of making profits or the disincentive of suffering losses “government functionaries”, as he called them, had no reason to seek to provide cheap and efficient services or to innovate in order to keep their customers, as other competitive businesses had to. Instead, they sought to maximise other “benefits” of a political nature, such as “warm nests”, “official honors”, “power”, and “presidential smiles”. In order to remedy this situation, Spooner set up his own letter delivery company and openly challenged the government to come after him so he could take them to court and settle the issue. This the government did and promptly put him out of business. Later, when Spooner became active in the abolitionist movement he personally experienced the politicization of the Post Office when it used its monopoly powers to prevent abolitionist literature being sent to the south. The USPS still enjoys most of its monopoly privileges today and is just as inefficient, and for the very same reasons, as Spooner pointed out in 1844.

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