Much has been written against the privatisation of Royal Mail. Often objections focus on one of two issues. First, majorities of both workers of Royal Mail and the British public were against it. Second, there are worries it will undermine the service it provides, with increased prices and decreased access in remote areas only two of the problems already cited. I sympathise with both worries, but my sense is that there is also a further difficulty, something that bothers me beyond concerns for popular sanction and proper provision.
There is clearly something problematic about sub-contracting certain actions. I should not, I think, appoint someone else, even someone who might do a better job, to write the message in my partner’s anniversary card. Such qualms can also arise in group actions. For example, if I am a member of a neighbourhood watch group, it does not seem appropriate for me to have a third party fulfil my duties. Some worry here regards proper provision; perhaps a third party would not have the same interests in doing the job aptly. But even aside from this worry, even if the third party was more reliable and more vigilant, I think the group could object to me outsourcing the task. “We did not agree merely that the job is done”, they might say, “we agreed that you would do it”. Unless I had good reasons for delegating the duty – that I was incapacitated by illness, for example – I think I owe them an apology. I seem to have violated some constraint assumed in our commitment.
Similar cases can arise in the citizen-government relation. It can be thought that government is justified, in part, by its contribution to realising collective goods. There are goals individuals cannot achieve alone, so they collectively empower an agent to coordinate these activities. Obvious examples include national defence and law and order. When a government assumes these roles, it provides a commitment to undertake these tasks on behalf of a population, and, again, there seem cases where sub-contracting this commitment is inappropriate. I suspect that it is something like this concern which explains the high numbers uncomfortable with privatising prisons. This function seems like a collective end handed to a collective agent that, through privatisation, it is not performing. Even if it is done effectively by the sub-contracted, I think we can say: “but we asked you to do it”.
Does this argument apply to the postal service? I guess it is most plausible to suggest that the relevant collective good asked of the government here would be ‘to provide a coordinated means of communication between dispersed individuals’. Mediums other than postage could meet this requirement. However, my sense is that when the government does not provide an alternative medium – whilst it does not, itself, provide, say, phone or internet connection to all – a case can be made that it should provide one means of communication for its population, a default option of sorts. We collectively empowered an agent to facilitate nationwide contact and when they sub-contract or privatise that role completely, I think we can say: “but you committedto providing at least some form of communications network for us”.
There are cases where a government would be excused this responsibility: 1) if the population agreed to sub-contracting; 2) if the government were unable or found it too costly to provide the service. 1 does not apply here since the population did not have a say, and, as noted above, were against privatisation. 2 does not apply to a business making profit. In the case at hand, I contend that privatising Royal Mail involves objectionably sub-contracting a commitment, and that there is some (additional) reason for the government to reverse that decision or provide an alternative default option for societal communication.
A brilliant post Andrew, and I totally agree with the general thrust of the argument. I'm very much in favour of your perspective, but I thought I would sketch out a hypothetical response in favour of privatisation, to see how the argument stands against it.
"I feel like the main appeal of your argument relies on our fondness for the Royal Mail as a national institution. The reason why we wouldn't want it privatised is because something about it being the 'royal' mail, a service provided by the government, is necessary for it to retain the fundamental national character of the Royal Mail we so value.
However times are changing, and letting sentimental values dictate our policy would be foolish. It is a reasonable prediction that in the future this service will become less important for the functioning of our day to day needs. Consequently a postal service is less of a necessity and rather a luxury for those who 'enjoy' sending letters. It is not the government's responsibility to provide such a luxury, at expense to the rest of the population.
The private sector will keep it going for those who still wish to use it, but due to its growing redundancy, the government should no longer be the provider of a luxury service at the cost of the rest of the taxpayer. I agree, there may be room for the government providing an alternative form of communication service, but this does not need the re-nationalization of the Royal Mail"
Thanks for the post Andrew, a topic I really haven't thought much about.
I basically completely agree with your analysis, however there is one area in this debate which I am uncertain of, which is to what degree we have a duty to ensure someone is part of the communication network.
I think we really need to question to what degree the state is responsible for providing for those who live in disconnected parts of the country – as essentially other taxpayers are subsidising their lifestyle.
You use profit as a determinging factor, which I think is good. However the Royal Mail is a monopoly and if we think it provides an essential service, it should always be able to turn a profit as people will be forced to pay whatever price necessary to access this essential service.
It is not inconceivable that privatising the royal mail leads to savings for the vast majority of its users, while a marginal few are forced to pay prices which are reflective of the actual cost of providing them with this service.
Andrew, I really liked your post, and I think I agree with your argument on why it is important that some kinds of collective goods be provided by government.
But I really wonder how this argument applies best to the case in hand – my comment is along the same lines as Katie's. My hunch is that it would be best if the government provided as a default 'coordinated means of communication between dispersed individuals' something else than post. Most likely internet – isn't it plausible that internet has been taking over as the main communication media, and will continue to do so? (It is interesting that, in the BBC article you linked, the Royal Mail is said to make profits from parcel delivery.) So perhaps the privatisation of the RM is the right context to press for public provision of internet connection and literacy.
Andrew, this is an interesting topic, and I'm sympathetic to your line of argument. I wonder, though, if there is also a related line of argument that you don't mention, but which might explain part of the public resistance. This is the fact that we want certain services to be available at the lowest possible price for individuals, because they provide the infrastructure for leading one's life. I don't know anything about the profitability and the governance structure of the Royal Mail, but I assume that they don't have to be profit maximizing, they just need to cover costs. If you privatize all or part of it, although you might have government regulation, there could be a fear that in the long run the private providers will abuse their quasi-monolistic position and exploit the fact that citizens rely on them.
So the citizens saying "we want *you* to provide this service" to the state might have to do with the fact that the "you" in question is not a profit-maximizing entity.
I agree with this to a large degree. Surely broadband infrastructure investment is more important to fulfil the governments obligations than providing a postal service?
However I have a suspicion that post offices might provide other, non mail related, functions? Does anyone know how much this is the case?
Thanks for the thoughts. Because a few of you raise similar issues, I hope you do not mind if I try to provide two cross-cutting reflections.
Katie, Anca, I think you are both right in pressing the thought of possible alternatives. I think the post conveys that this link troubled me somewhat too, especially in my concluding clause ‘or provide an alternative default option for societal communication’. If an alternative is taken, I suspect the internet probably seems the sensible option. But let me sketch a couple of niggles. One is the thoughts I tried to place on the conditional structure of the problem. At this point, there does not seem any great likelihood that the government will provide easily accessible internet services for all. It is also generally harder to establish an institution than dismantle one. Given these factors, my instinct is that we must be careful with what does exist. If the line I suggest has some merit, I think the chronology would need to be internet provision first, privatisation of RM second. The reverse order slips into the problem I pose and, further, makes me worry that the alternative will not be forthcoming. Another issue I ponder is how exactly the internet can replace postage. A good thing about postage is the lack of entry costs (i.e., the resources needed to use the service). Can internet provision present such an easy default option for all? As you will guess, I am a little uncertain on both, but I think I would press on the position that, at least, the privatisation is objectionable while the alternative is not available and tested. Or does that seem overly cautious?
Will, Lisa, it is interesting that you push worries that, in a sense, point in rather different directions on the costs. As I understand it, Will, your worry is that a public RM does not adequately reflect the supply-demand cost balance in certain areas, thus imposing unfair burdens on some, whereas Lisa, your worry is that it is precisely the shielding from market pressures that makes it such a valuable service. If I am not mistaken, both questions operate on a tangent to my own line, but raise important additional (possibly countervailing) concerns (perhaps along the lines of the ‘proper [or fair] provision’ argument I mentioned at the start). I am less knowledgable than both of you in the area, but my instincts rest somewhat towards Lisa’s position. I am not sure all provision of goods should reflect the supply-demand balance, especially when the service is, in a deeper sense, a collective good (i.e., its overall value is rather more than what each individual pays/gains from it). It seems to me that for the good it serves, a population can be asked to pay for it together, even if that falls somewhat disproportionately in places. Do either of you (or others) have a sense of how to think through categorising which goods/services we want to reflect market equilibriums and which should be protected from such pressures?
Agreed re the order. But concerning costs, internet is becoming increasingly cheaper. And, importantly I think, snail mail is a kind of institution that is slowly dismantling itself: how many people do still use it for communication purposes? Moreover, the reasons people hardly use snail mail these days (other than for sending official documents, perhaps) is because of how technically limited it is compared with email, blogs, chat rooms, FB, video conferencing etc. This gap is only growing.
So Andrew, I completely agree with this position. Also for example it may be a cost we have to bare in order to have people live in, and maintain, the country.
My question more goes to – where is the limit to this? Those living in the country receive significant transfers from those in cities (subsidised infrastructure, better public services etc.), I just wonder how we determine the limit? If I live on top of a mountain surrounded by lava am I owed access to the postal service?
Andrew, on the market-equilibrium vs. cover-costs question: a quick answer (maybe also a substantial one, I'd have to think through it) would be: if markets do not have problems such as externalities, information asymmetries, monopolistic tendencies because of economies of scale, etc., the market equilibrium will tend towards covering costs, roughly. Many markets don't work that way, and if the goods in question are also important for consumers, it might be worth thinking about alternative ways of supplying them (if one can reasonably assume that these will work better – not always the case!).
On Will's point: that is a serious question (we have the issue in many regions in Eastern Germany, which some people would prefer to turn into national parks…), but I think it is somewhat independent of the question of private vs. public provision. You could either have a public postal service serve you on your mountain top, or hand out subsidies to a private provider to make sure it comes to you (or give *you* extra money to pay for the extra costs).
Thanks, Andrew. I'm sympathetic to Anca's first reply, and I want to press that line of objection a little harder here:
It seems to me that, whilst you're right in saying that some kinds of goods must be provided by governments themselves because of *their* commitment to us, its not clear to me that the service provided by the Royal Mail falls into this group. That is, whilst I have a powerful intuition that you should write the message in your anniversary card, I do not have that powerful intuition in many other cases, including the case of providing communication services. It seems to me that they are very different cases and, in short, I think I need more of an argument to convince me that the Royal Mail is even the kind of thing to which the considerations you outline apply.
I imagine every national post service is different but a few of the additional services provided by the Belgian (and Canadian) postal services are 1) commemorative stamps both private e.g. death of a loved one, and public, promoting a sense of public space, memory, etc, 2) financial services, e.g. banking, payment of salaries to those without bank accounts, credit lines, insurance etc 3) administrative services, change of address, forward of mail, registered mail for security purposes, P.O box for those with remote addresses or who prefer to have their address be unknown, 4) Belgium post also offers other forms of communication such as telephone/internet. Perhaps a last immaterial service is that the post has a symbolic role in the history of developing a means of communication, first local, then national and now global. While many of us do not know our mail delivery person, they are often neighbours, members of our community and help to personalise a society that has become highly impersonal. Symbolically, privatizing the post might is yet another means to destroy our shared public spaces which require communication to sustain them.
I now see how the exchange with Will and Lisa re costs connect with the worries expressed by Katie, Tom and myself and can feed into your initial post, Andrew. It seems right to qualify the claim you make by saying that the government has an obligation to 'provide coordinated means of communication between dispersed individuals' in the most efficient available manner. Then the question whether the Royal Mail or the broadband should be the favourite means of communication is an empirical one.
Anya, I think you're right to point to the additional benefits brought about by postal services apart from just delivering post. The only caveat I would add is that in the UK the Royal Mail is separate to the Post Office, the former delivers post and the latter does most of the services you mention. The Post Office (for the moment) remains in public hands. But many of the neo-liberal arguments against the Royal Mail could also eventually be used against the Post Office, which would mean losing many of the community benefits you highlight. It is also possible that privatising the Royal Mail will in turn make it easier to privatise the Post Office.
The further thought here is interesting, Anca. You are probably right about the relative use-value of the internet. But a couple of other considerations here might go in another direction. One is that there would be considerable disparity between groups in terms of internet skills. While the range of options are available, not everyone knows how to use them. I suspect that postage has wider accessibility. The thought dovetails with my comment about entry costs. Such things are subject to change, of course, and if we are considering 'where next', I might agree with you that the future communication option is the internet. But I think I would again suggest that chronology and timeframe are important here, especially in the short-term.
A tough question, Will. Not sure I have a very good answer for you, although I might hazard that the question of limits is not as pressing as it might seem. Note that there are ways to balance the costs involved in serving those in remote areas, such as less regular collection and delivery. Given the line of my post, I think I can say that provided there is still some form of 'reasonable' access available to these individuals, the concern I mention is not violated. Thus, we can seek to balance costs a little in these ways. I guess that response does not offer any suggestion on limit, but I am not sure that we would need to say there is a ceiling unless we face a very outlandish case. Note that even the 'top of the mountain' case could be balanced through the midway options I suggest. Many European countries do that.
Sorry, Anca, I found this comment only after replying above. As my comments there suggest, I guess I have sympathy with this comment. But I would want to throw into the mix that the empirics of efficiency do involve more than a calculation of options, speed, and so forth. What is most efficient in the sense of serving the goal in question most effectively does depend in part on how a population is equipped and when alterations to the infrustructure can be (hoped to be) achieved.