Published in the Laissez Faire City Times, October 7, 2002
In a post office in Oxford, England, I noticed a sign requiring customers to turn off their cell phones. I asked the bureaucrat behind his reinforced glass counter the reason for this prohibition. "There are three reasons," he replied. "First, it can interfere with our computers. Second, phone ringing annoys people. The third reason is that some customers talk on their mobiles while they are at the counter, which we consider rude."
To anybody who uses both computers and cell phones, the first reason seems laughable. What is the last time your cell phone interfered with your computer? The second reason seems lame. Cell phone rings are now part of civilized life. I decided to focus on the last reason, i.e., the claim that it is rude for customers to talk on their cell phones in front of bureaucrats. "But isn't the customer always right?" I asked. The bureaucrat's polite, confident, self-righteous reply was neat: "No, Sir!"
I happen to think that politeness and etiquette are important in social relations. As I once wrote, "[i]n a sense, anarchy can only work when people hold their spoons and forks correctly."[1] The rules of etiquette governing who defers to whom also tell us much about what kind of society we live in: in a free market, the supplier defers to the customer; in a socialist system, it is the contrary.
It is not an accident that postal administrations are virtually never customer oriented. Individuals respond to incentives. Without the threat of being bankrupted by competitors, they will prefer to work little, and not to be bothered by customers. Relying on the taxpayers' financial guarantees, and often protected by legal monopolies, state administrations and state corporations are led, as by an invisible hand, to disregard their customers. Postal services are a good example of this general phenomenon.
In the case of postal services, it is quite clear that state corporations will not be able to hide for long behind their legal monopolies, challenged by private courier services and, more importantly, by the Internet. Between 1996 and 1997, the last available years in Universal Postal Union's statistics[2], world deliveries of letter-post items and ordinary parcels dropped by 1%. Between these two years, total receipts of postal agencies in the European Union were stagnant. Similarly, the last figures available (2001) for the United States Postal Service show zero growth in the volume of mail delivered.[3]
The British Royal Mail has recently been transformed into a crown corporation, called Consignia.[4] The company's annual report states that "Making the most of greater commercial freedom, with its increased competition and regulation, requires everyone in the company to recognise that our customers come first" – a fine piece of wishful thinking. How greater commercial freedom can go hand in hand with increased regulation is a mystery, but forget about this. The most important point is that, since the new company is still wholly owned by the British state, and manned by the same unionized bureaucrats, it is a fair bet that little will change.
On September 13, I send an e-mail to Consignia's press office, asking for any comment they had on the cell phone policy expounded by the Oxford bureaucrat. I immediately got an e-mail reply, entitled "Your enquiry, reference number RM0045-4541." The message said, "Your enquiry has been passed on to the relevant Royal Mail department, who will be in touch shortly with the information required." At the time of writing, two weeks later, I am still waiting for the promised information.
Over the past two decades, partial privatizations of postal services have been realized elsewhere in the world, generally on the same model. In Canada, the Department of the Post Office has been transformed into a Crown corporation, Canada Post, wholly owned by the federal government. In general, only some fields of activity have been privatized, and the monopoly on certain types of mail has been retained. Moreover, these timid privatizations have often been compensated by expansion in new markets, like the purchase of Purolator, a private courier service, by Canada Post. The most extreme type of privatization is represented by the Dutch postal services, where the state has kept only a minority interest, but has duly transferred the monopoly of letter delivery to the new company.
These false privatizations have been accompanied by a strong regulatory stranglehold on the new agencies. Consignia's annual report states: "We will work with our regulator Postcomm to deliver the universal service." The expression "our regulator" is a nice reminder of the tendency, well known to economists, of large regulated companies to capture regulation, and use it to further their own anticompetitive goals.
The recent experience in privatizing postal services is in line with more the general trend of the last 20 years. Privatizations have been made in fields like telecommunications or (in Europe) banking. But even when these privatizations were real ones, state control has often been maintained through more stringent regulation. There are two ways to nationalize an industry: by outright state ownership, or by regulation.
Real privatization of state corporations is a good thing. Yet, it should not be forgotten that privatization is only one dimension, and not always the most important one, of the general need to promote economic and personal freedom. Merely changing the names of monopolistic, trade-unionized, bureaucratic organizations like postal administrations is a smokescreen. This is why postal bureaucrats in Oxford think that customers who do not bow and scrape to them are rude.
[1] Pierre Lemieux, "Civil and Uncivil Disobedience," Liberty, July 1995; available at http://www.pierrelemieux.org/artho.html.
[2] See http://www.upu.int (visited Sept. 30, 2002).
[3] At http://www.usps.com/financials/_pdf/gfy01.pdf (visited Sept. 30, 2002).
[4] At http://www.consignia.com/consignia1.asp (visited Sept. 30, 2002).