But What Keeps McDonalds From Charging $100 for a Big Mac?

Jesse Jackson, Jr. is freaking brilliant.   When Larry King challenged him (well, not really, King never challenges anyone, particularly on the left) that people see the public option as health care by the Post Office, Jackson replied:

Look at it this way: There's Federal Express, there's UPS, and there's DHL "¦ The public option is a stamp; it's email. And because of the email system, because of the post office, it keeps DHL from charging $100 for an overnight letter, or UPS from charging $100 for an overnight letter.

This is really a weird view of the world, particularly given the history of how Fedex started.  It's amazing, given this logic, that McDonald's doesn't charge $100 for a Big Mac, given that there is no government competitor in that market.

The reality of course is that the relationship works the other way around - Fedex and UPS keep the Post Office in check.  Many of the Post Office's most recent service offerings were copied from UPS and Fedex.  After decades of trying, the USPS still can't emulate these companies' most basic service offerings, such as offering door-to-door tracking of packages.

By the way, here is a graph of the USPS keeping a lid on the industry's costs (via Carpe Diem):

stamps
It should be noted that the Post Office is still losing money at the current stamp price.

Also from Carpe Diem is this little service parable

The stamp vending machine at the downtown Flint Post Office no longer sells stamps, it sits there empty. Right next to the dark, empty vending machine for stamps sit two fully operational, bright and shiny vending machines, one for soft drinks and one for snacks, presumably owned and operated by a private, for-profit vending machine company (see photo above).

  • http://voidwhereprohibited.typepad.com David, Chandler, AZ

    Actually what keeps DHL or UPS from charging $100 for an overnight letter is the law that doesn't allow them to carry letters.

  • http://www.omaharag.com colson

    Call me a ditto-head but I found the same thing the last two times I've been to the post office - the first time was an empty machine with no postage available. The second time I went, they completely removed the machine so you had to go to the counter and get stamps. So instead of getting a book out of the machine and getting them all done in a few minutes, I had to tack on another 5 minutes of waiting in line, just to get what a machine offered much faster.

  • http://www.sbabg.org SBABG.org

    This article by Fred Smith (CEO FedEx) in 1999 does a great job explaining just how challenging it has been for FedEx and UPS to have to compete with a taxpayer subsidized, money losing, monopoly.

    http://www.cato.org/pubs/policy_report/v21n2/cpr-21n2.html

    The postal service has used its monopoly in first class mail to undercut pricing in the parcel business, running their parcel business at a loss in order to try and take market share from fedex and ups.

    It's a dirty business when the other team in the game gets to be the referee and rules-writer, too.

  • Brian

    He seems to have gotten his cause and effect reversed: UPS and FedEx came AFTER the postal service. USPS was not created as a "public option" to provide competition; UPS and FedEx arose AFTER the USPS because the public option was so inefficient that they were able to compete with USPS IN SPITE OF the government monopoly.

    Also, I wonder how his thought-process works to consider e-mail a "public option". E-mail was not created and is not provided by the government. Unless you're a government parasite like Jackson.

  • artemis

    I particularly like this part "The public option is a stamp; it’s email. And because of the email system,"

    Since when was email free? Sure the email itself is (sort of) free, but someone has to pay for the internet. The vast majority of places don't have public option internet. And thank goodness for that. Internet is dirt cheap.

    Of course that means free speech is dirt cheap so you know it'll be on the chopping block sooner or later. It's clear that the one thing the Democrats can't abide is their people having the ability to gather and spread information (other than that which the party provides)

  • Bob Smith

    After decades of trying, the USPS still can’t emulate these companies’ most basic service offerings, such as offering door-to-door tracking of packages.

    The USPS has spent billions on automation and computerization and gotten nothing for it, seeing as how their operating costs didn't go down a penny. That's not what you'd expect an automation program to do.

    When I went to the USPS the other day to pick up a package, they were using the most amazingly oversized and outdated UPC scanners I've ever seen. They were fully wired into the main computer, about the size of an external hard drive, and not very reliable seeing as how often they had to keep rescanning. Less amusing was one of the clerks kept reminding the others every couple of minutes that 5pm was coming up. God forbid they work a minute longer than that!

  • Global Warming

    What keeps McDonald's from charging $100 for a hamburger? Food stamps, of course!

  • Global Warming

    Oh, and government cheese.

  • John

    After decades of trying, the USPS still can’t emulate these companies’ most basic service offerings, such as offering door-to-door tracking of packages.

    The Postal Carriers Union has always resisted this because they fear it would provide data on the whereabouts and efficiency of delivery. Wouldn't want to be too efficient ya know.

  • Doug

    Let's see: can't maintain 23,000 vending machines. And this same crew is going to add 46 MILLION people to the healthcare system AND make medicine more efficient than it is now? Do I have that right?

    Isn't there a state somewhere willing to secede from this madness?

  • nom de guerre

    what nobody in washington wants to understand - despite being told - is that the USPS subsidizes their parcel-delivery operations (which, strangely, price their services right around ups/fedex or maybe a tad below) that they have *competition* for. they do this by raising the price of postage - which they DON'T have competition for. got that? they subsidize the area of operation that ISN'T a monopoly with money brought in from the area of operation that IS a congressionally-protected monopoly.

    UPS and fedex points this out - and proves it - at every "time to raise stamp prices again" "hearing" the post office trots out. but it never seems to matter. postage rates keep on climbing, year after year. uncle sugar looks after his own, no matter what. who cares if the peons have to pay more for stamps? uncle sugar is making a *deal*, here. it's why the stamp-dispensing machines stand empty: machines can't vote straight-ticket democrat. highly-paid, lavishly pensioned postal clerks *can*.

    or is stamp prices rising at 2X inflation just a coincidence?

  • epobirs

    On top of all this, the USPS is going through a massive contraction in service locations and personnel. The closure or reduction of as many as 700 post offices is currently in the works. They already closed our tiny local post office and didn't even leave a mail box for sending items out. In fact, there is no longer a mail box in my entire neighborhood, which is in a northerly section of LA County that multiplied its population in the last twenty years. More people, less service is apparently the formula. On the rare occasion I still need to mail a letter, mostly for rebates requiring a physical proof of purchase, I have to go a minimum of seven miles to the nearest sorting facility. It's rather out of the way, so it actually works better to go nine miles to the proper post office in Valencia.

    There was once a rationale for giving the USPS an exclusive on first class mail, which was that private companies would refuse to go to a lot of out of the way low volume places that would be financial sinkholes. (Actually, the USPS has always been the same, just not as much.) But the advent of email has so reduced the volume of mail that the needs of those isolated citizens are increasingly minimal and harder to justify.

    If rationality took hold, the USPS would likely disappeared within a couple of decades. I can't say I'd miss outside of nostalgic moments.

  • Brian

    So by comparing 3 things that are in different markets, you're making your point that the health care system is awesome and we can't have the government stepping in and offering a cheaper alternative? There's a few reasons why a public option is actually the most financially viable option at this time. Firstly, there's the whole thing about keeping your insurance if you like it. I highly doubt many of you have seen Sicko, but it's quite the eye opening experience as how a profit driven health care system is leaving many people in the holes. Between denying coverage for preexisting conditions and dropping customers based on minor discrepancies once they get sick, it's sickening that people can stand up in defense of the insurance companies. Secondly, we as a nation are spending far too much of our money on health care. We're spending over twice what other nations are spending, and what we have to show for it is one of the lowest rankings on the WHO index as far as quality of care(for industrialized nations). Also, the current economy can't afford to be wasting the capitol on something that is holding back the nation as a whole.
    With the current insurance practices, and people not having the money to spend on health care, unemployment will continue to be a problem(lower income brackets get medicaid) For the middle class, we're completely left on our own, with no incentive other than personal pride to be successful. A simple medical procedure, such as a broken wrist, can easily send someone into bankruptcy, depending on their personal finances. While life isn't fair, it seems to be even less fair to those in the middle class. And we need all the people we can who are willing to work, even if that means paying a bit more in taxes, rather than a perfectly capable person who is staying on unemployment because they can't afford to make more money and get put into a different income bracket.
    McDonalds is a very bad example. While it's a decent example of capitalism, the insurance industry doesn't work that way. They make money by not providing a service for money. The less money they pay out, the more money they make. Ideally, they are setting up plans(such as the one I have) with such unbelievably high deductibles, that it's almost impossible for me to reach that in a given year. The system of shopping around for insurance isn't applicable to the normal rules of capitalism either. If you don't like what you have, as far as health care, you can't just go to a new one. If you don't like the big mac, you can just go to wendy's or Burger king, McDonalds isn't a necessity, health care is. There is no loss if you switch from McDonalds to Wendy's, There is one in health care, it's called "preexisting conditions". And anything can be deemed a preexisting condition. If you liked jr. bacon cheeseburgers before, Mcdonalds will still sell a big mac to you. If you were born with a bad back, or had some other birth defect, you have to live with it your entire life now.
    Anyway, the point I'm making is that Insurance companies do not follow the rules of supply and demand, we are not getting the best service for our money, and we're paying taxes anyway, why not have it go to helping people in our country, rather than killing people in other countries. I also think 41 cents to mail something across the country isn't too expensive, and that e-mail is killing the postal service. Which is a good thing, USPS has served our country very well, things have gotten better with Fedex, UPS and DHL in the mix, but I can't really complain about the job that they have done. And that is a very inaccurate graph that you have. I would like to know where you got your data, and if those numbers on the side are supposed to be percentage points, it's a bit unfair, especially since the graph doesn't adjust for inflation. If it were to do that, the stamp price would actually go down for a while. And as far as Democrats not allowing public discourse, look at the people against the health care reform, standing up, shouting some stupid question, sitting back down and looking like an idiot, if you want a discussion about health care, stop making stuff up, read the damn bill and join a forum. It's not single payer, the goal is to make it cheaper, and while it's asking for a bunch of money up front, it's much like the bank bail out, it's a broken system that needs to be fixed, if America want's to stay on top in anything. We can't have all of our money going to health care that could be going to people starting businesses and making something of ourselves. People should be free to not worry about how they are going to pay for something if they get sick. As a nation we can afford to insure the middle class, and to have a good health care system, not only are opponents standing in the way of government action, they are also standing in the way of progress and allowing people to get super rich off of other people dying, I would much rather have a government bureaucrat who doesn't care deciding my health care, than an insurance one, who will do a cost analysis to decide whether or not it's cheaper to let me die. I don't know if I'll come back to this site, but if you want to respond, please cc it to me, my e-mail is arestheblue@aol.com.

  • gofer

    Get govt. out of our present health system and insurance would be affordable. There are over 1100 govt. mandates for insurance companies. In some states, hair transplants and other such ridiculous things are covered. Insurance not be allowed to be sold over state lines. Insurance needs to be just that, insurance, not a health care pmt. plan. Ask any doctor's office about the insane paperwork mandated by GOVT. There are ways to reform the system and keep govt. out of it. Obama has already stated his desire for a "single pay" system. It's GOVT that has made the system what it is. Give me a break! Name ONE govt. program that has ever saved money or come in at or under estimate!!!

  • Brian

    Fire Departments, Police Departments, Road projects(sometimes) And yeah, Insurance would be affordable without the regulations, You just wouldn't get any coverage. If it really is a better system, then we should have the best already. Regulations are put in place to protect the consumers. It's like saying, coal mining would be safer if the government didn't put regulations on it, because companies would police themselves. The reality is that things often start off by putting the best service out there for the money, but what quickly happens is that people realize that they can make more money by cutting corners. Insurance is paying someone under the hope that you will be covered when things happen that you haven't otherwise prepared for. The government option is a guarantee that you will be covered. If you honestly believe that insurance companies actually care about the patients, I have an extra bridge I could sell you. http://www.fhwa.dot.gov/infrastructure/images/cswa0701.jpg (it's the one on the right)

  • Wise-old-bird

    Actually the USPS uses Fed-ex to deliver the express mail. They were unable to do it themselves.

    The stamp machines are gone - they are too old to repair, and for some reason they "can't find" new ones. I think it is just a racket to protect postal employee jobs.

  • Travis

    McDonalds does not charge $100 for a big Mac because it has many competitors that will charge much less.

    Insurance is a means of pooling risk. It was never intended to pay everyone's
    bill. In fact, it cannot. Paying for the treatment of pre-existing conditions
    is not a pooling of risk. The pre-existing condition is not a risk. It is a
    fact. It is a fact that there will come a time in all of our lives when no amount of money or medical expertise will save us. A lot of the money spent today on medical treatment is in hope of a miracle. If one can pay out of one's
    pocket, that is their right. To demand that others pay through the medium of
    government is not a right. It is stealing.

    Travis

  • Franco

    Re: The stamp machines. The ones disappeared from the downtown Chicago post office (the Mies building) right after Obama was elected. It may be just a coincidence. I walked the entire place twice and they were definitely gone and the line at the counter was huge. Were the machines a threat to the workers at the desks? Absolutely. Is this why they were removed? I don't know. All I do know is that the machines had been there for decades and now they're gone. This is interesting in comparison to France, a socialist country which had very modern and automated machines in their post offices. It seems we're getting the worst of both worlds.

  • ParatrooperJJ

    What he doesn't say it that Fedex and UPS pricing is set at a multiple of USPS pricing by law.

  • frankania

    BRIAN, Brian, When govt regulates things, it usually has secondary (unforseen)effects, so then people naturally figure out ways to get around the regulations, and so then the govt. needs to make MORE regulations to "correct" the un-intended consequences and on ad-finitum.

    In a completely free economy,if I worked in a coal-mine, and if I weren't paid enough to work in a dangerous environment, I would get together with my mates and start my own coal mine or I would do something else.

    Same with insurance: if a group of 100 families got together and pooled their money with the idea of investing it and using the $ for repairs when someone's house burned down, according to the groups rules, it would be as efficient and fair as they make it. If they charged more for smokers or houses with fireplaces, and a smoker complained, too bad; he could join some other group. And they would'nt let anyone join whose house was already on fire!