The Unrepentant Individual

...just hanging around until Dec 21, 2012


May 31, 2005


How can we lose money?

Let me count the ways…

So on Sunday night, in an effort to liven up our barbecue, we kicked off a game of Trivial Pursuit, 90’s Edition. Before you ask, yes, it did liven things up quite a bit. And if that makes me more of a nerd in my readers’ eyes, so be it.

One question came to our team:

Q. What U.S. government outfit lost $84 million in three years, trying to hawk retail items like T-shirts, mugs, and stickers?

Tough one. I mean, so many of our governmental agencies lose money with reckless abandon, that trying to narrow it down could be hard. I waffled between the US Army and the Postal Service, thinking that these are the two most likely to try selling T-shirts and mugs. Thinking that the Army probably would at least have enough brain cells to make money at it, I guessed the US Postal Service, which was correct.

Now, there could be plenty of reasons why such an act could be seen, in the corporate world, as justifiable. For example, if you were selling mugs and t-shirts for branding purposes, to keep your name and logo in front of the public, you can justify a loss. Or, in the cases where companies donate money to philanthropic causes, they may be doing it for the good will in the community, which may later translate into revenue when customers choose them over their competitors for their activities.

But in the Postal Service’s case, none of this quite works. This is a group who can take all sorts of government monopoly protections against their competitors, and still can’t make money. Advertising? If I were a government service that can’t seem to make money, I think I would be doing a public good by *not* advertising, and hoping consumers will go to FedEx or UPS to send packages. In other cases, like the US Army, wasting large sums of money advertising is simply a waste. As a stand-up comic once suggested, it’s not like we allow other countries’ armies to advertise here. Amtrak, for example, just can’t seem to figure out how to make money in the transportation business. And that’s just the tip of the iceberg. The government seems to have a certain art to losing money. And when they’re not providing services at a loss, often government simply loses our money. How many times are we subjected to stories about how the GAO just can’t figure out where X billion dollars from the budget went to? They know they collected it in taxes, and know they don’t have it. In between, there’s a disconnect.

Now, I’m not going to be arrogant enough to state that government employees aren’t smart enough to make money. In fact, I think the truth of the matter, to put it in the most delicate way possible, is that they just don’t care. They’re just doing their job, and “making money” has never been a part of the government’s job description. You see, if a corporate executive had to report to his bosses or shareholders that he lost $84 million dollars trying to sell t-shirts and mugs, he’d find his way to the pavement, butt first. In the public sector, though, there are no consequences. If you run out of money, you can always get more. Raise taxes or issue debt, it’s the same thing. The public trough is there, take withdrawals as you need them. And if you’re not able to spend every penny you’re given in the budget, you’re not rewarded, you’re punished, because they reduce your budget for the next year.

Now, all this is not to say that we should always expect our government to be in business to make money. Frequently government’s goal is to do something, that the country feels is worthwhile, and to have government do it because it’s not a moneymaking endeavor. The army, for example, isn’t designed to make money, it is to defend our nation. But when we give the postal service all the benefits of monopoly, finding every loophole to give them as much of a competitive advantage against UPS and FedEx that we can stomach, and they still can’t deliver packages as reliably or cost-effectively, we might just need to rethink the whole matter.

Posted By: Brad Warbiany @ 6:53 pm || Permalink || Comments (2) || Trackback URL || Categories: Uncategorized

2 Comments

  1. Brad, the reason the Post Office can’t make any money on their T-shirts and mugs is because they charge to darn much. Also, who wants a T-shirt with a picture of the 37 cent stamp on it? Not me. Occasionally I will purchase some shipping labels out of the mark down bin, but that’s the only time I buy anything but stamps from the post office. As far as the other remarks you made, you are probably right.

    Comment by Lucy Stern — May 31, 2005 @ 7:14 pm
  2. The funny (not ha-ha) thing is the Postal Service is actually advertising for the purpose of increasing revenue. That is why it sponsors a Bicycle team. But monopoly or not, like Amtrak, it will continue to lose money.

    Comment by KJ — June 1, 2005 @ 6:55 pm

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