http://EllenBrown.com

March 16, 2018

The US Postal Service, under attack from a manufactured crisis designed to force its privatization, needs a new source of funding to survive. Postal banking could fill that need.

The US banking establishment has been at war with the post office since at least 1910, when the Postal Savings Bank Act established a public savings alternative to a private banking system that had crashed the economy in the Bank Panic of 1907. The American Bankers Association was quick to respond, forming a Special Committee on Postal Savings Legislation to block any extension of the new service. According to a September 2017 article in The Journal of Social History titled “‘Banks of the People’: The Life and Death of the U.S. Postal Savings System,” the banking fraternity would maintain its enmity toward the government savings bank for the next 50 years.

As far back as the late 19^th century, support for postal savings had united a nationwide coalition of workers and farmers who believed that government policy should prioritize their welfare over private business interests. Advocates noted that most of the civilized nations of the world maintained postal savings banks, providing depositors with a safe haven against repeated financial panics and bank failures. Today, postal banks that are wholly or majority owned by the government are still run successfully not just in developing countries but in France, Switzerland, Israel, Korea, India, New Zealand, Japan, China, and other industrialized nations. 

The US Postal Savings System came into its own during the banking crisis of the early 1930s, when it became the national alternative to a private banking system that people could not trust. Demands increased to expand its services to include affordable loans. Alarmed bankers called it the “Postal Savings Menace” and warned that it could result in the destruction of the entire private banking system.

But rather than expanding the Postal Savings System, the response of President Franklin Roosevelt was to buttress the private banking system with public guarantees, including FDIC deposit insurance. That put private banks in the enviable position of being able to keep their profits while their losses were covered by the government. Deposit insurance along with a statutory cap on the interest paid on postal savings caused postal banking to lose its edge. In 1957, under President Eisenhower, the head of the government bureau responsible for the Postal Savings System called for its abolition, arguing that “it is desirable that the government withdraw from competitive private business at every point.” Legislation to liquidate the Postal Savings System was finally passed in 1966. One influential right-wing commentator, celebrating an ideological victory, said, “It is even conceivable that we might transfer post offices to private hands altogether.”

Targeted for Takedown

The push for privatization of the US Postal Service has continued to the present. The USPS is the nation’s second largest civilian employer after WalMart and has been successfully self-funded without taxpayer support throughout its long history; but it is currently struggling to stay afloat. This is not, as sometimes asserted, because it has been made obsolete by the Internet. In fact the post office has gotten more business from Internet orders than it has lost to electronic email. What has pushed the USPS into insolvency is an oppressive congressional mandate that was included almost as a footnote in the Postal Accountability and Enhancement Act of 2006 (PAEA), which requires the USPS to prefund healthcare for its workers 75 years into the future. No other entity, public or private, has the burden of funding multiple generations of employees yet unborn. The pre-funding mandate is so blatantly unreasonable as to raise suspicions that the nation’s largest publicly-owned industry has been intentionally targeted for takedown.

What has saved the post office for the time being is the large increase in its package deliveries for Amazon and other Internet sellers. But as Jacob Bittle notes in a February 2018 article titled “Postal-Service Workers Are Shouldering the Burden for Amazon,” this onslaught of new business is a mixed blessing. Postal workers welcome the work, but packages are much harder to deliver than letters; and management has not stepped up its hiring to relieve the increased stress on carriers or upgraded their antiquated trucks. The USPS simply does not have the funds. 

Bittle observes that for decades, Republicans have painted the USPS as a prime example of government inefficiency. But there is no reason for it to be struggling, since it has successfully sustained itself with postal revenue for two centuries. What has fueled conservative arguments that it should be privatized is the manufactured crisis created by the PAEA. Unless that regulation can be repealed, the USPS may not survive without another source of funding, since Amazon is now expanding its own delivery service rather than continuing to rely on the post office. Postal banking could fill the gap, but the USPS has been hamstrung by the PAEA, which allows it to perform only postal services such as delivery of letters and packages and “other functions ancillary thereto,” including money orders, international transfers, and gift cards.

Renewing the Postal Banking Push

Meanwhile, the need for postal banking is present and growing. According to the Campaign for Postal Banking, nearly 28% of US households are underserved by traditional banks. Over four million workers without a bank account receive pay on a payroll card and spend $40-$50 per month on ATM fees just to access their pay. The average underserved household spends $2,412 annually – nearly 10% of gross income – in fees and interest for non-bank financial services. More than 30,000 post offices peppered across the country could service these needs.

The push to revive postal banking picked up after January 2014, when the USPS Inspector General released a white paper making the case for postal banks and arguing that many financial services could be introduced without new congressional action. The cause was also taken up by Sen. Elizabeth Warren and Sen. Bernie Sanders, and polling showed that it had popular support.

In a January 2018 article in Slate titled “Bank of America Just Reminded Us of Why We Need Postal Banking,” Jordan Weissman observes that Bank of America has now ended the free checking service on which lower-income depositors have long relied. He cites a Change.org petition protesting the move, which notes that Bank of America was one of the sole remaining brick-and-mortar banks offering free checking accounts to their customers. “Bank of America was known to care for both their high income and low income customers,” said the petition. “That is what made Bank of America different.” But Weissman is more skeptical, writing:

What this news mostly shows is that we shouldn’t rely on for-profit financial institutions to provide basic, essential services to the needy. We should rely on the post office.

In spite of what some of its customers may have thought, Bank of America never cared very much about its poorer depositors. That’s because banks don’t care about people. They care about profits. And lower-middle class households who have trouble maintaining a minimum balance in a checking account are, by and large, not very profitable customers, unless they’re paying out the nose in overdraft fees.

Those modest accounts won’t be hugely profitable for the Postal Service either, but postal banking can be profitable through economies of scale and the elimination of profit-taking middlemen, as postal banks globally have demonstrated. The USPS could also act immediately to expand and enhance certain banking products and services within its existing mandate, without additional legislation. According to the Campaign for Postal Banking, these services include international and domestic money transfers, bill pay, general-purpose reloadable postal cards, check-cashing, automated teller machines (ATMs), savings services, and partnerships with government agencies to provide payments of government benefits and other services.

A more lucrative source of postal revenue was also suggested by the Inspector General: the USPS could expand into retail lending for underserved sectors of the economy, replacing the usurious payday loans that can wipe out the paychecks of the underbanked. To critics who say that government cannot be trusted to run a lending business efficiently, advocates need only point to China. According to Peter Pham in a March 2018 article titled “Who’s Winning the War for China’s Banking Sector?”:

One of the largest retail banks is the Postal Savings Bank of China. In 2016 retail banking accounted for 70 percent of this bank’s service package. Counting about 40,000 branches and servicing more than 500 million separate clients, the Postal Savings Bank’s asset quality is among the best. Moreover, it has significantly more growth potential than other Chinese retail banks.

Neither foreign banks nor private domestic retail banks can compete with this very successful Chinese banking giant, which is majority owned by the government. And that may be the real reason for the suppression of postal banking in the US. Bankers continue to fear that postal banks could replace them with a public option – one that is safer, more efficient, more stable, and more trusted than the private financial institutions that have repeatedly triggered panics and bank failures, with more predicted on the horizon.

This article was originally published on Truthdig.com.

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Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including Web of Debt and The Public Bank Solution. Her 300+ blog articles are posted at EllenBrown.com.

In the middle of June 2016 the US House Committee on Natural Resources approved HR 3650, an effort to expand privatization of public lands. The bill would transfer control of “up to 2 million acres of eligible portions of the National Forest System” from the federal to state governments. Since state governments cannot afford firefighting budgets for such huge pieces of land, the law is a slick maneuver to make certain that lands will end up in the hands of private corporations. Endgame: increased logging, increased mining, increased destruction of ecosystems, increased profits for a few of the super-rich, decreased recreational sites, decreased jobs for the 6.1 million Americans working in recreation.

There is a word that the Green Party might consider putting at the front and center of its 2016 presidential campaign. That word would show the commonality of hundreds, if not thousands, of local struggles in the US and set the pace for Green Parties across the globe. It's a word that Donald Trump and Hillary Clinton won't touch. The word is: “De-Privatization.”

A few weeks ago I was working on income tax reporting for the non-profit organization, Gateway Green Education Foundation. When the online process seemed to be totally different from last year, I called the IRS with an expectation that I would be connected to the private company which had been handling the outsourced 990-N forms.

To my amazement and delight I was connected to an IRS employee who explained that the outsourcing of the form had been reversed and was being handled directly by the IRS again. The government employee with whom I spoke went through the process in a much more efficient and courteous manner than employees of the private corporation had during the previous several years. It could be because corporations which receive contracts for outsourced projects force employees to work longer hours for lower pay, provide less job protection, subject them to more harassment from management, and offer fewer medical and pension benefits than government employees receive.

While these oppressive working conditions may give the illusion of greater “efficiency,” they cause such extreme job dissatisfaction and such high turnover that they result in the average worker being on the job for a shorter period of time.

I congratulated the IRS worker for being able to work for the federal government and said I was very pleased with the help I received.

This is de-privatization. A government (whether US, state or local) recognizes that privatization of its service creates more problems than it solves and establishes government control over the task.

A couple of weeks later, on June 1, St. Louis KMOV TV Channel 4 reported that the Rockwood School District was taking over school bus service from the private company First Student in order to save $1 million. Private buses often did not start properly or failed inspections.

At the same time, the St. Louis Post-Dispatch reported that, instead of continuing to rely on private ambulances from the company LifeStar, the city of Alton will operate ambulances itself. The change was made both as a measure of financial responsibility and to reach “an adequate level of emergency response.”

There is a fierce battle going on which reflects a concerted effort to destroy unions and return working conditions to what they were in the 19^th century. City after city in the US is confronting the failure of privatization. We know that contamination of water in Flint, MI reached crisis proportions following privatization. In many cities the main push has been to privatize schools. In others, it has been to privatize municipal services such as trash collection.

Where I live, in University City MO, it has grown from privatizing mulch to attacking the firefighters union by privatizing ambulance service, attempting to reduce summer programs for children and trying to turn a children's playground into a parking lot. When the city acted like it was about to sell off some of our most beautiful historic buildings, a citizen initiative got Proposition H on the ballot. It requires voter approval before the city can privatize any of these buildings. It passed with 69% of the vote. If Prop H had gone down to defeat I believe that the next step would have been overturning the 1990 City Charter Amendment protecting U City parks. This would have paved the way to selling (or leasing) parks to companies which could charge admission.

At the national level, we see the grotesque privatization of services at national parks, permitting of mining and deforestation on public lands, and even the use of eminent domain to allow huge corporations to abuse small farmers and homeowners with fracking and fossil fuel pipelines. The centers of the controversy are attacks on postal services and efforts to privatize social security and medicare as a way to undermine them. Since the best defense is a good offense, citizens could demand expansion of postal services, a doubling of social security and a single payer health insurance program.

But, wait, there might be an even better way to protect Medicare. What do the countries of Denmark and Cuba, as well as the US Veterans Administration, have in common? Socialized medicine. We could abolish private health insurance companies and rehire their employees in a US socialized medicine system and, to make sure that there are enough jobs to go around, offer those employees a 35 hour work week with no loss in pay.

As Democrats join forces with Republicans to babble that socialized medicine must be “off the table” because it would be too expensive, data continue show that Danish socialized medicine costs less than half per capita of US medical costs and results in a longer life expectancy. The only “advantage” of corporate medical care is the billions in profits it earns for the parasitic industry. Should this industry be called health insurance or sickness assurance? Whatever you call it, it reflects the essence of private control by the 1%, whether it is at the local, state, or federal level.

Countries across Europe are seeing massive opposition to cutbacks in social services, selling of public assets, reduction of wages and efforts to make it easier to lay off workers. The prime example is Greece, where international banking interests conspire to grind the country further into poverty.

Throughout Latin America, right wing (and even some left wing) governments are allowing increasing corporate encroachments on mines, forests and indigenous lands. Struggles to stop the privatization of water propelled Evo Morales into the presidency in Bolivia. There can be no doubt that the right wing in Venezuela will do everything in its power to re-privatize the petroleum industry.

The outcome of this plethora of anti-privatization struggles is hardly predetermined. Small parties could use the 2016 US elections to ensure that protection of living standards and protection of the commons are simultaneously local and national issues. They could be saying loud and clear that privatization has been given a trial and has been proven an abject failure. Perhaps the Green Party should both link US anti-privatization struggles to international ones and offer a clear solution: De-privatization.

A century ago, the Bolsheviks proposed a slogan that pulled together simple ideas: “Bread! Land! Peace!” A 21^st century proposal could also bring together thoughts shared by millions: “Climate-Stabilize! De-Militarize! De-Privatize!”

Don Fitz will be an elector for the Jill Stein campaign (if the Missouri Green Party gets on the ballot) and is a National Committee member of the Green Party USA. He can be reached at fitzdon@aol.com