Hey, have any of you DB's who voted for Obama because you thought that government could solve the problems of this country even once considered how badly the federal government understands even the most simple tenets of economics?
To wit, the Post Office is in trouble. While private delivery companies like FedEx and UPS make profits, the USPS is constantly in the red.
So the feds pull out the big brains. More likely than not, within the next year or so, you'll see an end to Saturday deliveries from the U.S. postal service. That's great. Demand for your service goes down, so make your service even worse than before.
Brilliant!
Also, be on the watch for price increases. While every private company in the world understands that higher prices lead to a decrease in demand, the federal government plans on increasing its prices in order to make up for the loss of demand. That higher prices will lead to even less demand has not occurred to them.
Barack Obama: Your apostles say you are a genius, and yet you cannot read the writing on the wall. You are the epitome of the blind leading the blind.
At least Ray Charles could carry a damn tune.
"While every private company in the world understands that higher prices lead to a decrease in demand, the federal government plans on increasing its prices in order to make up for the loss of demand."
ReplyDeleteWhile I agree with your sentiment that the Federal Post Office is poorly run (as measured by losses per annum), the above statement isn't quite accurate. The demand for a given good is a function capturing the quantity demanded at each price - as such a change in price is simply a move along the demand curve. An increase in the price of postage simply represents a shift [decrease at any given price] in the supply of letter delivery. At this increased price, the equilibrium quantity will be lower, but the effect on profits is not clear as each sale now results in higher revenue (at it's higher price). In fact, firms with market power intentionally raise prices above competitive levels to maximize profits.
Based on the pricing of their competitors, the US Postal Service likely charges too little at present to break even.
Yeah, sometimes I shoot from the hip.
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