Finders Keepers

Felix Salmon, Emily Peck, and Anna Szymanski discuss the finances of the USPS, the fate of brick-and-mortar retail after the pandemic, and Citigroup’s (C) $900 million payment to Revlon lenders…that they sent by accident.

And in the Plus segment: Productivity in lockdown.  For full transcript, see below.


S1: This ad free podcast is part of your Slate plus membership.

S2: Hello, welcome to the Finders Keepers episode of Sleep Money, Your Guide to the Business and Finance News of the Week.

S3: I’m Felix Salmon of Axios. I’m here with Emily Peck of Huff Post. Hello. I’m here with Anna Shamansky of Breakingviews. Hello. We are going to talk about the post office this week because honestly, who is not talking about the post office this week? We are going to talk about shopping and whether it’s all going online and what that means. We are going to talk about one of the craziest lawsuits that I have seen in a while involving Revlon of all people. We are even going to have a sleepless episode about productivity. But the one thing I want to ask you is to just stay tuned until the end or if you have to fast forward until the end, because I have a question for you all after the numbers round, which I want you to write in with your answer. That is coming up on sleep money. So let’s talk about the post office. There are big hearings going on right now and everyone thinks that it is facing existential threats and people are sending as many mail letters and it’s losing billions of dollars. And this is a problem. And Emily, bring me up to speed.

S4: Well, it’s kind of a mess, Felix. Basically, this new guy came to run the post office named Louis Dejoy. He is a Trump donor who used to work at this company called XPO Logistics and before that owned his own logistics company. Anyway, he is doing a lot of cost cutting stuff that people don’t like that was underway before he even started, which was only like 70 days ago. And the cost cutting stuff is reducing the amount of overtime post office workers can take and removing these mail sorting machines. And all this is happening as the president is out there decrying mail and voting and sort of making it look like the process of mailing in your ballot is shady and dicey at a time when more and more people are going to be voting by mail because of the pandemic. So this means that progressives and Democrats are essentially freaking out and saying, basically implying there’s some kind of conspiracy afoot where like a Trump donor and Trump are kind of working together to undermine the election. But that’s not really what’s going on. It’s really the post office has been going through a long period of transformation ever since the Internet became a thing where people, like you said, Felix, are sending fewer letters. So it’s got declining volumes. And then, like all businesses we can talk about, it’s the post offices, a business fest, a hit with a pandemic. A lot of postal workers have gotten sick at the same time they cut overtime. So there have been slowdowns in getting the mail out, which sort of like feeds the conspiracy theory at the same time.

S3: So I want to jump in here and and say, like, the big picture is bad and it has been bad for years and it is going to continue to be bad for years. And there are big structural problems in terms of the way that the Board of Governors is appointed by the government and various other problems involving health care benefits. But this short term problem is actually not as bad. There’s no immediate cash crunch. The post office has billions of dollars. If you ask for a ballot and your state is remotely competent, you should get your ballot in plenty of time. If you mail it back in plenty of time, you should be fine. You do not need to mail it back. You can just drop it off at the ballot box or drop off box or something like that. And the president has done a very good job of politicizing this whole thing. The Democrats honestly have also done a very good job of politicizing this whole thing and making it seem like the election is at stake. And I kind of don’t think it is. And people should just be aware of this. That post office is a big problem. I do agree that the optics of Louis Dejoy look terrible, but I don’t think that there’s some grand conspiracy to delegitimize the entire election. I do think that Trump is going to try and delegitimize entire election, whatever happens with the post office, and he’ll take any excuse whether it’s based in fact or not. But where where do you stand on this?

S1: Yeah, I think we’re probably all basically on the same page that the conspiracy is definitely massively overblown. The state of the post office is it’s a little complicated because obviously a lot of their losses are non-cash losses because as you alluded to, Felix, they have to account for all of these health care and retirement expenses, however it is. Yes, it is certainly true that as the economy changes, the post office has had trouble. They actually didn’t have a particularly horrible quarter, but that was mainly because of census ballots or census that more than anything else, if you kind of look at their financials and moving forward, they are definitely going to take a hit. I think what the post office, though, that I always find a little odd is that, you know, it’s not really a business. Like part of the reason we have a post office is because you have roots that will always be uneconomical for private enterprises. Like there’s a reason that FedEx isn’t going to want to go to like that random guy way the F out there. And that’s what we have a post office to make sure that everybody can get their medication, that they’re getting through the mail. By definition, that’s going to lose money. If it wasn’t losing money, that it would make sense for a private company to do it. So there’s a part of me that sometimes thinks the way we talk about the post office is a little odd.

S3: Oh, it’s really. And also that the post office is a natural monopoly. It’s one of those things which exists in basically every country in the world. It’s a monopoly in every country in the world for very good reasons, because it only makes sense to. One entity to do this, it is very rare for the post office to be particularly profitable in any country in the world, and the fact that the post office has been able to fund itself internally up until this point is a sort of American exceptionalism thing, which I think a lot of Americans don’t understand. Here’s my favorite data point. The US post office delivers 50 percent of all of the mail in the world. It’s like no one else is remotely as much mail as Americans do. And it’s only because Americans spend enormous amounts of mail. And we’ve talked about this in the past, that people literally send checks in the mail to each other, paper physical checks in the mail to each other and put them into their bank account in twenty twenty. This is a common thing that happens millions of times a week. And this kind of thing is embedded into the American culture in a way that it just isn’t anywhere else. And because of that, the post office has been able to be vaguely self-sufficient up until this point. I think it’s pretty obvious that it won’t be completely self-sufficient going forwards again, depending on how you look at the accounting. And so my point in my news earlier this week was we just need to get away from this convention to the federal government, pays no money to the post office. And the minute you get away from that convention, then the federal government can just fund the post office to the degree that it needs to be funded and problem solved.

S4: Yeah, it’s just this weird and to my mind, inexplicable rationale, mostly coming from Republicans and conservatives that the post office needs to be self-sufficient and needs to be a business and people want to privatize it, which again, I don’t really understand. It’s a service. If you look at the polling, a lot of people are writing stories about the post office right now, sharing the polling information. And it’s like 90 percent of Americans like the post office, like why? Why would anyone want to mess with that? Literally no other part of the government has that kind of numbers. I mean, it’s it’s really wild. And it and it is the one institution left that seems to connect everyone in the country. Like I live out kind of in the country, I guess. And like in some areas there’s like nothing else. But there’s a cute little post office where people can go and get help and talk to a human being and feel connected to the world. It’s like this is good stuff, people. And now we’re seeing with the pandemic how important it is for like actual democratic processes, like voting is the most visible sign of big government.

S3: It is everywhere. There is nowhere in America that you can’t find the post office and they are all wearing these uniforms and you have these government employees literally walking up to your front door and putting mail on your post box and all of this kind of stuff. And so on some level, I can kind of understand why the small government arm of the Republican Party would rail against it. It’s a little bit like gas prices. They’re not the most important thing that we spend money on, but they are the most salient thing that we spend money on because we see them in big glowing letters every time we drive down the road. And the post office is the most salient part of government that we see every day.

S1: I also wonder if it has to do a little bit with the Postal Workers Union. And I partly think of this because I was recently reading the last book and the the Robert Caro Linda Johnson series and this and in the 60s they were even talking about at the time when they were trying to like, get this tax cut through. And so they needed to get the senator on board. So they needed to get the budget down. And the hardest time they had with the postal union. And it does seem like this has been something that’s actually kind of been a long, long standing issue that a lot of small government types have had. So I do wonder if that’s been part of the push as well.

S4: I think we have seen a lot of information now. I think the postal union has been trying to get people to pay attention to the post office for a long time and the cuts that have legs that have been going on for a while and the companies, Donald Trump and the pandemic have allowed the postal union to finally, people are listening to these guys. You know, they’ve been raising the alarm for a while. And the other thing I wanted to say about the post office is in terms of thinking about wanting to cut it and all this, they have a huge workforce, right? It’s like six hundred and sixty thousand employees or more. And more than a quarter of them are African-American, which is just something to think about. It’s a post office job has been like a good entry way into the middle class, stable job, good benefits. So for the people who want to cut that workforce and to privatize it, it’s just interesting coincidence there.

S3: It’s not clear that privatizing the post office would actually involve cutting the workforce. I like I don’t think it’s a deeply inefficient organization. It is certainly a heavily unionized organization. You know, it is conceivable that if it was privatized, then the private sector owners would drive a hard bargain with the union, maybe they wouldn’t. But what you definitely see is this thing that you see with a lot of industries that have been unionized for decades, which is that there’s been years and decades of negotiations over pay, basically, which is the most important part of any worker’s job. And the way those negotiations invariably end is the unions want more money. The owners don’t want to pay more money. And so the way they fudge it is by improving the benefits, the pension benefits and the health benefits in retirement. And that means the owners don’t need to pay more money because that’s all 20, 30 years in the future. But it’s great for the workers because they get awesome retirement benefits and that’s fantastic as a short term Band-Aid. And it’s absolutely terrible as a long term solution. And one of the reasons why the post office has been running these enormous non-cash deficits is because those health and retirement benefits are coming home to roost at this point. And this is just the worst possible time for that to be happening. And those kind of deals work in a growing industry and they just completely kill any kind of shrinking industry. And that is just very broadly why you can’t fix this problem with a silver bullet like privatization or a one off appropriation from the government to the post office. It needs to be like an ongoing annual subsidy. Or the one thing we have talked about on this show in the past. I know still banking, you know, which would solve a bunch of problems, maybe we don’t know for sure, but I think I’m pretty sure.

S1: Yeah, like it. Like, OK, fine. The Post is sure about that.

S4: But if the business if the post office is a business or business adjacent, then what it needs to do in order to stay alive is to innovate. And one of the things they could do to innovate would be do new stuff, offer new services, really modernize. Right. And one way of doing that would be banking. I think it’s we should do it probably would maybe solve it all the problems and it looks like and highly skeptical we can have a whole nother segment another time.

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