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Microbusiness: Canada Post and Crony Capitalism - February 14th 2014

"Government begins by protecting some against others and ends up protecting itself against everyone."
Robert LeFevre

This is the cost to send a letter in Canada from 1943 to 2014.* Does Canada Post know something we don't know?

Are you aware that Canada Post will be raising its postal rate on March 31, 2014? A letter in Canada will go from $0.63 to $0.85 if you buy your stamps in packs or $1.00 for individual stamps.

If you are thinking about stockpiling some stamps, Canada Post has already pulled all the permanent stamps. GO BOX Storage tried to buy the permanent stamps earlier this month. We were going to buy 25 rolls of 100 stamps. Apparently, Canada Post pulled all the permanent stamps when the announcement of the rate increase occurred.

Canada Post has been going deeply into the red over the last number of years. This rate increase is to help Canada Post stem the red ink. To help with cost savings, Canada Post will be implementing a program of phasing out home delivery of mail and moving towards community mailboxes.

At one time, I would have had the appropriate reaction to this sad news. I would have been horrified and looking to government to do something! Now, all I do is shake my head and hope -- beyond any reasonable hope -- that Canada Post would just go out of business.

You might be wondering how I came to such a heartless position. I would like to contrast the different between a government protectorate -- sometimes called crony capitalism -- and regular business. Many people can't tell the difference between the two.

  1. A regular business in trouble would cut everywhere before cutting visible services to customers or raising prices. A regular business would sacrifice everything to satisfy the customer because without the customer there is no business.
  2. If a regular business was forced to raise prices the business would be happy to take prepayments from customers wanting the old price. This would give a regular business an excellent first quarter of the year due to the prepayments. When the price increase hit the market, a regular business would normally see a drop in sales, but the business would make more on each sale. Assuming the price increase wasn't too extreme, the business would do less work at the new higher price and have a good year. The customers that got the old price would be happy and the company would have its needed price increase.
  3. If a regular business cannot make it in the marketplace the company is closed or goes into bankruptcy. We are seeing more and more organized closures of businesses due to changes in market forces. In an organized closure or bankruptcy, the assets of the company are dispersed and used by more successful companies doing activities better supported by the marketplace.

In contrast, the government protectorate will cut the most noticeable parts of its service.Government protectorates barely serve the customer.The government protectorate's primary focus is serving their political rulers and indirectly supporting crony labor. The customer hardly comes into the equation.

Canada Post solutions to their financial insolvency, are typical for government protectorates. Cut the most visible services to customers and raise prices. To add insult, Canada Post pulled the permanent stamps so customers couldn't stockpile the permanent stamps. A government protectorate like Canada Post wants to cut the most noticeable part of their service because this will give their political rulers the "juice" they needs to increase subsidies to the crony capitalist and indirectly to crony labor. The media picks up the story. The moaning begins about how terrible the situation is for Canada Post and how the taxpayer must "save" Canada Post -- and all those 8000 quality union jobs -- from market forces.

With a regular business, happy customers making voluntary transactions, decides if the business is viable. With government protectorates like Canada Post, it's the political climate that decides if the government protectorate sees another "business" year.

If Canada Post was a regular business, its latest actions would be like signing its own death warrant. But government protectorates don't live and die by the rules of a regular business. Canada Post is likely to go on life-support, at the taxpayer's expense.

So watch for the moaning and groaning of the state-run media about the sorry state of Canada Post. As always, the solution is for the taxpayer to bail them out. Maybe after reading this post you might hope Canada Post will have an orderly closure too.

* Here is a link to the price of a stamp in Canada from 1943 to 2014. This is a larger increase than during the inflation of the 1980s.

Updated February 14, 2014: I just wanted to share an inappropriate Valentine's Day card. I would like to credit the artist but I can't find the source.