Friday, August 07, 2009

Post Office Demolition -- Brick by Brick -- The Bank Angle

The US Postal Service just experienced a one year decline of 20 billion pieces of mail. Monopolies are not natural; like Feudal Castles, they eventually are breached. By granting and protecting the Postal Service monopoly, our government has allowed an inefficient beast to eat up more than its share of our incomes. This unionized beast overcharges its customers while maintaining small offices that should have been closed decades ago. A beast that robs from the poor and gives to the rich (the politically connected and powerful elite). The rich can easily afford 44 cent stamps, but 44 cents per piece is highway robbery to the poorest among us.

Today, a new iPhone app became available that will allow customers to "deposit" checks to their bank by phone. LINK. To make a deposit, one simply uses ones camera phone, takes a picture of the check and sends it to the bank with the account number attached. In 2006, USAA Savings Bank began offering this service via desktop computers attached to scanners. My guess is that less than 5% of all desk top computer owners use scanners (I'm sure that more than 5% own combination printer/scanners, but owning and using are two separate things.)

The smart phone market share is only 2%, but this market is growing faster than kudzu. In two years or less, a majority of cell phones users will have upgraded. My guess is that in less than a year, there will be more people using the "scanners" in their pockets than people using scanners at home. The pace of demolition of the Postal Service Monopoly is speeding up.

The service has put 700 post offices on its closure list. Of course, our elected representatives will battle to keep some of these open (bring home the bacon to the district even if the little old widow has to pay 50 cents per piece). There is one county in Pennsylvania that has 68 post office locations! (Do you suspect that a local representative was the head of a certain committee?) In addition to the closings, a large number of offices will be converted to limited service locations -- places where you can buy stamps and send mail but where there is no receipt or sorting of mail.

Forrester Research has done a study of electronic readers. The study concluded that reader sales would jump sometime next year when Forrester expects the $200 price level to be breached. The study went on to say that sales would soar a year or two latter when the $100 price level is breached. Forrester is one of the best in the business but they have already recorded a big miss here. Sony has already announced that one of its new readers will breach the $200 level in September. My current guess is that phone companies will offer subsidized readers for less than $100 during the coming winter "reading season".

In 1911, Thomas Dixon completed "The Root of All Evil", his third novel in a trilogy that attacked populist socialism. History does not actually repeat itself but it certainly does rhyme with itself. Today, in the USA, we are collectively raising taxes in order to buy old clunkers from individuals for $4,500 each! Is it not wonderful and ironic that "The Root of All Evil" can be quickly downloaded onto an Amazon Kindle for only 99 cents or onto a Sony Reader for FREE! Once again, FREEDOM will triumph over socialism! The "Group Think Socialist" incorrectly believe that the purchase of the clunkers will help the environment. In fact, the subsidy being offered to buy cars will increase the total number of miles driven from many years to come. On the other hand, the total savings, including environmental savings, from electronic delivery will be enormous.

So, while our government continues to heavily subsidize the car industry (in more ways than one) and while it continues to force Americans to overpay for the physical delivery of mail, the market is both tearing post offices apart brick by brick and reducing our reliance on cars.

Electronic banking is "preparing for take-off". Electronic delivery of books, newspapers, magazines and mail is "preparing for take-off". The consumer savings are going to be significant and the investment returns are going to be fantastic!


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