Tough Choices, Part Two: A Royal Failure, with an added Revision

Foreword: Tough Choices is a deliberately well-researched and argued series of articles on a variety of issues. Its name derives from Gordon Brown’s oft-used assertion that “tough choices” have to be made in the current climate. The crux, then, is arguing what tough choices should be made. Here, I give my suggestions from a reforming, classically liberal perspective- no doubt different to what will happen in many countries around the world.

Part Two:

A Royal Failure

“Eleven years ago we rescued Britain from the parlous state to which socialism had brought it. Once again Britain stands tall in the councils of Europe and of the world. Over the last decade, we have given power back to the people on an unprecedented scale. We have given back control to people over their own lives and over their livelihoods, over the decisions that matter most to them and their families. We have done it by curbing the monopoly power of trade unions to control, even victimize the individual worker.”

Those words were said by Prime Minister Margaret Thatcher, possibly the most controversial politician of our times. Thatcher did much to rebuild Britain, but she greatly ruined its industrial capacity by breaking up the coal industry and subsequently selling it, rather than simply privatising it as she perhaps should have. Nevertheless, she left some things untouched, sadly rather than happily. Take the example of British Telecommunications, now BT Group and one of the largest and most advanced telecommunications companies in the world, and a genuine world leader. This week, The Baron Mandelson, the Business Secretary, talked of similar hopes for Royal Mail. And it is this subject which is the focus of this article.

The problem of the Royal Mail is very similar to that of the failing American automotive giants, which it has been announced today are to receive around US$11billions in loans. All of them are strategically linked to nearly every company in their nations. If Ford, Chrysler and General Motors were to go into bankruptcy, so too would thousands of suppliers and tertiary firms. If the Royal Mail was to fail, and is currently in the red, then the entire postal industry would fall. As discussed in my previous article, the Royal Mail, much like the US Post Office, has a monopoly on delivering letters, parcels allowed to be delivered by third-parties. The Royal Mail was instrumental in linking communities, and for the cost of a stamp one could (with the Uniform Penny Postage) and can send a letter anywhere in the United Kingdom, such is the infrastructure of the company. However, it is a failing enterprise.

The definition of insanity, is to try something again and again, and to expect a different result every time. Thus, the current plan to find a partner for Royal Mail and keep it majority-Treasury owned (see last article for why I do not say publically-owned) is doomed to failure. The Royal Mail has been part-privatised or privatised before, when it was disastrously rebranded as ‘Consignia’, and both times have failed. Even now, the postage industry is partly privatised and open, with competitors allowed to distribute the mail, but generally do not deliver it. This puts a strain on the Royal Mail, and maintains a false brand image that it distributes all letters. The answer, then, is that ethically the Royal Mail should be broken up, and that the current state of affairs does not favour taxpayers or letter-senders, with private companies succeeding at the expense of the Royal Mail. The answer is not to re-instate the monopoly, but to make the distributors also deliver the mail, similar to how the same people who run the trains should logically own the track and signals (both owned/maintained by differing organisations). Indeed, the competition would spur modernisation, and create jobs, the unions currently having too much power over a failing system. If the Royal Mail’s workers go on strike, the United Kingdom’s economy significantly suffers, so as a matter of utility it should be fully privatised, previous attempts being botched and confusing, much like the railways (which, ignoring the material difference, was based on the highly successful change to the aviation industry’s structure, the idea of the difference in infrastructure meaning the plans were doomed from the very conception).

Post offices, worryingly, are closing around the country. This is because the Post Office Ltd. is literally losing hundreds of millions of pounds in its current state. If the idea for fundamental change is not accepted now, it may never be. If we open up Post offices to competition, or at least use them initially as a porous system for the differing mail companies to work within the infrastructure, then it will make the service very attractive to customers. Postal companies could theoretically pay the Post Office fees for using their buildings, and this would not be necessarily the new status quo, some Post Offices possibly being bought out by private investors. A large, nationwide, business like the Post Office may not find profit in keeping small, essential, rural branches open, but small local business surely will. It is a matter of life and death for these communities, just as rural train stations were pre-Beeching Report, especially for the elderly, the immobile and the infirm. If profit cannot be found, then non-profit and charities for the benefit of the elderly and disadvantaged could run the post offices.

This would surely create employment, as each agency would need its administrators, its delivery officers, its drivers, its warehouse workers, and its managers. Indeed, it could provide a much needed boost to Treasury funds by relieving Royal Mail from its books but also providing taxes, and it could theoretically stimulate rail demand if freight shippers exploited the new marketplace. Thus, the privatisation and breaking up of the monolith would surely go further towards the old social-democratic economic project of full employment, whilst exploiting the wealth and innovation of Capitalism. Indeed, if the accepted vernacular for Capitalists was true, then Free Marketeers (us being lumped in with the big corporate, corrupt, crony capitalists) would support the monolithic Royal Mail. However, this is of course absurd to any free marketeer.

It is a sad thing to contemplate, but we are coming to the end of seeing the old red dame strutting all around the country, even though it could still have life as a company, its days as a nationwide mega-corporation are over.

-R.J. Croton

Next in the Tough Choices series, the promised article A Matter of Loans and Taxes…

Coming in the future: Tough Choices Part 4- on the green planet, environmentalism, and the  actual advantages of a free market approach to upholding ecology and the environment.