Can anyone explain to me exactly WHY the insolvent US Postal Service was sponsoring a cyicling team in the first place?

Interesting thread. I'm into cycling and business and I understand that marketing and sponsorships aren't just 'spending' but investments in the growth of revenue. I've also read about the failed business model of the USPS, the odd pension obligations imposed on them, Congress' reluctance to pass current business restrictions, and the mixed success of privatization of the postal industry in europe.

Any rational person can see that the business should be privatized, though not for any of the reasons that the LR

partisan-troll has outlined for us. Strange why these non partisan topics are always trolled by (the same) belligerent know-it-alls that can't line up any consistent rational thinking. If the USPS is a monopoly shouldn't the partisan argument be that they're fleecing the consumer and imposing unnecessary costs on their services? The reality is the opposite, they're pricing below market and losing tons of money - this is not monopolistic behavior. If Congress is unfairly imposing external costs to USPS operations, i.e. mandated pension obligations unlike those of their competitors, shouldn't the partisan argument be that government is unnecessarily hindering business and free-trade? Instead, just avoid that point of debate entirely! It's not a tax if it's called an irregular pension obligation! If the business model is broken because of the Congressional mandate of universal delivery, shouldn't the partisan argument be that residents of rural or distant locales pay true market costs and not expect for their services to be subsidized by others?

I agree that the postal service ought to be privatized, but it was easy to arrive at that conclusion via the relevant facts and rational thought, not backwards ideology that was spoon-fed to me by ???. Where does this obvious distortion of how markets work come from? Maybe you and your many iterations of LR handles can enlighten the rest of us.

Back to the original question:

http://www.slate.com/articles/news_and_politics/explainer/2013/01/lance_armstrong_doping_scandal_why_did_the_postal_service_sponsor_him_in.html

how would you know the 'market' price for 1st class mail delivery when there is no market, since by law there's only 1 provider?

And I disagree that Rich Liberal is a partisan troll. Just because your opinion differs, doesn't make the other guy a troll. That's weak, bro'

Yes, I see you've reverted back to the name you use most frequently. I'll take a crack at this even though you've presented a real stumper: How would one know what the market price of a good should be? For starters, when market firms are operating at a loss it's safe to assume their goods are priced below market. Particularly when this applies to the dominant market firm. If average pricing results in a loss, what about non-average services, like delivery across large distances? More than likely those services are priced at an even greater loss to market.

Heard through the grapevine wrote:

The sponsorship for USPS was profitable. They didn't lose any money on the deal.

^This. I'm not an economist or financial analyst, but I'd bet this is true. It's also why the idea of sponsors suing Lance to get money back seems wrong. They got their publicity (which is what sponsorship is really about). Hell, they're still getting publicity from Lance now, maybe they should owe him more. I doubt there is a single individual out there saying "That's it, I'm not mailing that letter now that I know he did dope."

nah, I've posted under the same handle for the entire thread, actually.

So using your example...every 'market firm' (whatever that is) that's losing money is simply selling their product at too low of a price? And we can simply ignore basic economics & raise the price and bingo, now the firm is in the black?

Sadly, your complete ignorance of economics is now the norm in this country, not the exception..

How is USPS a 'market' anything? All other firms are banned by federal law from entering the market for 1st class mail delivery.

and here we have another poster who took econ 101 in college and thinks he is a know-it-all. first, as has been discussed above, the USPS is not a 100% monopoly as congress oversees it. thus, it cannot just jack up prices and fleece the consumer wherever it wants to. however, it should be noted that prices have been jacked up in order to maintain fairly flat revenue despite a dramatic drop in the number of pieces it processes annually. in other words, the USPS is taking in almost the same revenue each year but doing a lot less work in the process. that is monopolistic.

another huge benefit the USPS gets from being a government agency is that it doesn't pay any taxes. that is enormous and would be a huge barrier to entry for potential competing firms.

the USPS also has its own shell game going with the forever stamps. it sold $3.3 billion of them last year, which means that much future mail was paid for last year at prices that will be far below what the costs are in the future. this is a shell game pure and simple and will continue to grow each year as the USPS looks for additional revenue any way possible.

lastly, i can't stress enough that the prefunding cost is a very real cost that any well run private company would undertake. the promised future pension and health care costs are very real and very easy to predict with actuarial tables. the fact that, god for bid, congress has made a part of the government actually fund today a very real and predictable future obligation is what congress should be doing. that fact that the wacko Rich Liberal wants to label this as "partisan" is simply ridiculous unless you are a fan of our government running up unfunded massive future liabilities today with absolutely no intention of paying them in the future. unfortunately, that seems to be the way our government (both parties) prefers to run things today.

Yes, the business model no longer works and volume has fallen off dramatically. Cost per unit has therefore increased dramatically. A casual glance at their financial statements will tell you the same thing, it costs more than $.45 to send a document through the mail. Why do FedEx and UPS compete at prices twice of the cost of a stamp? Should the takeaway be that they need to drastically cut their costs, or is it more likely that they are in business to make money and therefore price to market? In what reality does anyone draw partisan conclusions from this information?

Why don't they just charge a dollar for a letter? If it's not worth a dollar for you to send something, send a friggin email

negocios wrote:

Yes, the business model no longer works and volume has fallen off dramatically. Cost per unit has therefore increased dramatically. A casual glance at their financial statements will tell you the same thing, it costs more than $.45 to send a document through the mail. Why do FedEx and UPS compete at prices twice of the cost of a stamp? Should the takeaway be that they need to drastically cut their costs, or is it more likely that they are in business to make money and therefore price to market? In what reality does anyone draw partisan conclusions from this information?

so you are just as clueless as Rich Liberal. this is right off the USPS's most recent annual report:

First-Class Mail is our most profitable service category and represents 44% of revenue. In 2012, revenue from First-Class Mail was $28,867 million, a decrease of $1,163 million, or 3.9%, from 2011. The corresponding volume decrease was 3,826 million pieces, or 5.3%. The most significant factor contributing to this decline was the continuing migration toward electronic communication and transactional alternatives.

. . . .

Prices of all services in the First-Class Mail category are capped at the rate of inflation because they are classified, by law, as Market-Dominant.

how does the business model no longer work if it was the most profitable business of the USPS? why do you people post on here when you have absolutely no idea what you are talking about? seriously.

Haha yes, I'm very familiar with this year's 10K. First class mail is so profitable that the business' loss ballooned $10B from prior year's loss of $5B. It would be helpful if they disclosed the cost of first class mail along with the revenues to show just how profitable the segment is, wouldn't you think? I guess we should just take them at their word contrary to all available evidence.

I'm partial to the disclosures just before the one you cited:

First-Class Mail volume has been heavily impacted by recent changes in customers’ desired choice of communication

platforms, as noted by the approximate 30% drop from 96,936 million pieces in 2006 to 68,696 million pieces for 2012.

Even if they could price their services above cost, or above the growth of inflation, they'd drive down sales even further. They state that their most profitable segment has contracted 30% over the last 7 years. That is a broken and doomed business model, and it's why they need to privatize and look to be acquired or sell off business lines and assets.

Wait, the UNION caused Hostess to go bankrupt? You didn't read much about that situation did you? The reason they weren't budging on pay scale is because they had already given up 100 million bucks in the LAST bankruptcy session. They also knew that even if they gave up more money, it wouldn't save the company; it would be bankrupt in 12-16 months anyway, so all it would do is lower wages across the industry. Hostess went through 6 CEO's in ten years. Annual salaries were doubled and tripled for the execs during the early 2000's, when it was PAINFULLY obvious they were struggling. And you're trying to blame it on the bakers? Eeesh.

Bad Wigins wrote:

Because it takes both of them 21 days to travel 2000 miles.

Awesome.

Very interesting discussion all around. Quick draw would have to be seen as the victor by anyone lacking a government employee, union worker, or teacher in the household.

The fierce opposition to "running [a government entity] like a business" that households containing the three employee types above always amazes me. What's the alternative? All it means is having a freaking balance sheet and being able to fund your operations in the future.

Sex in the city for dudes wrote:

Very interesting discussion all around. Quick draw would have to be seen as the victor by anyone lacking a government employee, union worker, or teacher in the household.

The fierce opposition to "running [a government entity] like a business" that households containing the three employee types above always amazes me. What's the alternative? All it means is having a freaking balance sheet and being able to fund your operations in the future.

he only wins if you like distorted facts.

I guess you could say he wins since he posted under the most different names.

do you mean real facts? which facts that i posted are "distorted"? please.

i also only used one name on this thread. it's not like there are 5 people writing similar things. would you care to entertain us with anymore worthless posts?