From: pshuang@athena.mit.edu (Ping-Shun Huang)
Subject: Re: Drinking and the MBTA was Re: Sunday Liquor Sales
Organization: Massachusetts Institute of Technology
	<PSHUANG.92Dec21202139@ninja.mit.edu>
	<1992Dec22.160712.8746@m5.harvard.edu>
Date: Thu, 24 Dec 1992 03:52:48 GMT

In article <1992Dec22.160712.8746@m5.harvard.edu> borden@head-cfa.harvard.edu (Dave Borden) writes:

 > [...] Ideally, if the USPS gets less business, it will also
 > spend less money in providing the reduced level that it's called upon
 > to provide.  The government can still subsidize the less profitable
 > areas of USPS' services, and there's no net loss to society as a whole;

I think one of the major holes in this aspect of your arguments in this
thread is failure to appreciate base versus marginal costs of providing
service.  The costs to the U.S.P.S. to deliver your mail falls into
several categories, at least: (a) man-power and equipment to sort at
sending end; (b) physical transportation; (c) man-power and equipment to
sort at receiving end; (d) man-power to deliver your piece of mail.
Suppose to my city block, if there were no competing services, there
would be 10,000 pieces of bulk mail, 1,000 pieces of first-class mail,
and 100 pieces of express delivery mail. The revenue generated to the
U.S.P.S. would be something on the order of $2,000, $300, and $1,000.
But, I bet the costs to the U.S.P.S. to deliver the express mail isn't
one-third of the total cost to deliver mail to my block. Most of the
man-power and equipment of the U.S.P.S. would *HAVE* to remain in place
even should the 100 pieces of express mail be sent via FedEx, since
although the revenue stream would be down almost 30%, the volume stream
would hardly be down at all.

I'm not saying I would prefer that FedEx and all the other courier
delivery services should be forbidden, just that there are many
fallacies and pitfalls to finding a better solution by "the sheer power
of reasoning". What segment of the population should be subsidizing what
subset of what services is mostly a political, not economic issue.

 > Does anyone know how the different long-distance phone lines work?  It's
 > a similar level of commitment to power lines, yet we have several major
 > long-distance carriers.  The resulting competition has given us all lower
 > rates.  (Of course, I just wind up making more phone calls and my phone
 > bill is even larger...)

Conceptually, your voice gets switched through your local phone system,
makes its way to some terminus, and gets turned into digital packets
which can then be transmitted and manipulated. In the respect I was
using electrical power transmission as a metaphor, the phone system
isn't dissimilar. One local company (frequently granted monopoly status
but with state regulation), e.g. your local Bell or your local utility,
is charge of the physical wiring to your house. The wiring to thousands
of individuals are brought together to some node -- and then service for
these nodes (two-way communication in the case of long-distance
telephone, one-way power supply in the case of electrical power) can be
supplied by a separate company, often by competing companies (AT&T
versus MCI versus Sprint for telephones; for electrical power,
increasingly it is becoming possible for utilities in one area of the
country with hydroelectric dams, for example, to be able to sell the
power to another utility company not nearby).

 > Exactly - private enterprise won't do it if it's not profitable.  And
 > what it doesn't do, government can still provide, if it's deemed
 > necessary or desirable.  I'm not attached to the idea of riding
 > private bus lines - I just want it to be allowed; then we can all
 > make our own choices.  If no one wants to start one, then that's the
 > choice made by free people, and it's fine with me.

So, we can discuss all we want: ARE THESE COMPANIES FORBIDDEN TO TRY?
If not, then by the above paragraph you think all this is moot.

--
Ping Huang (INTERNET: pshuang@athena.mit.edu), probably speaking for himself

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