The legacy of George Washington’s Postal Service Act of February 20, 1792

127304 600 End of Saturday Mail Delivery cartoons

WASHINGTON — Faced with billions of dollars in losses, the Postal Service announced on Wednesday (Feb. 06 2013) that it would seek to stop Saturday delivery of letters, a sweeping change in mail delivery that immediately drew criticism from postal unions, some businesses and lawmakers.

What went wrong I wonder?  Would it had been better if George Washington had never passed the Postal Service Act of 1792? How many billions would taxpayers have saved since then?  Would private companies like the  American Letter Mail Company of Lysander Spooner have served better the market? Or would the system have collapsed without government intervention?

In February 20, 1792 the Postal Service Act, establishing the United States Post Office Department was signed by President George Washington.  An interesting date to remember in these days in which the Postal Service made it to the news with their Losses and their controversial solution by ending Saturday Letter Delivery.

We know for certain that in a free market no company would survive if they had kept losses as huge as the one USPS has had over all these years. They had losses of   $15.9 billion only last year.  A principle of free market transactions is that in competing  there appears a beneficial rivalry among sellers trying to achieve goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.  Thus, enabling for those companies which succeed in growing larger and for those companies which fail to disappear.  With the existence of monopolistic services (like the Postal Service in the US) industries and business sponsored by government disrupted market transactions (bureaucratically made) and thus enabled for failing companies to continue existing even though they were not beneficial for society in the long-term.

126863 600 going postal cartoons

This reminds me to the company founded Lysander Spooner whom “being an advocate of self-employment and opponent of government regulation of business, Spooner started his own business called American Letter Mail Company which competed with the U.S. Post Office. Postal rates were notoriously high in the 1840s,[7] and in 1844, Spooner founded the American Letter Mail Company, which had offices in various cities, including Baltimore, Philadelphia, and New York.[8] Stamps could be purchased and then attached to letters which could be sent to any of its offices. From here agents were dispatched who traveled on railroads and steamboats, and carried the letters in hand bags. Letters were transferred to messengers in the cities along the routes who then delivered the letters to the addressees. This was a challenge to the United States Post Office’s monopoly.[7][9] As he had done when challenging the rules of the Massachusetts bar, he published a pamphlet titled “The Unconstitutionality of the Laws of Congress Prohibiting Private Mails.” Although Spooner had finally found commercial success with his mail company, legal challenges by the government eventually exhausted his financial resources. He closed up shop without ever having had the opportunity to fully litigate his constitutional claims. The lasting legacy of Spooner’s challenge to the postal service was the 3-cent stamp, adopted in response to the competition his company provided.[10]

Lets have this as food for thought…

Article recommendation: Twentieth Century Flick: Business History in the Age of Extremes

I apologize for posting much these last weeks.  I have been quite busy reading journals on Global Value Chains, Deviant Capitalism, Black Market Trade and theories on Global Political Economy.  While this has driven me nuts… it has also made me pay attention to the field of Business History.

Business history is not the history of Capitalism and it is also not the history of entrepreneurship.  The research in this field is mostly controlled by an European institutionalist approach.  And in the latest decades, it has gained more insights from economic and business studies that are highly afflicted by neo-marxist approaches of the 20th Century.  So, if you are interested in learning about this particular area of research here is the info for a good article on the topic that may get you also interested, and provide you with further bibliography.

Twentieth Century Flick: Business History in the Age of Extremes
Priemel, Kim Christian (2012)
Journal of Contemporary History vol. 47 (4) p. 754-772

.Full Text (PDF)

Conference: Global History of Agrarian Labor Regimes, 1750 to 2000 (Harvard University)

My interest in Agrarian Labor Regimes was first awaken in my research on Opium trade in India. Since then, more readings have made me realize the complex structures behind the history of agrarian labor in a global context.

If you are also interested in the topic, the *Weatherhead Initiative on Global History (WIGH)* at Harvard University is planning a conference for *April 2013* that is focusing on changing labor regimes within global agriculture.

As posted by Blog de la AMHE by Manuel Bautista, they are interested in exploring the diversity of labor regimes, the paths along which they changed, and—most especially—the connections between these changes in different parts of the world. We are interested in work that explores the connected histories of propertied farming, sharecropping, wage labor, slavery, *cultures obligatoires*, and other such forms of labor, and how they have been connected to the spatial and social spread of capitalism.We are seeking proposals from historians, political scientists, economists, sociologists, and anthropologists at all stages of their academic career, including graduate students. We encourage proposals from those in relevant career paths or institutions outside the university. We are particularly interested in forging a global discussion of these topics, and therefore welcome especially contributions from outside North America and Europe.

The conference will try to balance broad comparative papers and revealing case studies. The Weatherhead Initiative on Global History is a newly created center that responds to the growing interest at Harvard in the encompassing study of global history. The Initiative is committed to the systematic scrutiny of developments that have unfolded across national, regional, and continental boundaries as well as to analysis of the interconnections—cultural, economic, ecological and demographic—among world societies. For further information about WIGH as well as the conference, please consult our website at http://wigh.wcfia.harvard.edu.

Proposals should include an abstract of no more than two pages and a brief curriculum vita. Please email your submissions to Jessica Barnard ( jbarnard @ wcfia.harvard.edu ) before *November 30, 2012*. Travel expenses as well as accommodation will be covered.

Holger Droessler hdroessl @ fas.harvard.edu

A GPE perspective: World’s richest woman makes case for $2-a-day pay

The top 10 most competitive economies in the world. By: The World Economic Forum’s Global Competitiveness Report 2012-2013

Reaction to article: Lazarus, David. 2012. She’s back: World’s richest woman makes case for $2-a-day pay. Los Angeles Times, 5. September, sec. Money.

A month ago the world’s richest woman made a comment that got everyone’s attention.  Major sensationalist papers in the globe elaborated different arguments on Gina Rinehart case for a $2-a-day pay.  But putting emotions aside, what was she really talking about?  Well, she was explaining in very rough terms what globalization is about and what is the role of competition in the global political economy.

In order to understand what Ms. Rinehart referred to, it is necessary first to briefly evaluate the history of the word competitiveness. The term is historically rooted in the writings of classical economics. Its core is the theory of comparative advantage expressed by David Ricardo in 1819, in which he underlined how countries should/do compete.  Later on, the term was used by Marxist economists starting with Marx’s “Capital: A Critique of Political Economy” where he emphasized the impact of the sociopolitical environment on economic development in a global perspective, and therefore the communist idea that changing the political context should precede economic performance. Later, in 1942 the term was integrated to the role played by capitalists and entrepreneurs in the writings of Joseph Schumpeter, who stressed their creative and economic (“economic” here refers to capital as a mean of production) role as a factor of competitiveness by underlining that progress is the result of disequilibrium, which favors innovation and technological improvement.  Further, Israel Kirzner’s emphasis on the redefinition of entrepreneurship by highlighting how global competitiveness is more about the capitalist’s innovative abilities rather than just the capital accumulated and how he/she invests it.

Ms. Rinehart’s comment reflects both the impact she plays as an actor in the global sociopolitical environment and her role as a capitalist and entrepreneur capable of generating innovation and of inciting creative destruction.

A $2-a-day pay in Africa means that many capitalists and entrepreneurs as Gina Rinehart are considering the possibility of moving their investments from less competitive continents to places in which competitiveness allow them to produce at lower costs.

Unfortunately, the region Ms. Rinehart was referring to has disincentives to competitiveness and innovation.  Competitiveness is more than just lower wages and a cheap offer of labor.  By following Ricardo, Marx, Schumpeter and Kirzner in order for Africa to become competitive in global terms the regions will require also to achieve what Stéphane Garelli in the “IMD World Competitiveness Yearbook 2012” explains as the need to also A.) Create a stable and predictable legislative and administrative environment. B.) Ensure speed, transparency and accountability in the administration, as well as the ease of doing business. C.) Invest continually in developing and maintaining infrastructure both economic (road, air, telecom, etc.) and social (health, education, pension, etc.). And finally, D.) Strengthen the middle class: a key source of prosperity and long-term stability.

Ms. Rinehart’s comments were not a call for Australians to lower their wages to a $2-a-day pay since they have already achieved other of Garelli’s requirements for competitiveness. Her comments are a very clear example on how global economy works.  If African governments manage to improve the rule of law in their territories, develop infrastructure and allow for a stronger middle class then the chances that investment will move to Africa are going to be higher.  As such, economies as Australia’s should continue producing at the same efficiency rates or improve and innovate in order to avoid losing investors. Ms. Rinehart’s comment on how “her country’s mining industry couldn’t compete with nations that are willing to pay workers less than $2 a day for their sweat and labor” is as such partially truth. Australia’s economy has many other competitive assets to offer and as such do not require to compete by offering lower wages.  The country has many other competitive assets to offer for investors.  However, as time has passed since Australia’s boom in the last decades many other countries are also trying to spur competitiveness.

There is much more to be said about this topic and on how global competitiveness allows for rising standards of life and prosperity. Also there is much more to be said on how competitiveness in other regions of the world can destroy (remember Schumpeter’s work) the not-so efficient economies of other countries that have not managed to cope with a changing global economy.

Course on Human Action starts tomorrow!!!

Starting Tomorrow:

Human Action, Part 1

Instructor: David Gordon
Cost: $79 (50% off!)
Dates: September 12 – November 6, 2012
Length: Eight weeks

Register Now!

It is perhaps the most important and profound book ever written. Yet how many, in their attempts to read it, have been stopped in their tracks by Part I? In those 7 chapters, Mises lays out the philosophical underpinnings of economics and social philosophy. So they are crucial for understanding the rest of the treatise. Yet, for the reader not versed in philosophy, the technical terminology and references can be daunting.

In this course, David Gordon will clearly explain everything you need to know to make sense of the concepts presented in these chapters. He will define the terms, provide background for the references, and make clear exactly what it is that Mises is saying in these passages.

If this classic has been sitting on your shelf or in your Kindle, just waiting for you to tackle it, there is no better way to start than with this course, which will be followed by subsequent courses taught by Mises Academy faculty, covering the rest of Human Action.

Lectures

The video lectures are online. Lectures will be Wednesday evenings, 6:30-8:00 pm Eastern time. They will be recorded and made available for enrolled students to download.

Reading:

All readings will be free and online. A full hyper-linked syllabus with readings for each weekly topic will be available for all students.

Grades and Certificates

The final grade will depend on quizzes. Taking the course for a grade is optional. This course is worth 3 credits in our own internal system. Feel free to ask your school to accept Mises Academy credits. You will receive a digital Certificate of Completion for this course if you take it for a grade, and a Certificate of Participation if you take it on a paid-audit basis.

Refund Policy

If you drop the course during its first week (7 calendar days), you will receive a full refund, minus a $25 processing fee. If you drop the course during its second week, you will receive a half refund. No refunds will be granted following the second week.

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About David Gordon

David Gordon is a senior fellow at the Ludwig von Mises Institute. He was educated at UCLA, where he earned his PhD in intellectual history. He is the author ofResurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and JusticeThe Philosophical Origins of Austrian EconomicsAn Introduction to Economic Reasoning, and Critics of Marx. He is also editor of Secession, State, and Liberty and co-editor of H.B. Acton’s Morals of Markets and Other Essays.

Dr. Gordon is the editor of The Mises Review, and a contributor to such journals as AnalysisThe International Philosophic Quarterly,The Journal of Libertarian Studies, and The Quarterly Journal of Austrian Economics.