18 May 2006

Going Postal

So, the British government has decided to bail out the PO's pension scheme to the tune of £1.75 billion. This is the same Post Office we are told is moving with the times, upgrading, even turning a profit. Odd how a (basically state backed) company can claim to be turning a profit whilst simultaneously requiring subsidies. However, this bail out is not the truely ingenious part, no that comes with the regulatory body who, in their wisdom, have fixed the price of stamps and hence stripped the Post Office of their ability to set prices in line with their own costs and the market. So the end result is that, to save some money on the cost of stamps, everybody's taxes go up (or at least are diverted from other areas).
Now, I by no means defend the Post Office, if it's management have got into a situation where the PO will either go bankrupt from the pensions black hole or have to raise prices so much that it will go out of business anyway, then so be it. If a company is inefficient it should fail and it's competitors take over, fixing prices and subsidising is a gross distortion of the free market and, regardless of any perceived short term gains, will always lead to worse results in the long run.

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