Opinion

The Great Debate

Is the U.S. Postal Service ready to be sold off?

Last month in Britain, her Majesty’s government made an initial public offering of shares in the British post office, raising $5.3 billion. The government is only retaining between 38 percent and 49.9 percent of the shares, meaning that the three-and-a-half century old state enterprise soon will be guided by private hands. The Royal Mail will no longer be so royal.

You might think this is a model to rescue the U.S. Postal Service, to help it complete with emails, tweets, and Facebook as means of communications. But not so fast. Politicians in Washington need to put the Postal Service on an equal footing with other private enterprises, sorting out which monopoly rights, mandates, and regulations stay and go. Further, the USPS needs to decide exactly what its core functions would be. Otherwise private investors would have little reason to sink their own money into the Postal Service’s sinking concern.

The U.S. Postal Service is now in a fiscal death spiral as the communications and information revolution has eaten into many of its profitable services. Mail volume peaked in 2000 and has dropped by almost one-third since then. USPS income peaked in 2008 at $74.9 billion and then declined to $65.2 billion last year. But the big problem was that expenses last year were $80.9 billion. While much of that $15 billion loss stemmed from the requirement that the USPS put aside money to cover future pension liabilities, it would still be losing money in any case.

The service’s favored status is actually what makes it unsustainable. It has a monopoly over delivery of first- and third-class mail, and over physical mailboxes. It’s mandated to provide universal service and uniform prices. And it enjoys special powers and privileges — e.g., it is tax-exempt. But all that means it’s overseen by a government-appointed regulatory board, which enforces strict regulations lest the USPS abuses its status. It doesn’t have the flexibility of a private company.

If the USPS wanted to go public, like the Royal Mail in Britain and the Deutsche Post in Germany, a lot has to change. To begin with, American policymakers would need to scrap the regulated government monopoly model and put the USPS on an equal footing with private companies. This could mean stripping it of many special powers and privileges. But the big question would be what to do with the universal service mandate as well as the monopoly. To dampen unfounded fears that rural or other costly delivery points might find their mail delivery cancelled, there will be political pressure to retain the mandate and monopoly at least during a transition period.

Aging Americans have a new companion: higher debt

I like to joke about the fact that I have a ten-year-old boy at the age when my mother was not only an empty nester, but also an empty nester with a son-in-law. (That would be my husband.)

What I don’t like to contemplate as much? That I will almost certainly have just finished paying for the college education of the same adorable ten-year-old when the law permits me to claim a monthly Social Security check.

In a society infatuated with youth, the message is that you are only as old as you feel.

Va. AG: When voters don’t decide

Voters decide who wins an election, right? Not necessarily.

In fact, we may see partisan operatives determine the winner in the razor-thin race for Virginia’s attorney general. After the initial count, Democrat Mark Herring is ahead of Republican Mark Obenshain by a mere 164 votes out of 2.2 million. If Herring remains on top after a recount and any federal court litigation, then the next step is for the Republican candidate to initiate an “election contest” with the Virginia General Assembly.

This election contest is a procedure in which the losing candidate disputes the certified results. States have varying ways to resolve these controversies — and most use a process that allows partisans to determine the ultimate winner.

There are better solutions, however, than allowing a partisan legislature to decide. We can minimize ideology, actual or perceived, by creating a bipartisan entity that would resolve a post-election battle.

Fighting for democracy in South Asia

For the first time in post-colonial history, all of the countries of South Asia are democracies.

From Bhutan to Bangladesh, Kabul to Kathmandu, democratic institutions are taking hold and giving people a voice in how they are governed. But these historic gains could be short-lived if troubling trends in some impending political transitions go unchecked.

Over the next six months, more than one billion voters across South Asia will choose leaders of some of the most diverse and vibrant countries in the world. Coming elections in India and Afghanistan and successful recent elections in Pakistan and Bhutan illustrate the depth of passion voters across the region have shown for electoral democracy.

Swiss outrage over executive pay sparks a movement in Europe

Here’s an idea for how to end corporate greed and reverse the trend of growing income inequality worldwide: impose a new rule that would limit the pay of top executives to just 12 times that of the lowest-paid employees at the same firm. In other words, prevent CEOs from earning more in one month than the lowliest shop-floor worker earns in a year.

This proposal might sound like something cooked up by Occupy Wall Street or another radical protest movement, but in fact it comes from the heartland of a nation not usually known for its disdain of money-making: Switzerland. On Nov. 24, the Swiss will vote in a referendum on whether to enshrine the 1:12 pay ratio — in their national constitution, no less.

The initiative is backed by an assortment of mainstream political groups, including the Social Democratic Party and the Greens, who argue that CEO pay in Switzerland has gotten out of control and needs to be reined in. They quote a raft of figures to show that the ratio of top to bottom earners in Swiss firms has grown from about 1 to 6 in 1984, to 1 to 43 today. And that’s just the average. In some companies, especially banks, the gap is much wider, with top executives such as Brady Dougan, the American CEO of Credit Suisse, and Andrea Orcel, head of investment banking at UBS, earning hundreds of times as much as their juniors.

Inside the Apple and Google smartphone war

This is an excerpt from DOGFIGHT: How Apple and Google Went to War and Started a Revolution by Fred Vogelstein, published in October 2013 by Sarah Crichton Books, an imprint of Farrar, Straus and Giroux, LLC.

By 2010 Apple and Google were attacking each other on every possible front: in the courts, in the media, and in the marketplace. Android’s surge in popularity was astonishing, and Andy Rubin, Eric Schmidt, and the rest of Google made no secret of their glee. It seemed that every chance they got during 2010 they would expound on how many monthly activations Android had racked up and how mobile devices were going to change the future of Google and the world. In an April 2010 interview with the New York Times, Rubin even predicted that Android was going to rule the entire mobile universe.

The year before he had been worried that Google would abandon Android and that he and his team would need to job hunt. Now he confidently proclaimed, “It [Android] is a numbers game. When you have multiple OEM’s [phone manufacturers] building multiple products in multiple product categories, it’s just a matter of time” before Android overtakes other smartphone platforms such as iPhone and BlackBerry.

Too many cooks in the Iran nuclear kitchen

Last weekend, after years of failed negotiations, the “P5+1” nations — the five permanent members of the United Nations Security Council (the United States, Britain, France, Russia and China) plus Germany — finally appeared to be on the verge of a deal with Iran regarding curbs on its nuclear program.

All except France were ready to sign a stopgap agreement that would offer Iran limited sanctions relief in return for a freeze in its nuclear program. But Paris torpedoed the arrangement at the last moment — denigrating it as “a sucker’s deal.”

France’s torpedoing of the agreement appears less related to genuine nuclear proliferation concerns than with trying to curry favor with anti-Iranian countries — like Saudi Arabia and the United Arab Emirates – who commission and buy expensive French military, satellite and nuclear hardware.  The lesson in this latest failure is there ought to be a single point of contact with Iran endowed with executive authority over resolving the nuclear issue.

Yellen vs. the Fed critics

The confirmation hearing of Federal Reserve Chairwoman nominee Janet Yellen on Thursday will be an opportune moment for Fed critics to air their grievances.  There is plenty of fodder for disagreement and debate — ranging from the Fed’s supervisory track record, to the rules for tapering large-scale asset purchases, to the criteria for ending its zero-interest rate stance.

Yet, one sure criticism is sharply at odds with the facts: That the Fed’s crisis response was an insider affair, run by and for a handful of too-big-to-fail banks.

While the Fed’s actions in response to the 2008 financial crisis are certainly open to criticism, the creation and expansion of various credit and lending programs were aimed at calming the financial markets and maintaining the liquidity of specific financial instruments. It was not about befriending winners and giving the cold shoulder to losers.

Steven Cohen: The Gilded Age revisited

There he is in all his tarnished glory: Steven A. Cohen, arguably the most famous, and infamous, hedge fund manager in the United States. Maybe the world.

He lives in a 35,000-square foot Greenwich, Connecticut, mansion with an indoor skating rink, golf course and everything an exclusive school might offer. His New York City duplex in Bloomberg Tower is for sale at $115 million. He’s staying in a $23.4 million Greenwich Village maisonette, while his $38.8 million 8,250 square-foot house nearby is being renovated. Last summer he bought an East Hampton beach house for $60 million. He has another place there — 10 bedrooms and a spa — but it isn’t close enough to the water.

Cohen’s extensive art collection could fill a private museum. It includes Jeff Koons’ enormous yellow balloon dog sculpture and Pablo Picasso’s “Le Rêve.” Damien Hirst’s dead shark, preserved in formaldehyde, hangs from the ceiling in Cohen’s office. This may or may not be an intentional symbol of his methods of operation.

What we learned from the BlackBerry era

BlackBerry changed the world. It made wireless email a killer app that every salesperson and traveling executive absolutely needed to have to get their work done. It gave us devices with batteries that lasted a full week, connectivity that made email feel real-time even over very slow networks, and a user experience that everyone LOVED. And, for IT departments, BlackBerry established a standard of security that protected even the most sensitive information with comprehensive policy support from a central management console.

Great email and great security were the hallmarks of the BlackBerry solution and no one else in the first decade of this millennium even came close to matching them. The term “Crackberry” became so popular to describe the addictive nature of the service that it was selected as the 2006 Word-of-the-Year by Webster’s New World College Dictionary.

But the world changed.

Today, there is no shortage of pundits dissecting BlackBerry’s decline. My goal, however, is to step back and understand the broader implications of the BlackBerry story. Every CIO faces a tactical issue today of how and when to migrate from BlackBerry, but the strategy lessons and corresponding challenges are deeper and further reaching.

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