The Moral and Financial Bankruptcy of Government Intervention

by | Aug 1, 2012

What do the United States Postal Service (USPS) and America’s educational system have in common? Most Americans are aware that both are government monopolies, neither is meeting its stated goals, and both are huge money pits for taxpayers. Fewer Americans are understand that these government institutions are impractical because they are immoral. Both use government […]

What do the United States Postal Service (USPS) and America’s educational system have in common? Most Americans are aware that both are government monopolies, neither is meeting its stated goals, and both are huge money pits for taxpayers. Fewer Americans are understand that these government institutions are impractical because they are immoral. Both use government coercion to force individuals to sacrifice their self-interest for the alleged “public interest.” Let us consider what this coercion has gotten us.

In late 2011, the USPS announced that it would close more than 3,700 post offices, end Saturday delivery, and slow delivery times. These changes were announced in response to a loss of $5.1 billion in fiscal 2011. While the USPS enjoys a legal monopoly on many postal services, it is losing money while private companies such as UPS and FedEx rack up profits. Even with their hands tied by the “private express” statutes and mail box access restrictions, these private businesses are profitable.

When many Americans protested the proposed post office closings, Congress halted the closings while it considered legislation to “reform” the postal service. While we cannot predict the exact details of whatever “reforms” are ultimately enacted, we can be certain that they will not address the fundamental problem—government intervention. We can also be certain that service will not improve and that taxpayers will ultimately be forced to pick up the tab.

America’s government schools face a similar situation. We are regularly informed that American students achieve lower test scores than students in other nations. We are also regularly told that taxpayers must “invest” more money to fund the latest “reforms” proposed by politicians and educational bureaucrats, such as No Child Left Behind.

As with the post office, each debate over “reforms” is a magnet for special interest groups seeking to influence the next round of government intervention. Whether it is conservatives demanding the teaching of “intelligent design,” minority groups demanding a cultural studies program, or the politically correct demanding a more “sensitive” curriculum, the educational system is a continual political battleground. Since 1962, spending per pupil has quadrupled in constant dollars as educators experiment with the latest educational fads. Despite decades of such “reforms,” the performance of America’s government schools continues to decline.

The cause of the problems plaguing the post office and America’s educational system is the same—government intervention. The solution to those problems is also the same—ending the government’s involvement in both services. The solution is to recognize and protect the rights of individuals and businesses to act as they judge best.

Defenders of both the post office and government schools offer a number of arguments in defense of these bankrupt institutions. Fundamentally, these arguments all mean the same thing: the “public interest” demands regulations and controls on private businesses and individuals. For example, it is claimed that if government got out of the mail delivery business, service to some areas, such as rural communities, might decline; similarly, it is argued that if schools were operated entirely by private companies, the poor would receive a sub-standard education.

Interestingly, history refutes these arguments. Prior to the Civil War, both mail delivery and education were largely provided by private companies.

During the 1840s and 1850s, private mail companies flourished through the United States, with the Pony Express being the most famous. These businesses offered their service for less than the postal service, and it was estimated that more than half of the mail was delivered by private companies. So what happened?

After a series of price wars with the private companies, Congress simply banned private delivery of first class mail and forced the private companies out of business. When the postal service couldn’t compete with private companies, Congress prohibited competition. A similar story can be told of the educational system.

Until the post-Civil War era, government schools were almost nonexistent. Most children were taught to read at home and a wide variety of schoolmasters and other educators provided an abundance of educational opportunities. As one example, during the colonial period, more than 170 different educators advertised their services in Philadelphia alone. And many groups, such as the Quakers, provided free education for the poor, immigrants, blacks, and women. In short, anyone who desired an education in America had a multitude of choices. So what happened?

Spurred on by “reformers” such as Brown and Horace Mann, state and local governments began to offer “free” education. Of course, that education was not free–it was financed through taxes. But because all taxpayers were paying for the schools, parents of school-aged children received a bargain while non-parents and those without children in school were forced to subsidize the government schools. As is the case when government offers “free” services, private businesses struggle to compete and most of the private schools went out of business.

For many parents, private alternatives to government schools is simply unaffordable. Forced to subsidize public schools, the poor and middle class often do not have the funds available to home school or pay for a private school. They have little choice but to send their children to government schools, even when they disagree with the curriculum of those schools.

It is often said that those who do not learn from history are doomed to repeat it. In this instance, those who do not learn from history cannot repeat it. Most Americans are oblivious to the glorious accomplishments of nineteenth century America. They are unaware of a time when free individuals produced the goods and services that others want and need. And so, when some problem arises, invariably the “solution” is government intervention. The fact is, it is government intervention that creates most of our contemporary political problems.

Government intervention is a magnet for special interest groups and lobbyists, as each seeks to influence that intervention for their own particular cause. Whether it is postal bureaucrats lobbying for controls on private delivery companies or wars over textbooks and curriculums in government schools, these issues become political because government has intervened.

The solution is not more intervention. The solution is to get the government out of the business of providing mail delivery and education (as well as parks, libraries, museums, roads, water, and much more). The solution is to let free individuals act on their own judgment, as both a producer and a consumer.

Brian Phillips is the founder of the Texas Institute for Property Rights. Brian has been defending property rights for nearly thirty years. He played a key role in defeating zoning in Houston, Texas, and in Hobbs, New Mexico. He is the author of three books: Individual Rights and Government Wrongs, The Innovator Versus the Collective, and Principles and Property Rights. Visit his website at

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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