Saturday 8 March 2008

"Council bids to run post offices"

Fundamental to the whole debate about the survival or closure of rural post offices is the question, are post offices...

1. Businesses like any other, which should not be getting subsidies and have to survive or fail like any other, or

2. Providers of 'merit services', like child nurseries or public libraries, i.e. services that would be provided by private businesses if demand were there, but which ought to be subsidised/publicly provided to make them available to more people. In the case in hand, we do have to at least consider old people who refuse to get involved in internet banking and so on and may not be able to travel miles to the next nearest bank or cash machine etc.

3. Public goods, i.e. a core function of the State like law'n'order, protection of private property rights or defence, for which there is no real free-market solution, and which must be paid for out of general taxation.

If the answer is 1, then of course Post Offices should not get subsidies, end of debate*.

If the answer is 2, then remembering that the state is lousy at actually running anything, this is a case for local taxation, i.e. there should be a separate line on your council tax bill showing your share of the subsidy paid to the local Post Office, and of course the council should also publish details of how much subsidy each individual Post Office receives. Then every council tax payer can make up his or her own mind whether it's worth it or not.

If your answer is 3, then I'm afraid you haven't understood the question.

* Yes, I know that EUsceptics like to blame the closure of rural post offices on the EU, who are officially against state subsidies (unless it involves French farmers or German banks, of course) but all-in-all I am against subsidies as well, so there! If council tax payers are happy to pay the subsidy, then this is no business of the EU!

5 comments:

The Sage of Muswell Hill said...

MW

"I know that EUsceptics like to blame the closure of rural post offices on the EU,"

If this is still true then (almost uniquely) the EU is not to blame.

Simon Fawthrop said...

There is another solution: A Universal Service Obligation (USO) on private companies that want to enter the market but cherry pick the lucrative areas and services.

This worked very well in telecoms, in the early days of liberalisation new entrants had to make a contribution to BT so that they could maintain a telephone service in rural areas. The USO contribution kicked in when revenues hit a certain level - its a long time ago and I can't remember the exact level.

Anonymous said...

This is a tough issue for me because I'm not sure what post offices really are. I know it sounds absurd but I can't work out which of your categories post offices fall into. The reason I care, besides the academic in me, is that many of the voters in my area care a lot about the potential closure of their local post offices.

You back off answering your own question, Mark; what is your view?

Anonymous said...

I should point out that neither mynor your views will shoehorn POs into 3 as we both know from past correspondence.

Mark Wadsworth said...

My view is firmly answer 2 - it is a 'merit good', on which local voters-cum-Council Tax payers are entitled to form their own opinion.