In the January 21, 2012, issue of The Economist, the main focus of both the feature articles and the special report was on the resurgence of “state capitalism.” The magazine’s reporters described a world in which major companies in major markets were either owned directly by national governments, or subject to control or heavy influence, even if they were privately owned or had issued shares to the public.

The stories reminded me that, for the last 21 years of my Pitney Bowes career, I dealt continuously with the encroachment of state capitalism in the postal sector.  In the late 1980’s and throughout the 1990’s, we successfully fought a series of battles with the U.S. Postal Service to keep it from becoming another entity with all the powers and privileges of the federal government, but with none of the regulatory constraints associated with federal government agencies.  Several senior postal officials aspired to create a power base similar to many government-owned entities, such as the Tennessee Valley Authority (which Marvin Runyon, the Postmaster General from 1992 to 1998, had led) or the New York-New Jersey Port Authority.

Fortunately, we defeated efforts by the Postal Service to regulate the mailing industry and compete unfairly with it at the same time.  The Postal Service leadership teams succeeding Runyon and members of his senior team generally tried to operate within the boundaries set by Congress. We had a very collaborative, and mutually respectful, relationship with the Postal Service during most of my tenure as CEO.

The story was very different outside the United States.  While we had similarly respectful and collaborative relationships with the postal officials in the UK, Canada, Spain, Denmark, and Norway, we had a variety of challenges with postal authorities in many other countries.

We saw three distinct challenges:

• Some postal operators, which had appeared to become privatized, acted in very anti-competitive ways in their own nations, and also secured rights and privileges from their national governments that stacked the deck against partners and competitors.  The most extreme example was Germany, during the leadership of Deutsche Post by Klaus Zumwinkel, who resigned in early 2008 for reasons unrelated to his work-related performance.  Throughout Zumwinkel’s 18-year tenure as CEO, Deutsche Post acquired companies all over the world, including a disastrous acquisition of Airborne, a major package shipper, and the worldwide operations of DHL.

In Germany, where Deutsche Post realized most of its profits, postal rates were exceptionally high (well above $.60 per piece), service was not exceptional, but competition was ruthlessly suppressed.  At the end of 2007, a few weeks before Germany had committed to open its market to full competition from within the EU, Zumwinkel successfully prevailed on German legislators to pass a law that created a minimum wage for postal sector employees only, a wage pegged at Deutsche Post’s minimum pay grade.  The immediate result was to destroy its two largest mailing competitors, since neither could secure labor cost advantages over Deutsche Post.

In Italy, Poste Italiane took advantage of complex and onerous labor laws to fend off competition, since these laws made part-time and temporary workers prohibitively expensive.

• In many countries, postal operators expanded into businesses in which the marketplace was amply served by the private sector, but in which the postal operators would immediately have a competitive advantage, because of the implicit protection from national governments.  Australia, Belgium, Ireland, China and New Zealand all started retail banks.  Japan had always had a sizable postal banking system which paid almost no interest to depositors, but which became a huge source of loans to projects favored by politicians.  Prime Minister Koizumi staked his political career on an initiative to privatize the Japan Post, not because there was ferocious opposition to privatizing the mail or package business, but because the heavy governmental control of the flow of bank loans would be jeopardized. He barely avoided receiving a vote of no confidence because his initiative upset the way government favors had been delivered for generations.

Postal operators have played heavily in the money transfer business (competing with Western Union), in retail government services, in the sale of greeting cards and stationery, and in the sale of gift items often transmitted through the mail.  Postal operators like Australia, China, Finland, and Sweden moved seamlessly into mail services businesses. In countries with a strong tradition of state capitalism, these postal operators were able to operate freely in more businesses in which they competed unfairly with the private sector.

• The postal operators often carried mandates and missions inconsistent with a business focused on cost-effective customer service.  France and Canada were prime examples of this problem, as were Japan, Spain, and Portugal. In these countries, postal operators were saddled with explicit and implicit requirements that they keep a minimum number of people employed, even if the demands of the business would not justify such employment.  For Pitney Bowes, the government employment mandates made many of our productivity enhancement tools unusable by these postal operators.  They could not improve their productivity, even if they wanted to, because they were fulfilling social mandates.  Postal ratepayers paid more, in the form of a disguised tax, to create a welfare system for workers who probably could not have secured employment at comparable wage and salary rates.

I was able to experience the ugly underside of state capitalism for over two decades.  It made me realize that the United States should think long and hard about migrating down the path these other countries have followed.  It also is a cautionary tale for large multinational corporations that aspire to compete fairly in major markets in which one or more of the competitors are state-owned or state-controlled enterprises, or in which the state considers a particular industry strategically important.

I love the New York Post headlines.  One of my favorites was in the Sunday, December 11, 2011, issue.  The headline was “E-Z CASH: Change he can believe in: Toll collector makes $100K.” On page 5, the story to which headline refers is entitled “High-Pay PA Crew Taking Their Toll.”  It describes what we have learned is an all-too-common rip-off of taxpayers, the use of what is called “pension spiking” to give people making a certain level of income the chance to get an even larger pension by awarding them a huge amount of overtime pay opportunity in their last year of employment, the only year that counts for pension calculations in many public-sector collective bargaining agreements.

In this case, the employer is the Port Authority of New York and New Jersey, an entity created by a contract between New York and New Jersey and jointly owned by the two states.  This entity is not accountable to elected officers or voters, except for the indirect influence that elected officials from the two states sitting on its board of directors have on the entity’s operations.  Oddly enough, entities like the Port Authority were created over several decades in the 20^th century because elected officials believed that they would operate in a more business-like fashion and not be subject to the corrupting influences of elected officials trying to “buy” votes by bestowing favors on constituents. However, the lack of public accountability means that the customers of the Port Authority, namely those who travel in the New York Metropolitan area, will bear the brunt of the abuses of the pension system.

In one sense, it should be easy to solve this problem: abolish this “pension spiking” scheme in the next collective bargaining session.  However, we get a hint of why these kinds of schemes are so hard to uproot. A toll collector named Princesella Smith is quoted as saying: “I’m blessed. I have a great job, and, in this economy, it’s great that I can cover everything with my eight hours a day and overs.”

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In the Saturday November 21 New York Post, reporter Michelle Malkin writes a scathing op-ed piece on the Service Employees International Union,  entitled “The Union That Hates the Boy Scouts.“.  The major point of her piece is that the SEIU strongly opposes volunteer work in many communities, because they believe that volunteer work takes paid work away from union members.

Her description of certain union positions rings true to me because I recall that the Stamford Youth Foundation (Stamford, Connecticut) could not staff the variety and volume of after-school activities that it would have liked because union contracts required it to pay every teacher for the extra hours worked after the regular school day.  This deeply bothers me.

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On April 6, I had an opportunity to speak on The CEO Show with Robert Reiss. I shared some ideas for how small to medium-sized businesses can improve their customer communications and take advantage of valuable marketing opportunities. I also reflected on some strategies I used as CEO, and discussed how Pitney Bowes is working to evolve, adapt to change, and enhance the “customer experience” through innovation.

I enjoyed this interview very much. Please click below to listen to the recording.

The Sunday, January 6, New York Times Magazine cover story was about the disappointing results of the electronic voting technologies implemented by many states after the passage of the Help America Vote Act, which resulted from the problems identified in the 2000 Presidential and Congressional elections.

I have always believed that government officials and businesses get too enamored of the latest and greatest technology, without recognizing and trying to retain the benefits of older technologies. Pitney Bowes has strongly believed that the most secure system of all is voting by mail, which supplements traditional paper-based ballots with state-of-the-art address management software and ballot tracking and tracing systems.

The biggest problem identified in the article was the quirkiness and unpredictability of computer-based systems, which fail in unexpected ways on election days, because of the large number of people using them. The kinds of misuse possible when tens or hundreds of millions of people use a system are not all predictable, and, therefore, not preventable. This Freedom to Tinker blog post clarifies some points made in the article in reference to this topic. (more…)

Recently, our mailing industry has spent a lot of time thinking further about the continued strength of “Do Not Mail” legislation. Our company also sponsored a survey conducted by the respected industry publication DM News.

The findings are quite interesting:

• To the degree that “Do Not Mail” proponents have cited environmental arguments, they have successfully left with the public a number of misimpressions about mail’s environmental impact, all of which grossly exaggerates mail’s negative environmental impact:

• While mail constitutes about 2% of solid waste in landfills, the public believes it constitutes over 33%.
• Similarly, the whole issue of the cutting of trees to produce pulp and paper has been wildly misunderstood. The practice of cutting and harvesting older trees and replacing them with new plantings, usually accounts for very little negative environmental impact.
• The public correctly understands that poorly addressed and poorly targeted mail is wasteful. As a Company, Pitney Bowes has been passionate about selling solutions to reduce the production and delivery of wasteful mail, so I could not agree more with this perception. (more…)

Not surprisingly, I get asked about the future of mail. People point to the decline in personal correspondence, the tendency of large transaction statement providers like banks and insurance companies to encourage customers to receive bills and statements on the
Internet, the decline in magazines and newspapers on newsstands and through the mail, and the likelihood that catalog and direct mail recipients will find ways to stop getting mail they do not want to receive.

Every one of these parts of the mailstream has different future prospects. Paper-based consumer-originated personal correspondence has been declining for a long time. Transaction statements are a mixed bag. Some bills and statements are going electronic, such as bank and insurance statements. Others, like health care statements, are growing as we all spend more on health care. Mass circulation magazines and newspapers are declining, but a high-end publication like The Economist is growing nicely.

The Direct Marketing Association (DMA) has just launched a new mail preference service that will allow mail recipients to register to receive more of what they want and to eliminate or reduce what they do not want. The DMA has delivered a significantly enhanced service for mail recipients who want to have more control over what they receive. (more…)