The Free Press and the Postal System

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Freedom of the press is highly prized in America. Yet increasingly in our semi-controlled economy, people are losing sight of what being "free" really means. What would you think of a would-be publisher who complained to you that he was poor but worthy and that, therefore, in order to be "free" to publish, he was going to force you and your friends to contribute money to support his business? You would properly conclude that such a person hadn't the foggiest notion of what freedom is all about.

Yet this is precisely the position being widely promoted by an organization called the "Committee for Diversity of the Press," self-described as representing the intellectual journals which "constitute a kind of early warning system, alerting a society to the concerns of tomorrow" and as "the 'seedbed' of the culture." Its members do indeed constitute a considerable spectrum of important American journalism: AMERICA, ATLAS, THE ATLANTIC, CHRISTIAN CENTURY, COMMONWEAL, HARPERS, HUMAN EVENTS, (MORE), THE NATION, THE NEW REPUBLIC, NEW YORK REVIEW OF BOOKS, PROGRESSIVE, ROLLING STONE, SCIENTIFIC AMERICAN, SOCIETY, WASHINGTON MONTHLY, and THE WRITER. In article after article and in pages of Congressional testimony, representatives of these magazines have trotted out "freedom of the press" as a justification for continuation of the second class mail subsidy, which is threatened with phaseout by the U.S. Postal System.

Although large publishers such as TIME and READER'S DIGEST and their lobby group—the Magazine Publishers Association—have also protested the proposed rate increases, their arguments have not been as insidious or as misleading as those of the intellectual publications. The MPA's position can be seen by most people for what it is—rather baldfaced economic self-interest, much like that of farmers or shipbuilders who have grown accustomed to thinking of government subsidies as their "right." But it is the small publishers who are invoking freedom of the press as an excuse for subsidy—and moaning about the impending death of small periodicals. Their basic argument is that the proposed rate increases will force many such magazines out of business, thereby causing "social hazards" because the diversity of views expressed will decrease.

What are the facts about postal costs and the impending rate increases? First of all, the law under which the Postal Service was reorganized requires both (1) that total revenues equal total operating costs, and (2) that each class of mail pay its own way. Yet as of 1972, according to a study by economist George M. Wattles (JOURNAL OF LAW & ECONOMICS, April 1973), while first class mail generates 28% more revenues than its costs, second, third, and fourth class mail each costs far more than its revenues—by 60%, 36%, and 40%, respectively. In addition, Congress subsidizes the whole operation to the tune of nearly a billion dollars. Thus, taxpayers and first class mail customers are forced to subsidize the other classes of mail, particularly second class (magazine) users. The proposed second class rate increases are designed to phase out these subsidies over a several year period.

Secondly, what impact will the proposed increases have, in fact, on American magazines? Committee for Diversity of the Press representatives are fond of quoting the total dollar impact of the increases—in the millions for large publications such as TIME—which makes for scary, impressive reading. But they neglect to place such figures in the context of a magazine's total expenses. In the case of REASON, for instance, the cost of second class postage in a recent month was only 2.3% of total production and fulfillment costs. And REASON operates with a very small budget for such things as artwork and articles, with unpaid editors, and with very low overhead. It's hard to imagine that the impact on THE NEW REPUBLIC or THE NATION could be larger than this figure.

Small intellectual publications are still further subsidized by the second class rate structure (which is not being changed), which charges considerably more for each page of advertising than for each page of editorial content. Thus, a magazine like TIME or READER'S DIGEST with a very large fraction of advertising pages must pay far more per copy than REASON or THE NATION. Yet the editor of THE NATION has gone so far as to imply just the opposite by noting that the cost per pound of mailing his magazine is greater than that of magazines with more advertising (because his magazine is much lighter, since it has few pages of advertising)—a true but completely irrelevant point.

What the small magazine people are saying amounts to the claim that if postal rates are raised to full-cost levels, the resulting (5 to 10%) increase in magazine prices will cause enough loss of subscribers as to drive many magazines into bankruptcy. This point is never made explicitly or quantitatively; occasionally some pious words are offered about the plight of "lower income Americans."

In fact, however, it is middle class, mostly middle- and upper-income Americans who buy the vast majority of magazine subscriptions, particularly subscriptions to the smaller-circulation intellectual magazines. To claim that vast numbers of these people will stop subscribing because of 5 to 10% price increases is laughable. Although rising paper costs and other production cost increases do pose difficulties for small-circulation opinion magazines, any magazine that dies "because of" second class postage increases will die because its readers and advertisers did not believe in it.

We at REASON wish to be on record as opposing any form of forced subsidy for our product. We support the efforts of the Postal System to end mail subsidies, and oppose the bills introduced by Senators Goldwater, Kennedy, and Nelson to stretch out or rescind the proposed increases. Further, we advocate the prompt repeal of the private express statutes, which prohibit competition in the delivery of first class and some other categories of mail. Opening the mails to full competition would lead, in short order, to a reduction in first class rates (to about 7½¢ per ounce, based on 1972 costs), and would make it even more urgent for the other classes of mail to be self-supporting. Once competing private companies were well established nationwide in all categories of mail, Congress could then phase out (or sell off) the Postal System.

The pious defenders of postal subsidies in the name of press freedom should remember history—and their own government's recent Watergate exploits. (Do you really feel safe entrusting your mail to agents of the State?) The only way to ensure freedom of the press is to keep the government out. A free and independent press cannot afford to be dependent on government subsidies.

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