“When the post office is closed, the flag comes down. When the human side of government closes its doors, we’re all in trouble.” -- Jennings Randolph, U.S. Senator from West Virginia, 1958 – 1985

There’s a widely shared view in our country that things are falling apart. The reason this seems to be happening is that we’re not investing enough in those things – from transportation systems to school systems – that bind us together as a nation. Capitalism is a powerful and necessary engine of prosperity. Competition, the handmaiden of capitalism, is a centrifugal force – it pulls us apart.

We need capitalism but we also need countervailing forces to hold our communities together and to hold us together as a nation. Markets work best within a structure of stable government institutions. One of the institutions that holds us together and provides a structure within which markets can work is the United States Postal Service. Indeed, the Postal Service is such an important government institution that it is authorized by the U.S. Constitution.

But somehow, we’ve become confused over the years about the role of the Postal Service. Instead of seeing it as part of the government structure within which markets work, we decided in 1970 that it was some sort of private player in the market place, competing with other players like FedEx and UPS.

USPS generates huge amounts of revenue – more than $67 billion annually – but it had an operating loss of $8.5 billion in 2010. USPS has indicated that the financial challenges it faces will require it to close thousands of local post offices, close hundreds of mail processing centers, end six-day-a-week mail delivery and lengthen delivery times for first class mail. This is standard stuff for a private company in financial trouble and looking to survive in the marketplace.

But USPS is not a private company. It may come as a surprise to the power brokers in the big corporations and in the national media, but in thousands of small towns and medium size cities across the country the Postal Service is a revered institution and the local post office is seen as the heart and soul of the community. For example, Bill Finch, Mayor of Bridgeport, Connecticut, a city of 144,000 said in a press release in August, “While I appreciate the Postmaster’s efforts to reduce spending, I must object to the suggested closures in Bridgeport as they would have a devastating impact on our residents.”

Similar statements can be found from hundreds of other mayors across the country. In another example, Mayor Donny Hobbs of Lohrville, Iowa, testified before the Postal Regulatory Commission about “how proud people are of their post office; and how closing thousands of post offices, instead of helping to bind the country together, will end up ‘dividing the nation asunder.’” I don’t think people feel that way about FedEx.

All humans are flawed and so all human institutions are flawed. There’s no doubt that the Postal Service could be made more efficient, but its operating deficit, equal to about six-tenths of one percent of the $1.3 trillion deficit the federal government ran in 2010, seems a reasonable price to pay to bind us together.