Sure, Just Raise The Price Of Stamps (A GMAT Practice Essay)


The following appeared in the opinion section of a national newsmagazine:

“To reverse the deterioration of the postal service, the government should raise the price of postage stamps. This solution will no doubt prove effective, since the price increase will generate larger revenues and will also reduce the volume of mail, thereby eliminating the strain on the existing system and contributing to improved morale.”

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This argument takes a complex issue and boils it down to a simple solution without any real support whatsoever.  Moreover, there is a logical flaw in the argument which negates the effectiveness of the proposed solution, while the actual goal is unstated and unmeasurable. 

The only goal of the opinion piece seems to be “to reverse the deterioration of the postal service”.  Yet it is unclear what that deterioration encompasses, forcing the reader to make their own assumptions.  The problems themselves may be quite varied, from delivery time and accuracy to employee satisfaction or public perception of the employees, with each individual problem requiring a unique solution.  It is quite possible that in several of those cases a feasible solution might be to raise the price of postage stamps, but it is clear that, depending on the extent and specifics of the “deterioration” of the postal service, that a more complex solution will be necessary.

The Post Office has tried this approach many times in the past, raising the cost of a first-class stamp by one or two cents every couple of years.  But this methodology has not worked before, and there is no reason to believe that it will work in the future.  A more aggressive price increase might have the effect the writer seems to want to achieve, but even that does not take into account the changing marketspace the Post Office occupies.

In a world of electronic bill payments, digital bank statements and Internet phones, the market for physical delivery of mail is decreasing sharply, while expedited delivery companies occupy much of the customer space themselves, squeezing the postal service into a small niche market.  A complete overhaul of the postal system’s purpose and business model may need examination, rather than a “quick fix” which would certainly only be a temporary solution at best.

The fact is, the writer’s logic is flawed, and much more research must be done to determine if this proposal would even work to the minimal extent the writer suggests.  The writer’s claim that a “price increase will generate larger revenues” followed immediately by the statement that it would “also reduce the volume of mail” is contradictory.  Without further information, there is no way to know to what extent the balance might shift in either direction – or whether increased revenue is possible at all if the volume reduces enough in this tiny marketspace.

Should all of these factors somehow converge and prove a successful tactic for the postal service in terms of increased revenue and a lower volume of mail, it is unclear that we would see the results the author suggests.  The system is strained because it out-of-date, made to fit a different time.  Employees are an anachronism, stuck in another era, much like their employer.

It is clear that this quite complex issue requires deeper investigation before determining strategy.  Such a simple solution is not justified by such a poor argument.

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