What FedEx Can Teach Public Schools…and How VRCG Has Benefited from Mr. Fred Smith’s Career…
From the 6/25/25 edition of the Wall Street Journal…
What Mr. Smith created, FedEx, has helped VRCG become, and remain, one of the premier independent national remarketing firms in the nation. His insight into “moving stuff overnight” helps keep our administrative wheels rolling, and without FedEx (and UPS), our business would suffer. Further, as FedEx pushed the USPS to modernize, it also assisted in creating an atmosphere of deregulation in the trucking industry and, as a huge user of independent truckers in the US, that too helps our business. We hope you like this article:
Fed EX founder Fred Smith, who died last week at age 80, was a committed philanthropist. He sank millions into renovating sports stadiums, funded zoo exhibits, and endowed scholarships at historically black colleges and universities. Like other visionary businessmen, however, Smith’s legacy almost certainly will be how he made his riches rather than how he spent them.
It’s fashionable these days to dump on “oligarchs.” Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez have drawn large crowds at left-wing political rallies denouncing the supposed villainy of billionaire moguls. But many of our greatest industrial pioneers—from Thomas Edison and Andrew Carnegie to Bill Gates—amassed their fortunes by increasing social mobility and enriching the lives of others.
The Ford Foundation has spent billions of dollars on poverty initiatives, human-rights advocacy and other selected causes, yet Henry Ford’s most significant achievement was developing the moving assembly line in the 1910s, which transformed manufacturing. Ford made automobiles accessible to America’s burgeoning middle class, expanded job opportunities, and accelerated the expansion of related rubber and steel industries.
John D. Rockefeller likewise grew fabulously wealthy by revolutionizing an entire industry while improving the lives of others in the process. The rise of Standard Oil led to cheaper prices for oil and oil byproducts, including kerosene and gas. More goods could be transported over greater distances at lower cost and in less time. The everyday man could illuminate his home at night and no longer had to stop working when the sun went down. Rockefeller’s money gave us the University of Chicago, Colonial Williamsburg, and New York City’s Museum of Modern Art, but his ambition made immeasurable contributions to U.S. productivity.
Smith didn’t invent parcel delivery. Directly and indirectly, however, he made mail service more efficient and reliable than it had been before FedEx was launched in the early 1970s. By then, postal delivery was facing a crisis. Costs were rising, and service was poor. The Post Office Department, predecessor to the U.S. Postal Service, hadn’t upgraded its equipment in decades, and it ran a deficit of more than $1 billion.
Smith saw an opportunity. The U.S. Postal Service had a monopoly on certain types of mail delivery. The result, as ever, was bureaucratic inertia and mismanagement. Customers suffered because they could be taken for granted. Smith came up with a way to deliver documents faster and more reliably. He was so successful that the company’s name eventually became a verb—“I’ll FedEx you the package overnight”—and it changed forever the way billions of people in hundreds of countries send and receive parcels.
The Postal Service had no choice but to respond to the challenge. It invested in technological upgrades—including, eventually, online tracking and mobile apps—and improved on-time delivery rates and customer satisfaction. More mailing options led to more and better services to meet market demand.
The FedEx experience has long served as a model for education reformers, who liken the Postal Service to the traditional public-school system. Needed improvement won’t come from within the education establishment, they argue, unless outside pressure is brought to bear in the form of charter schools, parochial schools, vouchers, tax credits and other innovations.
Mike Feinberg, who co-founded the KIPP charter school network in the 1990s, has said that Smith’s company was a major inspiration. “FedEx didn’t hurt the post office. It made it better,” Mr. Feinberg once told a reporter. “I want the monopoly mindset broken up,” he has also said. “Without competition, neighborhood schools behave like monopolies, delivering low quality at high cost.”
Empirical studies have supported these claims. Research by Caroline Hoxby, an economist at Stanford, demonstrated that schools respond positively to deregulation and competition in the same way that other sectors do. Deregulation of the trucking industry in the 1970s resulted in faster and more-specialized customer service than before at the same price. Competition from foreign automakers has enhanced the quality of domestic vehicles.
“In parcel services, the introduction of competition improved productivity not only because the private firms (United Parcel Services, Federal Express, DHL Worldwide Express, etc.) had higher productivity and productivity growth,” Ms. Hoxby wrote. “The competition also induced the U.S. Postal Service to raise substantially its own productivity.”
The goal of school reformers isn’t simply to create more alternatives for parents but also to provide incentives for underperforming schools to improve or risk losing students to better schools. The most efficient way to improve K-12 education is to make schools compete for students. As Fred Smith and so many other successful entrepreneurs well-understood, more competition makes organizations strive to do better. Less competition breeds complacency.
