(FORTUNE Magazine) – Fascinating organization, the U.S. Postal Service. Hard to fathom, though. To take just one question of unplumbable depth, how do you suppose the fellows decide which artists will get to do those ''love'' stamps? How do they gravitate to an erstwhile art department head from Immaculate Heart College who has lately been producing billboards for the Boston branch of Physicians for Social Responsibility and now goes around gushingly telling the New Yorker that her arrangement of such letters as L,O,V, and E will help countries ''to realize there is a bond between us'' and furthermore that it would have been neat for the stamp to be dedicated at the U.N. instead of on the set of The Love Boat? And that's with five out of seven Postal Service governors known to have been appointed by Ronald Reagan rather than Joan Baez. And why don't any of the governors ever mention out loud this little old problem they have? Are they going to go through life being spooked by Bay State Republican Silvio O. Conte, the Pittsfield warbler, who has never got over being named outstanding young man of the year by the Massachusetts Junior Chamber of Commerce in 1954 and as a result will not allow market forces to solve the country's mail problems but instead grabs all the headlines for himself by intervening legislatively when management looks as though it might go out and hire some cheap postpersons for a change? Yes, friends, that's what old Silvio did last year. He attached a rider to some appropriation bill or other, and it said management couldn't use any appropriated funds to hire folks at rates prevailing in free labor markets. Discouraging, eh? Here you have an organization with $22 billion of labor costs (representing 84% of total costs) in fiscal 1984, and do you have to be a hard-liner to be able to see where you go to cut costs? Yes, yes, we know there are unions -- that's the little old problem. The solution we'll get to. Meanwhile, the problem is leaving postal managers looking at losses of maybe $500 million this year. They're also looking at requests for still more rate increases. But the little old problem means they can't cut where the costs are. Their 650,000-odd workers are overpaid by somewhere between 20% and 30%, depending on which honest economist you talk to, and by ''overpaid'' we mean you could actually hire other folks to do their job for less if only solons like Silvio would just go away. Even Clark Kerr, who headed the arbitration panel that awarded postal workers average annual raises of close to 3% for the next few years, said they were overpaid in relation to the private sector. His fun-loving line was that the 3% represented ''moderate restraint'' that would help reduce the gap over time. Yes, Clark has a great sense of humor. But amidst all the chuckles, the commentators of America seemed not to notice the gap was illegal to begin with: the law says postalites are supposed to get paid the same as people doing their kind of work in the private sector. Postal managers are now doing things all backward. They can't cut pay for the 650,000, so they're now nobly cutting their own pay -- which, by the way, the aforesaid honest economists say is too low and not competitive with private- sector executive compensation. Furthermore, the management pay cuts are peanuts: $2 million a year at best. If the fellows did things the modern way, they might knock $5 billion off the bill. Oh, yes, the modern way is to break the union. Lots of forward-looking people have done it during the past decade or so, and it's always a plus in the end. Frank Lorenzo saved Continental Airlines by hiring pilots at nonunion rates. Ron broke the air traffic controllers' union, and the system today is better (and smaller). Kay Graham broke the extortionists at the local pressmen's union at the Washington Post, proving that even liberals can get in on this game. With just a little help from Congress, the modern way might even come to the Postal Service. It would justify a commemorative stamp.