A recent column in The (Baltimore) Sun explains why the government should not have a monopoly on mail delivery. The column focuses on the theoretical case for private competition.
Two political obstacles stand in the way of making private mail a reality. The first problem is that there are hundreds of thousands of Postal Service employees, and they receive exorbitant compensation packages. Needless to say, they are an automatic constituency against reform. The second problem is that the current monopoly subsidizes rural areas at the expense of urban areas. This means politicians from places like Alaska will fight to keep the monopoly in place.
Principled leadership could make a difference in this fight, but that is in short supply in Washington:
Sure, government is growing and putting its nose into all sorts of new things all the time, but there are very few businesses the government runs entirely, as it does with first-class mail delivery. Most of the important stuff Americans buy — food, clothing, and shelter — is produced almost entirely by the private sector. The result? Nearly everyone is fed, clothed and housed. What's so special about mail delivery that the government must do it?
[C]ompanies such as FedEx and UPS can deliver packages, which could include letters — but they are limited by law to "extremely urgent" letters (such as overnight deliveries) and forced by law to keep their prices much higher than those of the post office. The postal monopoly costs you, me and all of us who have no choice but to be the post office's customers if we want to send standard letters, and yet the post office still can't come close to breaking even.
Meanwhile, the inflation-adjusted cost of other things has plummeted. Consider how much a long-distance telephone call costs compared with 10, 20 or 30 years ago. The price of gasoline seems to keep going up, but adjusted for inflation it has mostly gone down over the decades.