A few years ago I would have said privatize. Last couple of years, I've been VERY pleased with the USPS. This rate increase is the first one that I don't mind paying.
I do a lot of mail order, coming and going. For small to medium sized packages the USPS has been, for me, faster, cheaper, more convenient and more error free than UPS or Airborne /DHL.
FedEx is still pretty fast and accurate, and their newer lower rate classes have made them more competitive than they used to be.
Never thought I'd say this, but the way things are now: USPS RULES!!!!!
And this from a guy who in general believes that private business will always do better than something the government runs
USPS has economy of scale on their side. You might find that if private agencies didn't have to compete with the USPS, they would be able to do the same quality work that the USPS does for even less.