The answer should therefore not be "withhold funding to increase rates of lost mail".

Eliminating polling stations, like what's happened in Kentucky, decreases the rate of voting. Voter ID laws prevent people from voting. Purging voters from registration rolls prevents people from voting. If you want to compare voter suppression methods, I've got news for you: lost mail is not what should keep you up at night.

Ever heard of "hanging chads"? There is no perfect system.

There is no perfect system? In the UK we have fully paper elections that basically run without a hitch year on year. Why do you need a voting machine at all? They just give you a pencil in the booth

I do see people arguing in the UK for electronic voting and Blockchain, which is worrying.

The UK has a fairly simple election system: you don't vote in many elections and generally not very many at once (maybe three or so at max if there's general elections and local elections happening at the same time). The US has many more elected positions that any given voter can be given. While it's easy to imagine that there's maybe one or two more ballots to fill in for e.g. the presidential election, in reality a voter on election day in the US may be voting in near 100 different elections for posts all the way from the local level to the national level. Marking, collecting, and counting these votes is an effort on another level from what the UK system deals with, and even filling in the ballot is not a trivial task (especially with the focus on being able to automatically count the votes).

There's a lot of scope for technology to improve this system, and a lot of improvements which can be made to the technology which is already there, though I do believe you either need a paper trail (which is less convenient and harder for an individual voter to verify their vote was counted, but a lot easier to explain how the system works and is hard to tamper with and preserve anonymity of the vote), or a clear open cryptographic voting system (which has more convenience and may be able to produce greater trust in the system, but it's much harder to explain how it works and preserving anonymity is much harder. 'Blockchain' contributes nothing to this BTW, it's more or less a completely different class of protocols).

The current situation in some US states where there's black-box electronic voting machines which just output a count at the end of the day and don't even have particularly good security to prevent someone who isn't the government or manufacturer from tampering with them is an awful state of affairs (though thankfully they do seem to be falling out of favor after some backlash).

Let's all hope that they do not give you a PENCIL of all things to fill out a ballot with.

They do in the UK: you can bring a pen if you want, but you should probably make sure it's something which quick drying ink so it's not likely to mark other parts of the ballot when its folded. In terms of tampering with the ballots it really doesn't make much difference: there are ways which are far easier to pull off and harder to detect to tamper with them than erasing pencil marks, and the way the election system is designed to protect against those ways also effectively prevents any issue with what was used to mark the ballots.

They do, in the UK. Supposedly this is due to the possibility of pens containing disappearing ink. More likely this is to avoid ink being accidentally smeared across the ballot, since it has to be folded.

Why?

Presumably because a ballot filled out in pencil is not immutable — the pencil marks could be erased!

That's why the sealed ballot boxes are accompanied by by two officers and the candidates are all present at the count.

If you tampered with the ballot it would only be discarded due to the rubber marking in the "wrong" box

I don't know about the UK, but in Australia it's attended by the candidates' representatives, called "scrutineers". The counting is done at the polling place, so the candidates can't be multiple places at once.

I've scrutineered before, and it all seemed to work well.

https://en.m.wikipedia.org/wiki/Scrutineer

As long as the loss is small and well distributed, it's kind of ok.

And the solution is to dismantle the USPS?