not wanting to get into a philosophical debate here, but even as someone who generally argues for smaller government, i disagree..
people generally discount the significant economic advantages (to all in an economy) that government investments provide; in most cases, investments in transformative projects which otherwise would not have occurred were it up to the private-sector alone.
take development of the us interstate system as an example.. the costs involved in building-out the network are estimated to have been in excess of $425 billion [1] and the original phase took over 35 years to complete as planned; no rational, profit-seeking, company would ever undertake such a project. the economics just don’t make much sense. and even if the private sector was able to come-up with a similarly adequate solution (potentially networks of small/regional players monetizing usage through tolls), the cost to society both in actual usage charges (sufficient to generate profits for the firms) and in lack of a consistent, expandable, and reliable network that so many people and businesses depend on would likely be far in excess of the $425 billion cost.
the fact that the us built-up solid infrastructure (both physical and in terms of networks and connectivity systems) early on (relative to many other nations) provided domestic companies a major competitive advantage over less/later-developed countries; its freed-up physical ($) and intellectual capital towards other endeavors and was a key part of why, collectively, more significant commercialized innovations over the past few decades (by private companies) have come from the us.
and beyond the economic savings from the outcome of the investment itself (i.e. a system facilitating a reliable, consistent, and relatively inexpensive means of transportation), the actual exercise in carrying it through also yields a lot of ancillary economic benefits. new construction methods may be developed, equipment manufacturers may grow in scale or scope, and a lot of people (and companies) are employed (and contracted) in carrying-it through (gaining new skills/experience).
beyond that, there is all the subsequent innovation and opportunity to develop profitable businesses that are created once a major transformational technology is introduced. think of the advantages ups (and later fedex) would have in utilizing the interstate system to grow in scale relative to competitors in countries that lacked similar systems (now lookup who are the leaders in that industry). the benefits are even clearer when you look at all the technology and defense companies that have benefited from foundations laid-out by, or innovations developed during, large government-funded projects such as the internet or during the space race..
[1] http://en.wikipedia.org/wiki/Interstate_Highway_System
