Back to your comment regarding the military, Private investment cannot and will never be sufficient to build infrastructure for the hinterland.
In the US after the use of electricity became practical, private investment would have sufficed to serve the major centers of population. But a government program was necessary for rural electrification. The same is true of telephones and interstate highways and in many circumstances water supply.
The rule of thumb is that the last 5% of the population costs 95% of the outlay and vice versa. Naturally, the more rural a population, the different the number.
The costs are too high and returns too dispersed to rely on private investors. Thus, government investment is needed.
If you read what I wrote you will see I mentioned basic infrastructure.
This can also include a legal infrastructure necessary to protect property.
The underlying falacy is that somehow government has money that does not come from it's citizens. The only difference is that when the government undertakes to provide for the people, whether it is in the form of good, services or basic infrastructure they invariably provide it in the least cost effective way possible. The government has no funds that are not confiscated from people, usually against their will. When people in the hinterlands desire services badly enough to pay for them, then they will see that those services are provided.
One example is electric service. Not thirty miles from the Chicago Metro area, there are several rural co-ops that provide electric, water and in some cases sewer to some of the most upscale as well as the most basic forms of housing. These co-ops are the result of people providing their own infrastructure in order to improve the quality of life and the value of their property. After the initial costs were amortized, the resultant fees were substantially less than those paid by urban dwellers whose basic utilities are subsidized, cost controlled and rate fixed by the government. These co-ops WERE NOT FUNDED BY GOVERNMENT PROGRAMS. They are the result of private bond issues.
As far as the military goes, private firms are more efficient than national armies, for example, Executive Outcomes of South Africa. The only limitation they face is size and scope.
I do not question your figures on the last 5% of a population requiring 95% of the outlay. I do question where it is written that 100% of a population are somehow guaranteed the same quality of life. (Our Constitution says "Life, Liberty and the Pursuit of Happiness". It does not include gas heat, electric lights, air conditioning or a paved road.) John Maynard Keynes thories had been thoroughly disproved.....just ask Milton Friedman.