>>maybe it makes sense for it to do x too rather than make a whole new organization.

For one, by having multiple private sector organizations competing to solve a problem, you spread the wealth around society more evenly than if the government were the only one doing x.

Second, new ideas and better ways to do x can come from anywhere. By having only one organization doing x, you have to convince the person in charge of organization doing x to change how they do x in order to do x in the better way. If you have multiple, competing organizations trying to do x, the one who decides to do x in a better way gets rewarded by serving more customers and making more money.

Third, if you only have one organization doing x, when that organization fails to do x, then everyone who depends on x gets screwed. By having more organizations doing x, if one fails, there are always others to serve customers who depend on x.

I think I've become your straw man. I was not advocating. I was explaining why I think org y ends up doing x too when it's already been decided an org needs to be formed to solve a problem that the market is not or cannot solve.

Understood, and agree that when it makes sense to do so, it should be done, in the private sector - e.g., Amazon offering cloud services on the back of their excess server capacity. The difference between the private sector doing this and government though lies in what happens when failure occurs. That's what I want others to understand.

I think everyone agrees that the private sector should do everything it can. It's a spectrum. Most problems the market can solve just fine. Some problems it cannot without the power of taxation (no free riding). The cut off line is hotly debated. Arguably the line shifts with technological advances.