Why do you think China or Russia prefer to hack foreign private competitors rather than sending a bunch of missiles on their infrastructure?
And security via threat of retaliation does not sound like a practical or effective solution either: we already have plenty of capabilities in that area, and it didn't stop east coast oil & gas infrastructure from going down or a sizeable portion of the nation's meat processing from going the same way. These attacks are escalating rapidly, and relying in the free market to find a solution doesn't look like it's going to happen fast enough.
This needs to be a national, not (just) a private corporate issue because of the enormous national security implications involved in cyber attacks against infrastructure. When a single company's security failure can cause national chaos, there needs to be a nation-level approach to this.
I don't see what the public could do better than private entities, besides absorbing their costs. The only way I can see it practically working is if the private sectors would allow government entities full access to their IT infrastructure, submit themselves to random controls, audits and checks, and bear sizeable fines if they're found to be negligent.
Unlike "real war", cyber defense also gets to design the battlefield, everytime time. There will always be social attacks, but the stupid C and Unix stuff that is the bread & butter today is completely preventable
Tbh I trust the FAANG companies to run better security. Government is incompetent in this area.