Assuming a government is democratic , not corrupt (or a close approximation of) and government by law a government has limits to where it can apply violence and must follow some due process that is deemed to be fair by a majority of democratically elected members. For that process to be changed said members must vote on changes and these must be published. This means that in theory rules should be made that are reasonable to the majority of the population, they might not be able to vote on all laws but if a representative votes for too many laws that are unfavorable he will be unelected.

The mafia works on the basis of fear since they will play by their own rule book that is likely decided upon in secret and not applied consistently. All rules will be made in favour of the rule makers themselves.

Imagine for a moment that we let private corporations hire goons with sticks and imagine that when you miss a payment instead of a polite but firm letter you came face to face with one of these goons at your doorstep and they have paid off the police to take no notice of what they do.

Plenty, a government is granted a monopoly on violence in order to block other players from getting into (or at least flexing their muscles in) the violence game.

It depends on the government. In the end, the fundamental proposition is that you pay into an institution that offers physical protection.

I find it fascinating that:

1) That model of government traces its roots straight to Ancient Rome.

2) Organized crime has a long history of stepping in to fill the vacuum of legitimate government - sometimes to profoundly negative effect, sometimes in a benevolent way.