>>First, it’s a well-understood though not often mentioned point that even in a plain-vanilla market, a monopolist with high fixed costs and limited ability to price-discriminate may not be able to make a profit supplying a good even when the potential consumer gains from that good exceed the costs of production. Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs.<<
Sure, it's well understood that certain people want others to provide a service that certain people find very valuable, but aren't willing to pay for. That doesn't mean that service must be provided by the government when private parties refuse to provide it.
In 2003, I wanted an online store where I could purchase all of my pet-related supplies. This would make me, and society, far more productive because we would not have to spend time going to the pet store and purchasing those products. We could all then spend that extra time being productive. Potential consumer gains exceeded production costs.
Unfortunately, actual consumer gains did not exceed pets.com's production costs. So it died. And guess what? It turns out that when a company learned how to properly structure, supply, and support such a service at the right price, people were willing to pay for it, and thus actual consumer gains exceeded actual production costs.
The government didn't have to step in and supply this vital service to its citizens. Some of the smarter citizens figured out how to do it, at assuredly a fraction of the cost of whatever government program might have been implemented.
Note: before you claim that pets.com failed for some other reason, please stop. I picked it as an obviously frivolous example. You can substitute most other recent government programs if you’d like.