That said, there are a number of externalities that you're not thinking of. The simplest is: without a government, what's to stop someone from walking into your house and killing you? Every incentive says they should: free money, no consequences.
Another is: if we privatize everything, then only the wealthy get the benefits of having a society. Privatized workplace safety enforcement, for example, would ensure that only those rich enough to afford a lawsuit could get justice if injured in an unsafe environment. That's just stupid.