[robbrown451]

Obviously there is a difference in that private capital invests in what will help that particular company, while government funds should go toward what benefits the nation as a whole. A company might say "we won't bother investing, let our competition invest, and we'll just get the components from whoever will sell them to us cheapest." That can make sense individually (and especially in the short term), but as a whole (whether talking about industry as a whole, or nation as a whole), they are worse off.

Essentially, a prisoner's dilemma.

There is also the fact that American companies are competing against Chinese companies, where the government can subsidize various Chinese companies and initiatives. China is communist, of course, which does sort of favor this sort of thing. If the US was to close itself off to China, then it's a lot easier to be 100% capitalist as in your ideal scenario.