Any government entity should be allowed to compete directly with the private sector in any area of the economy by forming its own business to service that market, just like a private business would do. As long as this government-owned business is run without any form of government subsidy or assistance which its competitors do not enjoy and as long as it doesn’t receive the lion’s share of the market or cause adverse market reactions, such activities should be allowed. In short, such an entity must play by all the rules governing private entities. The only difference is that some of the profits from such business enterprises would be used to supplement government tax revenues. Eventually, if enough businesses generate enough revenues, actual public tax rates could possibly be reduced.
Examples in which government business enterprises can become involved are virtually endless. There could be government-run transportation companies (possibly serving public transit), movie production companies (perhaps specializing in historical and documentary films), garment industry businesses (using prison labor which would also be available to private businesses), etc. The possibilities are endless and they will have the decision-making flexibility that private businesses possess.