The arguments come down to whether or not a democratically elected entity, that responses to influences and can be subject to the people is better or worse off than a system where decisions are made by people buying and selling.  The main difference between the two is that the democratically elected entity gets inputs uniformly from everyone in the form of one vote, and markets award people with more money, more votes.  Also, in markets, people with little money may have no votes at all.  In the videogame industry, you have a few players.  And in other markets, barriers to entry end up making there be even less players involved.  And with this, there are very few players making all the decisions also.

I will still stand by what I wrote, from the perspective of individuals who petition government effectively.  For such individuals, they get what they want from government.  The government is a genie for them.  Oh, there is consequences, as there are consequences for any complex system of interconnecting parts.  The financial meltdown of recent years is an example of this.

Your overlooking something,

In buying and seling, everybody gets a say... if your part of a niche market you get screwed.

While voting wise, only the majority get a say, outside of a few very specifically decided cases... and then only if your representative actually listens to what you say.

The reason why Gay rights for example have pretty much completely stalled out, is because gay people being such a minority, they need to rely on normal people giving enough of a shit about stuff that doesn't effect them to make things happen.

If the government controlled most of what the free market does and listens to voting, we'd have no restraunts but fastfood, no Movies except "Medea goes to"   etc.

If all that stuff was based on politcians, they'd pick what they want through their point of view, often missing, with no other options.

Government is pretty much always going to suffer from

A) Groupthink.

B) One person deciding everything, meaning their failures crash EVERYTHING.

But the Government doesn't do most things well. Look at how many things they do that have gone, or will go, bankrupt. And this is despite their ability to confiscate as much wealth as they see fit, through taxation, inflation, and borrowing.

I can't think of a single thing that Government does better than the private sector.

You are posting this on the Internet.  The Internet got its birth as a government initiative founded by the Department of Defense, to build a communications network that could withstand a nuclear war.

The private sector didn't produce an Internet.  The private sector gave birth to the likes of AOL, Prodigy and Compuserve.  All of these fell to the wayside by an entity that was birthed by a government initiative.  Nothing the private sector came up with rivals this.

Same could be said about the likes of Spain sponsoring Christopher Columbus discovering the new world.  Private enterprise didn't do this.

GPS is another government invention.  None in the private sector produced this.

Libraries only exist now, due to government funding.

Large initiatives which benefit society almost never come about strictly from private sector involvement.  There are things that the private sector can't even get near at all, because it isn't in the interest of the private sector to do it.  Later on, once established, it is entirely possible for the private sector to take it over.  But the public sector is the one that kicks it off.

You're asking me to rewrite history. Fact is, we have no idea whether these things would have happened with or without Government, or whether similar alternatives would have emerged. We also do not know all of the technologies that we could have been enjoying today, if the private sector had not been stifled.

We can look at where AOL and others were at the time, and see how they approached networks and doing that.  The whole interconnectivity just isn't there now.  The funding to get it off the ground wasn't either.  The closest comparison we have to the Internet is cell phone companies, and their products now have to compete with the Internet.

The issue you are running into is that you are not able to come up with equivalents to what government initiatives have done.  You can't justify your claim that there is NOTHING that government does that the private sector can't do better.  And that is a problem, because you can't present evidence for your claim.  The reality is that they didn't do it at all.

And the Internet has NOTHING to do with the private sector being stifled.  The government didn't go in and block AOL, or Prodigy or Compuserve.  If these solutions would of been better than the Internet, they would of existed in their old form, but they don't.  They lost in the market to an initiative that the government offered.  It is an initiative that is also complete with the net neutrality act and government involvement to level the playing field.

I am not really understanding what you mean by "government works." You offer as evidence of this the fact that people turn to the government for help as proof that the government is effective. The problem here is that this does not prove that government is effective, it merely proves that people are forced to utilize it. If there is only one company that provides a service then everyone will flock to that company, but it does not necessarily mean that the company is doing a quality job ... they have a monopoly and with that comes stagnation and poor service (no need to innovate when people have to buy from you regardless). The government is by definition  a monopoly on the use of force and, thus, will always be inefficient at best and an outright failure at worst.

Think about any nationalized government service whether it be police, healthcare, or the post office and you will see a model of inefficiency precisely because there is no incentive for these organizations to be efficient ... government has made it illegal for competition to exist. Whether your or happy with any government service or not it really doesn't matter to them as you are forced at gun point to subsidize them so your opinion on the matter is irrelevant. Compare this with private sector services like restaurants that are constantly developing new and innovative ways to attract customers by offering new services and products that give them an edge in a competitive market. It is precisely because government is not involved in these industries (that is to say force and violence is not involved in them) that we get so many wonderful innovations like the computers we are using to post in this forum for example or the mostly free Internet we are using (probably won't be free for long as SOPA and other things will come back like they always do).

This is just a taste of what is wrong with government, and I am not even getting into the moral arguments against it such as the obvious fact that government is coercive entity that rules by force, and not by consent (the only people who can claim to have consented to the U.S. are the original framers of the Constitution. The original framers do mention that the government, inthe case of the U.S. that is, was meant to benefit their posterity, but that can no way be seen as consent for anyone aside from those original framers.

I could go on, but I think that covers the basics. Government does not "work" and it never has if we define "work" as being a positive and beneficial force in human history. It is just another relic from humanities violent past much like slavery, and the world will be much better off when it is finally done away with.

Growth in size, power, and expenditure of the government tends to be driven by good intentions; and (as the saying goes) "The path to hell is paved with good intentions" ... The reason for this is unintended consequences of action on a governmental level tend to create results that are greater in scale and run in opposition to the intended results.

The primary example of this is welfare. Prior to the war on poverty beginning in the 1960s, the poverty rate was steadily falling and the distribution of income became more equitable. With the introduction of welfare the government began subsidizing bad behaviour on a wide scale, and further complicated this by building housing projects to concentrate the consequences. The net result is a generation of children with poor parents and no role models who grew up in an environment with low expectations; and these children grew up to the be the drug addicted neglectful and abusive parents of the gang-bangers and junkies that have infested the crime filled hell that the housing projects became in the 1980s/1990s and still remain today.

In an ideal world where the government is managed like a charity, venture capitalist and bank with no politics or corruption a lot of good could come from government spending; in the real world government intervention to solve any problem typically makes it worse.

Correlation is not causality.   One can't just say that because there was government doing welfare that meant that suddenly families broke down.  Families broke down in middle and upper class to.  The sexual revolution happened in the 1960s also.  Catholic Church would argue that birth control was a major factor also, saying they predicted this would happen.  One could then also argue that the drug war drove people to do more drugs, and argue the prohibition side also.  And on this, some would argue you are wrong on the causality side, and also outcome:

http://en.wikipedia.org/wiki/Welfare%27s_effect_on_poverty#Table_of_poverty_levels_pre_and_post_welfare

http://www.governmentisgood.com/articles.php?aid=22&p=2

This being said, government is working for someone, even if it were special interests.  Someone is getting rewarded for it, or there would be an attempt to grow it.  Someone gets the extra money reallocated.  Someone happens to get benefits from restricting things.  There is a payout, with desires outcomes, so it continues.  

The graphs you're choosing are cherry picked timelines, after all why use 1960 to 1991 or 1970 to 1997 when the data we have starts in 1950 and is still collected today in 2012? If you look at the longer timeline you can see exactly what happened ...

Industrialization reduced poverty, welfare had nothing to do with it. Many European countries were delayed compared the the United States because of the time needed to recover from the destruction caused by World War 2.

As for the breakdown in family structure ... before welfare changed it, a man would be pressured to marry a woman he "got" pregnant. As you can probably imagine, a man who "ruined" his life by being forced into a marriage he didn't want was highly motivated to prevent his sons and/or daughters from following in his footsteps. As you can see from the following graph the rise in teen pregnancies begins at the same time as the war on poverty began