Another poster discussed that letting government provide vital services often results in those services being used / abused for political gain. Abusing regulations is a lot less effective for politicians and so they tend to be manipulated less in my opinion.
Let the free market do the producing.
But let the government keep them in check with regulations. You are right that regulations tend to be thinned out when politicians see no other way to promote growth anymore but I'm still not convinced that that is in any way worse than when the government would be responsible for production itself. Governments are perfectly able and willing to cut back on vital infrastucture below any responsible levels. The New Orleans levee's were not built nor maintained nor were policies and budgets set by commercial entities!
If the government is your only supplier you are left with no recourse should you be dissatisfied with their services. You can actually buy meat that has not been "improved" with all kinds of chemicals and pharmaceuticals. But you probably choose the convenience of buying the cheap meat at you local grocery store.
Ok, so you talk about "Services that people need in order to live - energy, water, medical".
There is a lot that people need to live. Would you argue nationalising all of them? Energy, water and medical aren't the only things that would make that list. What about food, transportation and clothing? You'll die very soon if they aren't in order. Houses - in a lot of climates you need them for shelter and defects in houses could cause them to collapse so they are crucial to survival - hygienic products, etc.
Now, why stop there? If you want energy, water, medical and maybe al those other things that I listed to be state supplied, why should their suppliers be excluded? Why nationalize the hospitals but not the farmaceuticals? They use up a large chunk of our health care budgets and the quality of their products is just as critical to our survival. So we add the farmaceuticals. And the producers of diagnostic equipment of course, can't have any defective MRI's. But MRI's have software. So those are in as well. We also need dependable medical oxygen suppliers. Suppliers for mainframes, PC's, lightbulbs, desktops (the ones you can tough), concrete, glass, sand, catering, bread, beef, cows, grass, fertilizer, oil.
My point is: we are very much used to putting our lives in the hands of commercial entities. From a car or an airliner to the contractor that built my house to the caterer that made that nice chicken filet that I just ate. They're all commercial entities, large multinationals or small mom-and-pops. They are regulated so I know what quality I can expect at minimum and if they don't deliver that quality either they get busted by the state or I sue them. This system actually works very well!
Now, why is water or a hospital that much different?
I ask this as someone who works at a healthcare provider in a "socialized healthcare" country.
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