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Do the things that private industry can't (police, fire, schools, healthcare, etc.) and place regulations on business. Along with other more basic things like equality and all that.
Laissez faire does not work. I think Europe has it about right.
Your first point touches on something great that is left out of the other replies, and also left out of many people's understanding: services that can't always be profitable.
Think plastic waste for a good example. Even the third world countries can't be bothered with it as plastic is so cheap. Not that it should be left for them to begin with! That just means even tiny scaps of profit can't be extracted from plastic waste. We'd all agree something needs to be done about it. No company will do it voluntarily, as it's a money loser.
This is where the government should first compel the waste generators to resolve this. If they can't resolve it voluntarily, then they should be made to comply. If even after that, the solution can't be found, then the remaining costs go on to the citizens.
A bit simplified of course, but this is just a light discussion.
My point is I'm fine with businesses making money, but citizens should come first. People that think the government should run like a business miss that point. Businesses should run like businesses, with a profit motive, as this pays everyone. But some things can't be handled without a loss, and those things are where a government can shine. They tax us, but for things that serve us where businesses can't.
Military is another example. I would NOT like seeing us have a for-profit military. That is a terrifying thought. But we need protection as a nation, so it needs to be ran and paid for.