Government subsidies enable fraud and largess. Individuals and organizations are inherently less careful and results-oriented with Other People's Money. That is starting to be rectified, for better or worse.
All money is someone else's money until it's your money. This is as true of private as public sector activities.
The problem is what's incentivized to be rewarded with someone else's money.
In my opinion, the ultimate problem in academics (aside from pyramid schemes) are administrations applying a profit model to science, where science is a means to a profit end (for the institution) rather than an end in itself. That is, the problem is in expecting a public service to operate as a private profit enterprise.
Sometimes you pay someone to do something, not to make a profit for you directly.
