The government took a risk on an unproven launch provider. The fact that they were unproven is precisely why private money wouldn’t bet on them. When they secured large government contracts the risk balance changed and private money started increasing.

I’m not making an argument about reusability. I’m talking about the business risk. Note my original statement is about business strategy.

The Feds do bear most of the launch risk. That’s exactly what “self-insured” means. If you have enough wealth, many states allow you to self-insure your car; that means if something happens the resulting financial responsibility is yours. In the case of spaceflight, when a govt loses its payload, the taxpayer just eats that cost; no insurance company reimburses them. Many in the govt aren’t thrilled with that risk dynamic because it subsidizes the risk but privatizes the profit. But when the risk of a new industry is too high for private industry to shoulder, the government is about the only game in town with that level of risk tolerance.