That is such a ridiculous constraint. Do they mean that, if I start selling tapped water for $100 a gallon, the government can not provide its citizens with an alternative? Obviously it both can and does in many important areas (water, education, electricity, roads and defence to name a few). The decision on whether government should be active in a market should be based on an analysis of the benefits it can bring to society – be it savings, innovation or equality of opportunity.