There has to be a check on the inefficient and unprofitable things that a government undertakes, though, because otherwise all of the citizenry gets tied up doing inefficient stuff.

In theory democratic government is the check on this - if the government wastes too much money, the electorate is supposed to vote out their representatives and elect new ones that will cut the budget. (In this sense, Reagan-style conservatism is working as intended). In practice, this rarely happens, largely because the average voter is terrible about judging opportunity cost, and every expenditure seems worthwhile in a vacuum.