Regarding the profitability - spaceflight isn't profitable yet. Some companies are trying to do manufacturing and mining that could be profitable in the future, especially if launch costs keep dropping. Moving heavy industry off planet seems like a good goal to me. That's also ignoring different imaging and communications companies that are doing alright.

Regarding privatization - NASA has contacted out services from their literal beginning in the Mercury program. Contracting out basic/boring launch makes sense to me and lets them focus on bigger ideas. I don't really think SpaceX is "subsidized" vs winning contracts to deliver hardware and provide services, especially when you compare to their competition for programs like ISS commercial crew/cargo and Artemis human landing system, where their direct competitors (Boeing, Northrop Grumman, Blue Origin, etc) are more expensive.

My big gripe is that no one else has launch capacity right now, so SpaceX has no pressure to get cheaper and companies don't have a choice. Ariane 5 retired, Atlas V is booked out, and Vulcan, Ariane 6, New Glenn, Neutron, Terran R, etc. are not flying yet.