Failure is a vital part of the market. Failure is the market saying, "This capital can be used more effectively somewhere else."
Failure is _not_ bad. It may be painful but it's necessary.
Think about it, should the govt subsidize every startup so that none fail?
Seems like the failures aren't just caused by the free market.
But of course this picture is missing one of the key mechanisms of a truly free market -- there's no market pricing of the market participants themselves. You can't buy out a government that's acting foolishly.
Whether the government taxes you less, pays you directly, or puts tariffs on your foreign competitors, it all amounts to a subsidy in the end.
(And I don't disagree that it's a foolish idea.)
In that sense, for example, there's a train of thought that if creating VFX in the USA becomes untenable then its move to other countries may drag money with it, then know how, then creative talent, then innovation, then production, then the entire industry and then it associated power for cultural dominance.
The entire sequence can be debated and argued and nitpicked to death (and I don't know enough about it to even try), but the underlying idea is valid.
While it can clearly benefit certain special interests (hence its popularity), it simply cannot benefit a whole society on net. Rather than repeat the whole argument, I'll just cite Adam Smith (a guy who was much more moderate than often portrayed by modern partisans), who showed in no uncertain terms that subsidies and tariffs make a nation poorer.