> A national ID system would only be useful if one system was widely used, but free markets only function well with competition and choice.

Isn't this also a problem with having the government do it? E.g. it's supposed to prevent you from correlating a certification that the user is over 18 with their full identity, but it's insecure and fails to do so, meanwhile the government won't fix it because the administrative bureaucracy is a monopoly with limited accountability or the corporations abusing it for mass surveillance lobby them to keep the vulnerability.