How far is too far?

Government. It is a topic of discussion some relish while other cringe at the very thought of the word. It is essential yet often overlooked. A government, in this case, is going to be defined as a set of rules and regulations which allow or disallow members to do or not do things (the definition is a bit watered-down but bear with me). My question to you all is how far should the government be allowed to enter into its members' lives? Absolute freedom of government brings about problems such as the ability to do any drugs, steal anything you want, or even take the life of another. It brings society to a Darwinian approach, allowing those who can survive to do so and those who die out, well too bad. On the other end of the spectrum, absolute protection with government develops the problems of no freedom and, arguably, no progress. If the government was allowed to intervene in our lives whenever, we would be subject to its power whether or not we wish it so. Progress would be hindered merely because experimentation breeds advancement. With the government invading the private sector and socializing businesses, they assume control of everything, possibly not allowing them to experiment with new products/capital gain/price settings. Without the ability to try new things, people will have a significantly worse chance of developing new things and therefore advancing in society.

So, my question posed to you all is this: Where is that perfect balance of government intervention? Should government only intervene when harm is done to another, be it physical or mental? Or should the government act as a block to prevent that from ever happening in the first place and protect more than allow freedom?