You are almost on point here, but seem to be missing the primary point of my work. I work as a researcher at a university, doing more-or-less fundamental research on topics that are relevant to industry.

This is something I'm very familiar with.

As I wrote: We develop our libraries for in-house use, and release the to the public because we know that they are valuable to the industry. If what I do is to be considered "industry subsidies", then all of higher education is industry subsidies. (You could make the argument that spending taxpayer money to educate skilled workers is effectively subsidising industry).

This is largely the case, yes. Research universities do the basic research that industry then turns into a product and makes piles of cash from. And you are also correct that subsidizing STEM education is a subsidy for industry. It very specifically is meant to do that. It displaces industry job training and/or the companies paying to send their workers to get a degree. It also has the benefit of increasing overall supply in theur labor market, which helps drive down wages. Companies prefer having a big pool of potential workers they barely have to train.

We respond to issues that are related either to bugs that we need to fix for our own use, or features that we ourselves want. We don't spend time implementing features others want unless they give us funding for some project that we need to implement it for.

That's good!

In short: I don't work for industry, I work in research and education, and the libraries my group develops happen to be of interest to the industry. Most of my co-workers do not publish their code anywhere, because they aren't interested in spending the time required to turn hacky academic code into a usable library. I do, because I've noticed how much time it saves me and my team in the long run to have production-quality libraries that we can build on.

I think your approach is better. I also prefer to write better-quality code, which for me entails thinking more carefully about its structure and interfaces and using best practices like testing and CI.