If the only benefits of science were to individual people who read the papers, then no government on earth should or would subsidize the process.

How do you reach that conclusion? Governments subsidize all sorts of activities which benefit particular sub-groups more than the general population. It is hard to identify any government activity which doesn't implicitly favour certain groups over other groups.

In reality the benefits of government funded science tend to accrue to more than just the individual people who read the papers but funding decisions are clearly not based on any kind of utilitarian calculus.