You're right but also wrong - people generalise about "the government" even though it's a large collection of entities because on average their performance is c

You're right but also wrong - people generalise about "the government" even though it's a large collection of entities because on average their performance is characterisable as worse than "the market" would be. Whilst you can have incredibly efficient and well run government departments, there's no particular incentive for people to run their departments well, doing so is difficult and so the noticeable trend is that they aren't. The evidence that this stereotype is true is overwhelmingly strong, so, it's perfectly legitimate to set policy around it.