As Communism showed dramatically, whenever government services (or means of production) constitute a monopoly, several things happen:
1) The quality of the end-product/service deteriorates
2) Motivations tend toward maintaining the status-quo than toward innovation (CYA is more important than R&D)
3) Practitioners/workers view their roles as being entitlements rather than earned
4) The impediments to spending “other people’s money” are few.
5) Protectionist technocrats (e.g. department heads, bureau chiefs, etc.) develop policies (e.g. red-tape) to obscure their actions, discourage critical analysis, obliterate competition and expand their domain.
As various political science studies have determined, and as is likely clear by paying attention to the way citizens talk and behave, people tend to view government pockets as arbitrarily deep. Thus “waste” and “deficit” are perceived more as idealogical issues than as practically important. In most cases, a vocal minority of people will fight for the practical and tangible benefits they receive from government, while those of us who pay for such benefits view it as a trivial issue (the still kicking bridge to nowhere, anybody?).
To rely on a solution of “competent managers” is to rely on virtuous and selfless human nature. People who exhibit such characteristics, who behave with prudence, ethics, restraint, wisdom and selfless stewardship are rare. I suggest they are in fact so rare, that it is unrealistic to suppose a such a virtuous horde of selfless technocrats (not to mention elected officials) will ever be found.
Competition, which lies at the heart of capitalism, is a fantastic means for motivating innovative, efficient, results-oriented processes and services. Government, being often a monopoly, falls prey to the lethargy, lack of focus and poor results which are endemic to such entities.
True progress toward diminishing government waste will require stiff penalties, accountability, outsourcing competition to multiple providers, and perhaps inter-agency competition for project/program governance.