Unfortunately (in the USA) due to our current campaign financing situation, lobbying and media outlet consolidation the elected representatives voting to write big government checks are far more beholden to the corporations than to the people, which explains the crazy boondoggles like the TSA and congress buying military hardware the military doesn't even want (causing it to be regifted to local police, causing all sorts of carry-on negative impact).
And then those same corporations/wealthy individuals that profit from this system point to it as an example of how the government can't be trusted with our money and thus shouldn't be allowed to regulate anything they do.
The entire system is just ridiculous at this point and possibly unfixable (without some kind of huge society-shifting event).
I guess my comment back would be it appears that this is an issue with governments, not with competition. I would hope that the government has some incentive to spend tax payers' money wisely (re-election would probably be the only one).
Ignoring the whole "lets give tax breaks to businesses that move here" issue, I think we'd all be better off if there was a strong incentive for the appropriate spending of tax payer money.
I mean Singapore seems to do it reasonably well, why can't we. And yes, I know a little about how Singapore trainings and attracts top talent to government.