This was true in the US before we created all these stupid regulations, which is why they were created. 1700s/1800s, "spoils system", etc. That is the whole reason the regulations (and attendant overhead) exist.

(I bootstrapped a US government contractor and have worked for several others.)

Can you clarify your point, were you saying that the US had 3rd world-levels of corruption before the regulation, or were you saying that the US was as fine as it is today, before the regulations.

The former- before the regulations in the 1800's there wasn't even really a concept of 'third-world levels of corruption' as it was universal to every government.

The former. Google the "spoils system."

I've worked for commercial, government and semi-government organizations. It's not corrupt in the sense that it's illegal. The problem is that while the stakes are high within the private sector there are no such stakes within the government sector. Yet people do get payed high stakes salaries. There's no incentive for efficiency. In the government realm when the end of year is nearing, departments start burning through their budgets to ensure they don't receive less the next year. Inefficiency is rewarded. It simply means more people get to pay for nice mortgages.