That's the fun thing, it doesn't have to be one or the other. It can be both! And I would moreover argue that if a government scheme can be sabotaged like this in the first place, the government scheme is itself at fault given its obviously lacking transparency, and a "libertarian" response is all the more appropriate.
This is the weirdest argument. I mean, you seem to be arguing for some kind of government that's not answerable to elected leaders or voters? I mean, how else would you be able to run a program that couldn't be shut down by the leadership of an organization - public or private?
This reads a lot like the kind of condescension I mentioned receiving from my wealthier friends and family growing up. Well intentioned, but people usually privileged enough to only know what they knew about poverty and assistance programs from magazines, research journals and politicians selling compassion. Rarely were they the people who experienced the consequences of what they were advocating for themselves, giving them a comfortable perch from which to preach what felt helpful and moral, but never knowing what it meant to be wrong about the results firsthand.
If it's true that these programs can be done the right way and are being deliberately sabotaged (with which I tend to agree), then they are being sabotaged by more than just the "means testing" and "market-based solutions" crowd. I know firsthand, because some of the most destructive of these initiatives in my life have come directly from undivided Congresses made of the politicians telling us that "we can't afford not to go all in".
But somehow when one of the supposedly non-hamstrung programs still comes with impossible red tape, unintended consequences, or otherwise leaves the recipient worse off than when she started, even the "all in" programs that make it through via unchallenged bills or executive action, somehow end up being criticized in retrospect for not being "all in" enough. "We just didn't commit enough. We need to double down."
Failing that, it's always the fault of "those other politicians" and when all other excuses fail, then it always falls back to victim blaming. "They just don't know what's good for them" or "they just don't know how these things work". Yes, both the "change your attitude and work ethic" crowd and the "government assistance" crowd blame the victim, if you know how to spot it.
I'm certainly not arguing that you're wrong in the assertion that many of these institutions are designed to fail, but I do think, for anyone committed to actually solving problems, that taking honest account of how these institutions are failing beyond just "they need more money and fewer restrictions" is among the necessary first steps.
Confronting the problem by dedicating yourself to the results rather than dedicating yourself to the politicians who say nice things and then shrug their shoulders when their solutions don't work, even (especially?) when that means coming to the uncomfortable conclusion that the "team" you trust may not have earned that trust beyond words.
Or the uncomfortable conclusion that the people supporting the other "team" are doing so not out of ignorance or deception but out of a reaction informed by genuine personal experience that you may not have had. That those people, still in need of solutions not being provided by either team, are turning to the devil they know and can manage, rather than the one they cannot.
The good news is that these first steps are unifying and results oriented. The bad news is that it requires people to confront their own biases that they think of as mutually exclusive postulates to be accepted and instead turn them into non-absolute theories to be tested and refined. It likely means realizing that our "teams" don't matter so much, and that spotting the good from the bad on both sides is harder than it seems.
They can be done the right way, but aren't because politicians deliberately sabotage them. Every confusing and unnecessary form that is put in the way of getting assistance is put there deliberately to make the institution less effective and punish the people who need it. This is not an accident or some emergent, inevitable quality of government. It's not that the government just happens to hire incompetent or callous people to run these programs. It is sabotage by elected officials who oppose helping poor people. We DO have a handful of institutions that are still competent and effective. This also is not an accident--they're the ones not being deliberately hamstrung by Congress.
The solution is not to throw one's hands up and declare "Government doesn't work, I'm a libertarian now!" The solution is to stop electing asshats whose purpose in life is to dismantle institutions and hurt the poor. It's not like these politicians are hiding their views. They proudly talk about things like "means testing" and "promoting market-based solutions (transparent code for sabotaging institutions)". Astonishingly, in many States, the poor tend to favor this team and vote for them, (presumably) knowing they are voting for politicians who are against the very things that would help them.