When those in power (in the U.S.) take as a prior that gov't can't/won't work, then they're given an excuse to not really act in the public's interest in good faith, or to try hard to design a regulatory framework that could actually function. Belief in government dysfunction becomes a self-fulfilling prophecy (that conveniently most benefits those who are already most powerful, those individuals whose power can only be checked by government).

The solution to "regulatory capture" is sometimes less regulation, but at other times transparency and better regulation. This is the real world, and there aren't any silver bullets.