In capitalism, every entity is kept in check by the need to keep employees coming to work, shareholders holding the stock, customers happy enough to come back, and the government off of their backs legally. These keep companies in line.

If you think about it, none of these forces exist for government. Government employees often have no rights (military doesn't even follow constitution). They have little choice. The "shareholders" of government don't even get to have clean elections (not since 2001, voting fraud has not gone away, it's just no longer a big news story.) You have no choice.

And of course the customers- you can't boycott he government. No matter how much you don't want to fund drones that murder teenagers for the crime of being brown and living near a desert-- you have to pay for it. IF you don't you go to jail, and if you resist, or try to escape you get shot. Can you imagine if walmart could compel people to shop there? Government doesn't even think twice about using the threat of violence for even its most insolent whims.

Thus it's extremely important that government be kept in check, otherwise it will grow beyond all proportion until it undermines everything that opposes it and there's little, short of a revolution, you can do to stop it.

I can think of examples for each of your points for government run services:

> Should there be rewards for lying?

Police want a suspect more than they want justice because, especially in high profile cases, being able to say they get to say they solved the case. There's evidence of widespread incidents of just convicting whoever they can convict of the crime without any pursuit of justice (eg: the hair forensics that the FBI was faking for decades.)

>Should there be strong encouragement to charge people for things that are effectively free?

Like the national parks? The massive amount of taxes people pay at all levels of government-- a charge-- for the pitiful results they get? For example, in Washington state the roads are less than %1 of the state budget, but they often increase the taxes charged by well more than %5 a decade, with repeated claims to use the money to fix the roads. How about he spectrum that he US Government claims to own and sells, even though it's free and everyone could use it at the same time (using spread spectrum technology).

>Should the winner be whoever cut the most corners, cheated the most people, had the greatest deceptions, and paid their employees the worst?

It is in the case of government. Poorly run services, under paid, overworked employees, entire industry of elections predicated on massive deception of the people, no real investigations when major events happen, pathological lying from the figureheads at the top, etc. etc.

>Should we really exalt those who provide the cheapest service at the most unreasonable price by defrauding people?

Have you ever been to a campaign rally? Seen how emotional and choked up people get about even really the most heinous examples of psychopathic politicians? Charisma is pretty much like magic. Meanwhile we pay unreasonable taxes compared to the benefits we get and the government defrauds on a massive scale-- from social security which returns less than %3 of net present value of the money taken to the welfare system which loses %75 of the money in overhead and only distributes %25 in benefits, etc. etc. If a retirement fund in the private sector or a charity were run like this, they'd be shut down for fraud. Yet government gets away with it- and people turn around and DEFEND IT! Talk about exalting those who are cheating you!

> Should we have a system that defines success and progress by the volume and speed of such swindlers and con-men?

You mean how politicians get re-elected by passing laws and claiming that this makes them "tough on crime" or "standing up to those moooslims in the middle east" and the like? Where success comes from backroom deals and selling access as Hillary is being alleged to have done, but as republicans and democrats have been doing since forever?

You mean like the common shake down racket of threatening heinous regulations that would put whole industries out of business, yet backing off once a nice fat campaign contribution has been made? (And after you retire, don't those campaign war chests go into the politicians back pocket?)