1) Yes, value is subjective but we also have common values. I think part of the problem is our politicians have been very successful in creating this narrative that frames some of those common values as none of the government's business. Infrastructure is one. We all benefit from infrastructure but we only seem to invest large amounts of tax payer money into it in response to hurricanes or other disasters. Education is another. It behooves us to educate our children but the politicians don't want people making educated decisions.
2) I would say there are a variety of reasons why the government hasn't been capable but the few that come to mind are opposing objectives; not understanding how economics work; and greed.
I admit that I am not well versed in economic theories and you probably are much more knowledgeable.