Governments know that AGI will be a game changer if created, and governments are in the business of countries. They know that if it is going to happen someone is going to do it eventually, might as well be someone that is a citizen/registered as a corp in their jurisdiction. Why would the US for example want to stop Google from achieving AGI supremacy? So that Tencent can do it first? They're stuck, AGI would be a threat against their power, but stopping it will ensure that a competing country has sovereignty over the creation instead. It's not incompetence, it's a legitimate conundrum, it has elements of MAD and public/private power balances and geostrategy.
Personally I don't think AGI is possible. I think there's some element to intelligence that is not just some threshold of complexity, maybe it's some architectural feature or perhaps something more fundamental. What I think might resemble it in some ways, and IMO is the future, is complex application specific computation. Imagine an algorithm that can take over for example nuclear strategy decisions, but can't really tell you the most optimal layout for roadways, off the top of my head of course the two problems might fundamentally be the same optimization problem, I don't know, but it's an example. Powerful machines that do one thing really well, not one system that does everything well.