You are wrong on two accounts.
There are plenty of ways for getting rid of underperformers in a goverment organisation. I've seen entire teams being sacked, and also some of the hardest working people I know work for goverment organisations.
Also, you cannot run the goverment like an startup that is always running on the edge. A majority of startups fail and that's fine, but one goverment organisation failing could cause problems for the entire country.