> OK, but following this logic, shouldn't we disband the government altogether and have mafias rule us all?

Conservatives seem to be fine with mafia rule, so long as the don has the correct party affiliation.

> When is it acceptable to hope that something is actually going to work well enough when handed over to the government?

Mob rule doesn't with very well as a defacto government, or oligarchy. Nor food and drug safety or national defense. Some things just have to be tackled by society as a larger group. Ideally as locally as possible, but not so locally that minorities are crushed or rule becomes petty and micromanaged.