The problem is entrepreneurial support organizations (typically organized as a "non-profit") that the government awards economic development grants to, who are then supposed to support the entrepreneurs. These are often incubators, accelerators and/or venture support/investment organizations. Universities sometimes fill this role as well.
These organizations take a MASSIVE cut of the funding to cover their "overhead" before any money goes to the entrepreneurs. The amount of the allotted government funding that goes to entrepreneurs to actually grow their business is tiny after the various "non profit" organizations get their hands on it.
I've seen state funded business plan pitch competitions that cost far in excess of $2M to put on their annual pitch event, with teams of 5+ employees "working" full-time on them. I've seen a party planner get paid $195k to put on a one-time demo day for 300 people. I've seen consultants get hired for $15k to put on a one-day sales workshop for founders. A successful founder paid $170k to give a speech at a demo day. Universities charging 53% overhead rates to run government funded programs. Program directors paid $200k+ to work on an accelerator that runs for 3 months of the year. I could go on and on.
All of this was government funded in the name of "economic development." How many of us on HN could start a brand new business if we got even a fraction of this funding instead of wasting it on pomp and circumstance that masquerades as economic development?
I guess the bureaucrats could/should realize this is a waste and put a stop to it, so perhaps it is back to being their fault. But these "non profit" orgs whose mission is to "support entrepreneurs" have no qualms about pulling up to the trough of government fundings and sucking it dry before it goes to actual entrepreneurs...
(Source: I've seen this spending first-hand since I work at once of these places, which is why I'm posting this under a newly created alt account. Trying to do my tiny part to stop it, but it's systemic and hard to change.)