You keep confusing companies and government -- companies make things, government doesn't. Government is the one that oppresses through violence -- just look at all of human history (capitalism offered freedom as opposed to feudalism, and now we are turning it back into feudalism). Companies are the scapegoats in most situations, as they are nothing but people joining together to create or sell things. When there is no judicial/policing agent (does not have to be State-sanctioned), then companies use violence -- see the drug war + its domination by gangs.
A huge difference between a government and a company is that a government cannot go insolvent without epic losses (because of its central bank), and you cannot opt out of a government (even renouncing citizenship is limited by the US). In the case of a government, there is no accountability and there is no measure of success (it always spends at least up to its budget, you can only complain to/vote out some figurehead). There really are police quotas, and things like speed limits are actually optimized for revenue rather than safety (many studies have demonstrated that gimmicks like red light cameras actually create more accidents -- rear end collisions from not wanting to get a traffic ticket).
Heck, a part of Europe tried out an experiment semi-recently: they removed all road signs and signals to see what would happen. In fact, there was a dramatic drop in accidents. Why? Because driving is dangerous, and it needs to be experienced as such.
The broken window fallacy was a simple example meant to illustrate that actions are difficult to measure. Todays reliance on econometrics does not and cannot take into account the unforseen, because the density of human action is not mechanical and we are not omniscient. A slightly different example: when a state increases taxes, it may be stopping people from moving there in addition to making some people leave (California). When the government does something, it removes incentive to do that thing. When it says to do something, it creates an incentive where there otherwise is not yet one (and as soon as it stops creating that incentive, it will collapse the bubble it just made).
When society lends government some power, it will not be given back (money is only one kind of power). Obviously, society must have had some power which it delegated away (and so no longer has that power, at the threat of force).
Again, if 80% of society is fine working together, that's how the basic structure is to be formed. The first priority is for the normal cases, then you deal with all the end cases. The other way around is sloppy, and a surefire way to make the structure itself convoluted (a logical design paradigm). Your argument for dealing with the assholes first suggests that they are the majority.
If you want government to work structurally, it must have some built in accountability. One way, which I know you'll hate, is voluntary taxes. They would ensure government it does its job and certain standard taxes could be set as the default (so it takes some effort to say no).
Correct me if I'm wrong, but you seem to be advocating for a centrally planned economy -- which cannot work on even a basic level, precisely because of the economic calculation problem (and price signals). It's interesting, but when the Soviet Union had to set prices, its only way of setting them was seeing how much it could trade items for. Price itself has a very useful utility which cannot be solved otherwise -- it makes distribution and coordination of production possible. And these are merely the reasons it is technically infeasible, there are obviously political issues.
I would ask that you not wonder "how can society prevent poverty?" but "how can society create wealth?" because it doesn't take any work to be in poverty -- it is the natural state of man. It was the establishment of capitalism which allowed people to save money, and do things they want to do in life (modern day example: the average Chinese factory worker can save 6x as much of their income as Americans, in some bizarre fashion they have an economically freer market these days). It wasn't a coincidence that slavery disappeared as capitalism appeared (first in Britain). As for America... Lincoln did not care about slaves, said equality between white and black would never work and specifically announced he thought white men were superior and need to be the rulers. He initially offered the South the option to keep its slaves and wanted his own generals to keep slaves. The Civil War was about states' rights, but it has become propaganda about slavery.
Similarly, the civil rights issues of the 60s were because of government-mandated segregation. Even if a white man wanted to serve a black man, it was illegal (and vice versa). This goes back to my point about government mandates being absolutist and arbitrary. Once an unjust law is passed, you are screwed. If you are in a minority, you have no recourse whatsoever.
Finally, I would ask that you consider the moralistic duality of ethics, going back many centuries. All subjects are expected to be just, to follow the law and to not be liars or use force, but rulers are given exemptions -- it's practically expected that they will have to lie. This duality goes back to even way before the theoretical construction of the Nation State. I see it as a fallacy, the same way that I see the Nation State as a manifestation of this fallacy.
