How are the incentives in the wrong place? The airlines need security theater; people are already fearful of flying, and fear of being killed by terrorists while flying only makes that worse.
The key is to remember that checkpoints do not keep you safe on an airplane. You can walk through a checkpoint with all kinds of sharp objects -- like all those sharp metal bits in your laptop -- all kinds of explosive chemicals -- like batteries -- and then you can buy more things that are easily turned into weapons on the other side of the checkpoint. We have checkpoints because the government wants to remind people that something is being done, and it works -- people were terrified to hear that the TSA would relax the knife rule to something approaching sensible, and nobody cared about the number of other dangerously sharp things people are allowed to carry through.
If airlines were responsible for security, this would all be simplified. No corrupt contracts for nude scanners, because the airlines cannot afford to dump money on that garbage. No nude scanners means no pointless groping -- the groping was always a punishment reserved for anyone who refused a scan (gotta make sure the machines are used, right?). Too annoying and the airline's profits suffer, as they should (and as long as there is a TSA, nobody should fly unless they have to cross a distance that is beyond driving / train range).