we will instinctively protect the in-group even when it makes no rational sense to do so.
I'm not so sure that it is entirely true. The problem is that the "in-group" make it very much in the rational, self-interest of whomever gets into power to support that in-group. What you need are politicians in power who are willing to go against their own self-interest and act in the interests of the people they represent. These are a rare breed and getting rarer since, when one appears, the "in-group" do all they can to stop them getting into power and/or corrupt them.
The result is a choice between politicians who will not act against the in-group and, because of the huge power and influence of that group, very little chance of that ever changing unless something severely damaged the in-group's power which, in our case, would probably need to be something like an economic collapse of biblical proportions.