No, I think you're correct, however Mr. Friedman's statement is focused. Since government effects everyone under its authority, and there is a wide spectrum of opinion regarding regulation of the government -- in a free society at least -- then government is perpetually mismanaged since it must service conflicting directives.

This is precisely why it is such a bad idea to turn over so much responsibility to the government. It is an industry without competition and mostly immune to market forces, so there is no pricing to control what it produces or gauge the value of its product. It always over-produces!