Why do you think politicians & bureaucrats have much incentive to improve things? They can ROB (tax & inflate) the people, so there's very little incentive for them to do any good to raise standards. People in the private sector have profit-incentive, they compete for profit amongst themselves, government can just TAKE money, it doesn't have to work a lot to earn it that's why communism/socialism fails. As far as the living standards go, if government weren't STEALING so much money out of the economy by way of taxes & debt, & putting crippling "regulations" only to protect big lobbying companies & crush the little guys then it would be much much better than it is right now so of course, the problem is government.
Again, you keep missing the point, it's NOT about "money", it's about resources - goods & services (REAL WEALTH), the more there are the higher living-standards people will experience - & the only way to ensure that is to allow those people who produce goods & services to keep their profits & re-investing it to produce even more & so on. Again, if someone could just take money "legally" or otherwise, they've no incentive to be very productive.