I follow this logic, and it’s exactly why there will always be a debate about this. Believe it or not, I agree with most of what you’ve said, but come to a different conclusion.
“Nobody is perfect, so nobody can be trusted to make decisions for others” is why neither extreme is feasible; in both, the average individual is at the mercy of a boss ( be it governmental or economic). This is why the idea of a representative government is both brilliant and problematic. It still limits the individual’s own options, but allows that individual to have a say in whether their representative keeps their position. There are no laws that are unable to be changed to better suit the needs of the individual, but those needs must be weighed against the needs of the nation as a whole to get passed because representatives must gain support from others who represent individuals with different needs and officials who are responsible for the nation as a whole.
If the pandemic has taught us anything in the US, it’s that there must be leadership with a long view willing to make decisions that won’t be popular but are the right thing to do for the health of the country, but also that the representatives must do their part to keep those decisions from destroying the lives of individuals through compromise and cooperation. We have neither at present for a multitude of reasons, but it can be remedied. Very few people are interested in either extreme, and any in government that are won’t hold those ideals for long once they get into the job.
Government isn’t bad. It’s slow, and clunky, and can devolve for a time. It’s fixable, though.