It is not that the government became incompetent, we just expect so much more.

Just look historically, in the US, it took the government years to even start digging us out of the Depression (yet we expect it to solve the finance crisis in a week). The government couldn't stop, and helped foment, the civil war, and for the first couple years the government seemed helpless to end it. The government blundered us into WW I, the reasoning behind our intervention is debated even today. In short, for every Louisiana Purchase or Marshall Plan, there is a war of 1812 or Vietnam.

Compared to our ancestors, we are a supremely demanding group of people. That is not a bad thing, but it skews our outlook sometimes. I'd say our government is as competent and as sophisticated as it has ever been. But we are conditioned to wail and cry and blame the government any time something bad happens that they failed to predict and stop.