He isn't blaming the software problem on the government. He is saying that if we apply this reasoning to everything in our lives, then we have a race to the bottom in other facets, of which one is government.

He is saying "if we apply (or are applying) the same business mentality to government, we will get literally the worst government we are willing to tolerate based on money"

It's not blaming. It's an explanation for probably why things can go wrong.