In San Francisco (as well as other cities I've lived in) they put police in the middle of intersections during rush hour to guide traffic (i.e., stop cars before they drive into an intersection that they'll get stuck in the middle of). Seems woefully inefficient
Imagine how much gas would be saved if the city spent a little effort on the traffic lights.
In the USA, a significant amount of tax-funded infrastructure is actually built out by contractors, which means there's profit going to a corporation, and there's often a cynical idea that the contracts go out to whoever will send a kickback in the form of a campaign contribution to whoever makes the decision on which contractor to use.
I don't think you need a vast conspiracy to point out that connecting traffic signals costs more (fancier signal equipment, running cable, maintaining the cables, etc) and the benefits may be subtle, hard to predict, and maybe even hard to measure.
Additionally, you have a lot of people that would prefer to slow traffic. Depending on local culture, investing in traffic control can be difficult (although upgrading traffic signal systems may be better able to accomodate priority for transit and bicycle detection)