Does government action produce better outcomes? Certainly, it can (not always). What is the evidence? Look at the economic expansion in the United States since the 19th century - do you think the power of capital markets to allocate capital into this quantum leap of economic progress wasn’t helped by government action?
Of course it was.
But don’t misconstrued the point - just because government action works some of the time means it works all the time, or that more is always better. As you note, there are always trade-offs, and there is always a law of diminishing returns with government action.
But the remains - sometimes it is necessary for society to restrict liberty in an effort to ameliorate or prevent entirely some end results that are too intolerable for society (or too expensive to fix after the fact). It’s important to leave a lot of space in the middle where people are free to do what they want and live with the consequences - generally. But some consequences are so bad, societt has to intervene.
And is some cases - like broken families - society isn’t so much “nosing” and intruding into their business - rather, it is forced to fill in the power vacuum and intervene to provide something very important (indeed, essential) that some have destroyed through their “freedom of choice”.