Great idea, let’s counter the power of a handful of large private organisations by putting that power in the hands of a single large government. What could possibly go wrong?

There are lots of governments around the world - some big, some small. Lots of discussions around digital sovereignty are framed in this manner - a model for Brazil, a model for Japan, etc. There certainly could be coalitions of governments or governments could strike out on their own. Whatever floats your boat.

How about a joint effort by multiple governments, done fully in the open, with all results, including training data and methodology fully open source?

Yea and let's just compare Starship and SLS to see how well the works

Probably not the greatest comparison - SLS was successful on the first launch