It's an interesting problem, isn't it? We can recognize basic principles as individuals, but throw a large crowd of people together and they tend to collectively turn to madness.

Regarding governments, the proposed and enacted solutions have been to try to coerce people to "sanity" or morality (assuming that it's even necessary in the first place). Clearly, that hasn't worked well. We must find a better way - and it starts with understanding ourselves and our own desires when interacting with other people on an individual basis.