I agree with you on some level - blockchains have an financial information leakage problem that needs to be addressed. But the difference with legacy systems is not on the government level - you don't have ANY financial privacy from your government, and this is by design. There is difference however in that on blockchain you have no financial privacy from anyone (so from other government, including totalitarian ones, from moral busy-bodies, from criminals etc).
There are some projects that try to address this. For payments that is (famously) Monero and ZCash. There is nothing in production for smart-contract-like capability ATM. But there are attempts to build such capability on top of ZEXE [0] paper and there is Aleph-Zero [1], which is unlikely to succeed (they bought DAG idea, and they will fail), but their research/code is likely to spawn better variants.
There are some projects that try to address this. For payments that is (famously) Monero and ZCash. There is nothing in production for smart-contract-like capability ATM. But there are attempts to build such capability on top of ZEXE [0] paper and there is Aleph-Zero [1], which is unlikely to succeed (they bought DAG idea, and they will fail), but their research/code is likely to spawn better variants.
[0]: https://ieeexplore.ieee.org/abstract/document/9152634/ [1]: https://alephzero.org/