What does it matter if the government did end up holding a majority of the coins? This isn't a Proof of Stake protocol, you know?

Bitcoin's hard cap, while intended to create scarcity, could backfire. It might allow those who accumulate Bitcoin early on to exert undue influence, effectively replicating the centralized control of traditional finance. This is a valid concern. If a small group controls a significant portion of the Bitcoin supply, they could manipulate the market or restrict access for others.