Democracies aren't businesses. Getting some kind of consensus from a huge, diverse populace is hard. I think you end up with diseconomies of scale.
> If there are diseconomies of scale then you can organise it at the state level or municipal level
This requires the federal government to now maintain 50 distinct sets of policy, or delegate to regional bureaucrats. Both of these are diseconomies of scale.
These kinds of problems are hard to solve within a large enterprise with a hierarchical power structure; the United States is a much larger, more diverse entity with a distributed/consensus-driven power structure.
The argument that it is merely an option assumes that you are able to rationally choose the best option from the ones available. Not the case when we're talking about government. And the larger the government, the more political power is at stake, the less rational the decision making becomes.
While this is probably true in an absolute sense, Sweden is also a much smaller, more homogeneous country than the U.S.; I don't think governments scale very well, so a small affluent country can likely be more nimble and innovative than a large affluent country (think startups vs enterprises).