Netflix is still mailing out DVD's and library's have both computers and books. Which is very telling, most often new methods supplement existing systems not simply replace them. The real transition has been cheaper shipping costs replacing the need for local retail and that's been spreading across the economy for decades.

Further governments are often first adapters. Many legacy government IT systems exist, but as they generally work and cost less to maintain than replace. Really the advantage of free markets is information exchange and diminishing returns not simply building large scale systems.

Consider, some cars come with built in refrigerators yet we ended up with roadside stores selling cold beverages. That's the kind of tradeoff markets are great for identifying.

The elected component of the government sector in a properly functioning democracy is far more mortal than large corporations and newly elected Cabinets generally more zealous about reforming (for better or worse) the way agencies and services are run than newly appointed corporate board members. Sure, some services are prioritised more than others; no government is going to get voted out of office solely for running the nationalised film rental agency into the ground, but the main reason for the institutional inertia is the same scale, complexity and principal/agent problems large corporations also suffer from.

> the elected component of the government sector in a properly functioning democracy is far more mortal than large corporations

The elected component of any modern government oversees a vast administrative bureaucracy. This is the part people refer to when comparing "big" and "small" governments.

> the main reason for the institutional inertia is the same scale, complexity and principal/agent problems large corporations also suffer from

Federal bureaucracies only die if (a) the legislature explicitly kills it or (b) the government collapses. Large companies, on the other hand, can go bankrupt. Shareholders are motivated to be ruthlessly efficient in a way lawmakers, somewhat by design, are not.

I'm not convinced the legislature explicitly killing or dramatically reconstituting agencies is a significantly rarer event than large companies going bankrupt. More to the point, the executive is seldom shy about embarking upon restructuring or adjusting funding and objectives of its administrative bureaucracies, not least because it faces its own acute existential threat from not being seen to give its taxpayers value for money and the operations and future direction of its bureaucracies is the subject of open public debate; obviously more for pensions and prisons than vehicle registrations or waste transfer licensing

Ruthless efficiency for maximising long run profit is only useful in cases that particular metric happens to align closely with the goal of society. For film distribution this might be a reasonable assumption. For promoting health or learning outcomes or facilitating retirement, it almost certainly usually isn't.

> I'm not convinced the legislature explicitly killing or dramatically reconstituting agencies is a significantly rarer event than large companies going bankrupt

In Western European and North American history, at least, it dramatically is. Look at a list of the Dow or S&P 500's founding components. Look at those lists now. Now look at a list of U.S. departments in 1850, and compare them to today.

My reference point is the UK, where we killed 89 civil service departments in the early 90s alone.

There is a difference between immortal and slow to change. I don't think people want government to fail fast and be replaced with another government in the span of two years.

The "immortal" term and Blockbuster are great concreate examples. I will have to keep those in mind as it accurately portrays some of the pros and cons of government