> 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.