My take on this is that it's because government doesn't scale in a simple way with the biological population size, unless we understand government as simply serving the biological needs of the population. The government serves the noosphere: kinda like a biosphere, but the sum of all ideas, reason, language, memes, thought and innovation of the society. The noosphere just happens to live [mostly] in the biological minds of the population, but it's not growing linearly like population is, and is probably becoming more complex and higher dimensional in a nonlinear way. The world doesn't just accrue humans, but rather it accrues (often via tech augmentations) the capacity of each human to process more, and so the world complexifies (is that a word? ha)
Anyhow, not saying this is how it should be, or needs to be, but I def am not personally surprised or indignant about government failing to see scaling benefits we see elsewhere. I also suspect this is related to how government's in charge of many more things than corporations, which often can't be re-classified as externalities
I dunno maybe I'm wrong-headed here * shrug *
For example. If you think the role of government is to regulate pairwise interactions among people, then government should scale as O(N^2) where N is population.
There is a perverse incentive in government to use all of the "resources" (tax dollars) that they have access to. Normally this kind of incentive is counter balanced by competition (the competitor that can do more with less has a better chance of winning), but in this case, the government is a monopoly. They have no competitor threatening to usurp their role.
And where is the accountability? When things aren't getting accomplished with tax dollars, the answer is always "more." Who is holding the spenders accountable for us?