Of course, the Somali government is very small and Somali people are very free, and they aren't doing very well either.
I would say there's a correlation between less government and worse living conditions on average
I think this is true, but I don't think the correlation is causal. Rich countries throughout history have tended to grow their governments after becoming rich by adopting social programs and trying to flex their muscle internationally. Most of Europe followed this model, as did the US.
Edit. Are you claiming social programs are created to flex your country? Do you have proof of this?
Post WW2 for the US, post-Victorian era in the UK, post-Napoleon in France, post-Tarism in Russia, post-oil-boom in Scandanavia, etc. Countries with big social programs are still great to live in, but I only mean that the social programs and big government are clearly not part of the reason why those countries became rich. The big government is caused by the wealth, not the other way around.
This is why it is critical to have government established "of, by, and for" the constituency - because even in a best-case scenario, corruption will get in the cracks and make them bigger, etc.