But when I think of governments, the largest ones are almost always the most corrupt and inefficient.

Compare US to UK. California to Washington (state). EU to formerly more independent nations.

In each case the larger state delivers services less effectively, with more waste, arguably more corruption, and more useless nanny state rules.

I won't take that bait, but I will say that wasteful or not, the US can lean more heavily on its trading partners for concessions, just as whether wasteful or not, giants like WalMart can lean on their trading partners.

Size is might, even if it's blundering, wasteful, and inefficient. (Although I am not saying the US is any of those things).

Totally agree that size is might.

The question is whether or not might is good! (As in, is it better for your own government to be mighty or puny)

Many folks would rather live in puny Switzerland or Sweden than mighty Russia and China.

On the other end of the spectrum Iceland is fascinating, because by their independence a relatively small group of people has much power. (Iceland is also an example of corruption in a small nation)

I didn't know that Iceland was considered to have corruption in any meaningful quantity!

I faintly recall a study (by an Icelandic economist, if memory serves) which showed that Iceland had one of the lowest "corruption ratings" in the entire world! Perhaps I or the study are mistaken. Wouldn't be the first time.

It's a so small country that family and friend ties in government and administration are hard to avoid, for one thing.

The examples of corruption I'm thinking of are all related to the financial crash and Icesave scandal in Iceland.

Hmmm. Just read over the Icesave Scandal wiki. Doesn't looks os much like corruption as it does the Icelandic government trying to mitigate/avoid the large deposit insurance payments they'd otherwise be required to pay.

Normally most people consider corruption to be some kind of private-public intermingling. But this was all about the public side trying to protect itself (I think?).

Former PM Geir Haarde was on trial for his involvement. The powerful pretty much went in lockstep, with the smoking hot icelandic economy after a growing banking sector, it looked like every icelander benefitted, being able to take loans and buying multiple cars. With the "success", the people in charge let themselves be instruments of a run away modern high-risk banking sector, not their doing their job as regulators.

http://www.voxeu.org/article/government-failures-iceland-ent...

I agree with your overall point but I think your corporation analogy is slightly flawed. To my mind, the appropriate analogy with a corporation is a comparison of citizens to customers rather than employees. That is, the original commenter would like to see a number more like ARPU. Something like Average Trade Per Capita (ATPC)?