I don't disagree, either. But in my opinion, the competence and the size of government directly depend on the available technology. I'm not saying that you could create the perfect, omnipotent state with the help of the most advanced technology, it all has limits. But it works as a tool to help the government to fulfil the tasks which are necessary to exist (for example the monopoly on the use of force).

I think you could say:
a) The state needs a certain minimum of competence to justify its existence.
b) The larger a government (and the country/number of citizens) is, the more difficult it is to fulfil this minimum.
c) Technology improves the efficiency of the state and therefore allows a larger size.

The OP's statement is probably too simplified, since it depends very much on the circumstances.