@hkkmr
I think you are looking at government as a hypothetical system, rather than looking at the historical nature of government.
I think this leads to the next question of what direction of approach and political philosophy is either correct or optimal.
"Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat."
--Theodore Roosevelt
"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover."
-- Mark Twain
"Man who stand on hill with mouth open will wait long time for roast duck to drop in."
-- Confucius
The historical nature of government is that it arises in some form and collapses in some form. There is no ideal or hypothetical, it either lives or it dies in the environment that it exists in. Governments are just social organism that live, achieves what it achieves and dies, no more no less. Correct and optimal is something for the historians to decide, and they generally don't agree on.
By even having the pretense to "correct" and "optimal" you're the one dealing in hypothetical. As a scientist, I deal in approximations, probability, measurement and analysis, beyond that I don't know what's correct and optimal, that's a shifting target.
"Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat."
--Theodore Roosevelt
"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover."
-- Mark Twain
"Man who stand on hill with mouth open will wait long time for roast duck to drop in."
-- Confucius
"Real" approximations. Optimization is possible with real approximation, but not "optimal", optimal is a temporary theoretical state. Also by optimizing too close to the edge of efficiency in a system, it's generally to the detriment of reliability, scalability and/or flexibility.
As I said before, government scales efficiently until it doesn't based on its design, also when it is too small it is also inefficient due to overhead of simple establishment. So based on the system there is a sweet spot for size. Optimization can improve this sweet spot. A mouse is efficient at a certain size, a elephant is efficient at another.
Yes getting too big or too small will be inefficient, but it's not the only factor that causes collapse. There are other factors such as energy prices, natural disasters, external influences, complacency in the population, aging population, demographic shifts, environmental crisis and plenty of other things lurking in the unknown.
Wanting a really efficient optimized system generally leads to other pitfalls, like reliability, scalability, flexibility, and other issues. Naive notions of big and small as some how the sole determinant of good and bad is just rhetoric and sophistry, the US government is small compared to many first world countries but it also happens to be greatly inefficient in areas such as healthcare, education, military expenditures despite these other countries having a great deal more public expenditures in healthcare and education while having much smaller military expenditures.