Yep, the same thing happens in both public and private sectors. As a company gets older and bigger, there's a strong tendency for it to accumulate the kind of s

Yep, the same thing happens in both public and private sectors. As a company gets older and bigger, there's a strong tendency for it to accumulate the kind of semi-parasitic costs you mention, get worse at changing things due to bureaucratic ossification, develop more intricate internal politics, and so on. And then there's simple regression toward the mean: a company that becomes successful due to unusually good luck and leadership will probably not have unusually good luck in the future; on average they will have average luck, which will cause them to go downhill. Entropy reigns eternal! ... And yet, things we buy from private companies tend to get cheaper and better over time. It's weird, isn't it? I think the big difference here is that private companies are not immortal monopolies, but government agencies are. Sears was the Amazon of its day, and gradually became less impressive -- but we weren't screwed, because now Amazon is the Amazon of its day, and in time we'll find out what upstages Amazon. In contrast, the government of New York used to be unusually good at building subways -- but now it can barely maintain what it already has, and people living in NYC are just stuck with it, because there's no realistic mechanism for the department in question to be replaced with a more competent one. I'm increasingly convinced that solving this category of problem is one of the most important unsolved political questions, and it's tragically under-explored.