While it is certainly true that 'voters want the services that government provides' it is equally true that most of them do not bear the cost of those services, which is shifted to a tiny fraction of the population through progressive taxation. As a result, and exactly as in the market for healthcare, the demand for essentially 'free' service increases without limit.

Moreover, most government expenditures are transfer payments, which arguably have experienced nearly exponential productivity growth over the past 50 years as it takes virtually the same number of labor hours to process checks for $1 trillion as for $1 million.

Also, as you point out, the growth in 'productivity' in Defense has also increased dramatically.

The areas of government where productivity has remained stagnant, like education, are still relatively small and not really relevant to the problem of government growth.

The real problem is in the growth of entitlements, where certain voters have learned that they can force others to pay for services they desire.

That is the core problem of all democratic systems and has nothing to do with lack of productivity growth in government (although of course it would be less of a problem if we had faster productivity growth overall).

There is no obvious solution to this problem, except that it will stop when it reaches some natural limit , as in parts of Europe.

