He's right, I have to admit: every country with a population more than ~175M is pretty f-ed up somehow if you think about it.

It really makes me wonder if there's an actual scaling problem here. Just look at how much trouble large corporations have with inefficiency. Maybe humans just aren't capable yet of making extremely large organizations work well.

No, but we shouldn't assume that solutions that work in small countries are going to work for large countries. In particular, I don't expect that the 5th percentile standard of living is going to be as high in large countries as it is in wealthy small countries. We should be looking to solve problems in our own ways instead of naively trying to imitate the way that small wealthy countries work.