No, there is balance between that is optimal. If the State gets too large it damages the free market. If the State gets too small markets can't operate and things degrade.
This is an example of argumentum ad temperantiam.
http://wiki.ironchariots.org/index.php?title=Argumentum_ad_temperantiamYou have asserted that when the state gets too small "things degrade". Defend your assertion.