Anyway, I think you have the start of an interesting look at institutional failure, and I look forward to reading the next installment. Personally, I think a huge part of the problem, and what I would like to see explored in greater detail from journalists who cover government, and especially budget fights is this:

As people shy away from the complexity, control is gradually ceded to a small coterie of insiders who grow more fluent with the complexity and increasingly (first unconsciously, later deliberately) work to maintain a ‘moat’ around their influence. This is how our institutions get captured: insensitivity to low ownership, being seen as an externality and oh-so-gradually creeping complexity. To round out the toxic cocktail, capture gives insiders further incentives to deliberately make rules more complex and inaccessible to latecomers.

We always hear of lobbying from without, but rarely of lobbying from within, an equally toxic problem. Moat building, as you call it, tends to crystallize bad policy, which leads to even more top down control being required to keep the lights on.