Rent-seeking is more efficient when legislators represent more people: Democracy Does Not Scale Well. An interesting proposed cure for this problem is "cellular democracy" (Wikipedia summary here, full paper here) by the LP's own Professor Fred Foldvary of Santa Clara University here in Silicon Valley. He advocates "a governance structure of cellular, bottom-up, multi-level voting, with public revenue flowing up from the lower to the upper levels". A more mainstream paper with analogous ideas was by Michael Greve of the American Enterprise Institute, stressing that the true genius of the U.S. Constitution is not the mix of rights it advocates, but rather the competition it created among the governmental branches and levels and regions.
Unfortunately, the LP's anarchist immune system has given it an intellectual blind spot for the fascinating and important academic literature related to design of government institutions. We're the party that best understands the insights of economics about the production and consumption of material goods, but we don't exhibit very much understanding of the radical and revolutionary insights that economics has recently revealed about the production and consumption of public policy.