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weregamer
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That latter is the "Heavy Foot of Government" rule, probably the single most controversial rule in the game. It's supposed to represent the accumulation of cliques, bureaucracies, and other inefficient substructures in a large government, but its growth does not actually depend on the size of your empire, and it ends up just being an artificial and arbitrary reduction to everybody's ability to improve colonies and build new toys. Each civ has its own HFoG rating, and you can see them on the Victory tab among the other stats.
This extra multiplier gets applied to everything you do. It grows over time, with only a few things (a couple of random events, a handful of technologies) causing a slight reduction. It goes up faster depending on your government type and oppressometer setting. And of course, with the standard values for spy success, you can't survive without the highest oppressometer setting your people will tolerate.
You can cause a reduction in your own HFoG by having a "governmental purge". Change your government type for one turn, then change it back (assuming you've already picked the government type in your series that you wanted back on Turn 1). Your Government DEAs will shut down (lose their unrest bonuses) for a few turns so you'll have some unrest problems for that long, but you'll have reduced your HFoG substantially. It will of course start to creep up again. (This, and the other forms of HFoG reduction, actually reduce the amount by which your HFoG exceeds 1.0, so you can never get things cheaper than base costs due to HFoG.)
But the computer players don't know about this trick, so they are doomed to ever-higher HFoG. If you do use this trick, you are getting a big unbalanced advantage over them. But if you don't, you will have a heck of a time building lots of big shiny ships with big shiny guns, which many of us really like to do in this sort of game. I haven't tried it myself yet (plan to next game), but this argument leads to the idea of tweaking the appropriate spreadsheet files to reduce or probably just remove all the ways that HFoG increases.
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