I think you're looking at an effect instead of a cause. The main reason for the desire for a small government is not some inherent and absolute obsession with smallness, but because of the belief that larger governments are incapable of effectively utilizing their power (for reasons beyond just incompetence), are prone to inevitable abuses, and so forth. And that belief itself is not simply ideological, but based on history through most of all time.
Even with rehab versus punishment - it's the same story. The view isn't that punishment is inherently superior, but simply that rehabilitation is more of an ideal than a reality, and that typical appeals to places like Norway - a relatively homogenous and extremely wealthy microstate - don't necessarily translate well to large diverse societies, especially ones where there are substantial chunks of society that adopt cultures that glorify criminality.
Even with rehab versus punishment - it's the same story. The view isn't that punishment is inherently superior, but simply that rehabilitation is more of an ideal than a reality, and that typical appeals to places like Norway - a relatively homogenous and extremely wealthy microstate - don't necessarily translate well to large diverse societies, especially ones where there are substantial chunks of society that adopt cultures that glorify criminality.