There is a penalty for shrinkage. No one argued that. I argued that once you're on top, there is really nothing stopping you. In every Paradox game, there is stuff you have to worry about that uniquely exists on the top, and Crusader Kings is the best example of that. The only possible drawback is unhappiness and social policies, but even those can be overcome by sheer scale. Hopefully, BNW will fix this by increasing interdepency, something that does not exist in Civilization V on a meaningful level.