I wonder whether there's a "nothing stops this train" aspect to all centralised systems, and to state systems in particular. The state may even realise that ever increasing surveillance ends up doing more harm than good, but by its nature, it's an impersonal system, and has no effective means to bring about stronger communities (where it tries, it's counterproductive). So, when attempting to solve problems, it just keeps pulling harder on the system levers it can control, until eventually something breaks.