The devs already said that it will be tweaked. That said, morale/happiness is almost a non factor right now as it only effects how your planet fights or how your influence grows. Both of which can be heavily influenced by other things.

It's only really an issue in the larger Galaxy sizes, in the smaller ones 1% per planet is pretty small and as has been said can easily be countered. All they reall need to do is add a scaling factor that reduces the per planet penalty as the Galaxy size is increased, since in bigger galaxies you expect empires to be bigger.

Yes hence my suggestion for a scaling factor based upon Galaxy Size, e.g. morale penalty for large empires becomes;

Morale Penalty = (NumberOfPlanetsOwned*scaling factor)

The scaling factor would be at it's max 1 on small maps and get progressively smaller as map size gets larger.

I believe what it's supposed to represent is the loss of cohesion in society as your empire gets larger, which is fine but on the bigger map size you need to scale the impact per planet down since you expect empires to be considerably bigger.

The exact scaling factor to use for different map sizes would need balancing. 

I don't really agree that it's a bad design in itself, having a widely scattered population spread across lots of star systems, it would lead to a loss of social cohesion and respect for  central government, (unless your species had very different psychology from ours and they have an attribute for that). But hey we all have different opinions on these things.....it's just yours is clearly wrong  .

Seriously though some people will support this mechanic, some will hate it, but assuming they keep it I think it does need re-balancing on larger maps, which is why I make the suggestion.

If anything this mechanic should be a based on the distance from your empire capital planet.

Structures such as manufacturing capitals and research capitals could (if built on any other planet than your homeworld) mitigate this penalty.

It could then be an additive to influence, both positive and negative, bepending on the situation.

Personally I dont think its a bad idea, it means you have to consider a little more carefully about the planets you are colonising/invading and then 'nurse' them a bit more than the normal procedure of 'Upgrade those 3 buildings and terraform that tile and build a Solar Power Plant between these 2 factories' and forget about it for 30 turns.

When your talking distances on galactic scales anything outside your home system is very, very far. 

I also like this idea, it reminds of Sins of a Solar Empire and how loyalty degraded with distance, but local culture centers boosted this.

Why would people be upset with more and more citizens? Well a few possible reasons? In a highly educated democracy, every citizen added deludes your relative power. If I live in ancient Athens and vote, my vote is 1/20,000 in the US today theoretically my vote is 1/320,000,000 its effective weight of power is heavily diluted if I cared to think about it.

Not all the empires are democracies, and a much more natural reason, is simply that people are limited in the scope of how big a thing they can believe in, they may lose faith that their needs are really represented and cared for in such a large empire. Depending on the communication technology, cultural diversification becomes a real thing, and a lack of cohesion and civil war may result.

Just a couple of ideas. In general, the GalCiv universe has instant communication and very good travel times, such that, I agree its pretty unlikely for a morale penalty to occur just because the empire got bigger, maybe the assumption is, that every new planet is a economic drag on everyone else for a period of time. If the empire penalty eases up with time, I think that'd be very balanced. Especially if the large empire penalty was, well, large.

I think that there should be an "influence potential" generated by each planet and starbase calculated by the formula a/(1+(x/b )^2), where a would be the influence produced and b would be a scale factor that could increase with technology and buildings, with X the distance between a planet and a given point on the map. Based on its level at a particular planet, the total influence field generated by all planets in your empire would give a bonus to approval on that planet, not large enough to drown out completely the effects associated with increased population but nevertheless substantial. Additionally, the influence potential should be the means of calculating influence spread throughout the galaxy, which shouldn't be too difficult to implement by release.

By implementing this feature, it would be possible to restrict over-expansion by conquest and colony rush, without forcing players to accept the linear "large empire penalty". Furthermore, the influence potential concept would consider not only distance from the civilization capital, but from all other planets in the civilization, giving other important and populous but nevertheless non-capital worlds importance in approval.

In that case we should give a significant nerf to influence. Planet approval should start at a low base level and rise with the total influence potential, being unaffected by the large empire penalty as we know it. This would reduce massively the investment in approval that players have to make, provided that they don't overextend.