I know this issue has been discussed before, but I have not yet seen anybody suggest a solution I liked.
The problem is that since military, social, and research rates MUST add up to 100%, 2/3 of your industrial capacity is always wasted, no matter how you adjust the sliders.
My solution would be to remove the industrial capacity slider, and make the military, social, and research rates independent of each other, so they can ALL go to 100%. This way, there would be no wasted industrial capacity when each slider is at 100%, but you would still have the control to reduce spending in any of the three areas to best fit your current situation.
I read someone suggest that military and social production should be merged, but I find that during wartime I sometimes want to stop all social production to focus on getting a quick fleet. Merging social and military would make it VERY tedious to manually cancel each social project, then start them up again after I have my military fleet.
I have also read posts suggesting that it is intended to realistically simulate government efficiency, but my response is: (1) Yes government can be inefficient, but that particular mechanic of inefficiency does not even remotely compare to the types of inefficiency in the real world. (2) Sometimes realism is good for a game, but not when it takes away user control in such an arbitrary manner. (3) A dictatorship CAN be very efficient, because there is one person who can cut through ALL the red tape.