I read a business book several years ago that studied companies that had been at the top of their industry for a time but had then been overtaken by a much smaller competitor. The study was trying to determine what caused their downfall and how they could be blindsided by a competitor that had far fewer resources. The conclusion from this study is that smaller organizations work more efficiently, they are able to react to changes in the marketplace in a more timely manner, and tend to foster more innovation. The recommendation to companies is that they need to operate as a group of small companies and when they get too big, to spin off certain parts of their company into smaller business units. These small units should act like any other small company by securing their own capital, being responsible for profit and loss, and managing their human resources. The larger company can set certain guidelines for all of these but each smaller business units is responsible for running their business.
That lesson applies to our government as well. Local governments tend to be more efficient, better able to react to changes in the local community, and more creative in developing solutions to problems. When everything is being directed by a large central government that is many layers removed from the individual citizen, we end up with a system that delivers services in a very inefficient manner. We also introduce many levels in which corruption can enter into the system. The federal government can and should set some guidelines to enforce some consistency but they should be careful in adding so much regulation that it inhibits innovation and adds excessive costs from regulatory enforcement. Local governments also are much closer to the individual citizen which helps keep everyone honest.
Our founders realized that a central government was necessary but they also set up a system where the states had significant control over their governance. We need to get back to their original model of a smaller federal government and more control at the state and local levels.