Is a national or state government too centralized?

We all know that a world-government will not be possible without a dictatorship, and that the bigger and more centralized a government becomes, the worse it gets for the citizens. But, is a national (federal) and state ("local") governments too centralized, which allows for corruption to become rampant and widespread? Do governments and people only thrive under city municipalities, where the government is more transparent to the people and can deal with their needs much better than a state or federal government can?