I think this is a huge problem with democracy as well. The larger a country, the worse democracy works. Any apparatus of power or wealth attracts parasites only interested in exploiting it. And the larger the lever, the more profit from manipulating it. And the larger the potential gain the more investment costs can you justify.
This isn’t necessarily an argument for “states rights” or federation though, with “divide and conquer” strategies you can copy and paste the same strategy to multiple instances. If there is monetary gain to be had, there will always be an unrelenting force trying to exploit it.