CTL, you praised local officials as being efficient and dedicated.(after full disclosure on your negia). In my experience on both sides of the desk the inefficiency and laziness that sometimes crosses the line of robbery of bureaucrats is inversely proportional to the level of government from local to national.Moreover, contrary to what you claim, even without these problems a central government cannot give the individual solutions that are necessary but play to the lowest common denominator.
Perhaps because of this Rambam only enumerates four jobs for the central government: national security, fighting crime, upholding Torah and meting out justice (although each province and locality also had its own system of battei din, as Rambam himself discusses at the beginning Hilchot Sanhedrin). Tzedaka is given over to local communities (and, in fact, Rav Cherlow wrote in the name of Rav Kook that this is because of the inability of a central government’s clerks to give each individual an appropriate solution).