Centralization ensures that mistakes hit the maximum number of people. Centralization
Be wary of centralization, especially when there is no skin in the game ensuring that the incentives of the center coincide with those of the peripheries. Centralization Skin in the Game
A major problem of centralization is the lack of granularity. A central government cannot possibly review granular data and cannot enact policies that are granular enough to be effective everywhere. Instead, we get one-fits-all. Hence the importance of bringing down decision making closer to the people involved. For example, if a decision can be taken at the province or state level, it should be taken at the province level. Localism Centralization
This tension between what happens on average and what happens locally is the main problem of centralization. Centralized organizations must rely on averages. They cannot make thousands of micro-decisions, each appropriate for a given corner of the world. They must take a single, one-fits-all decision. Even if these decisions work on average, they might have a terrible impact on some local populations. Centralized organizations make more sense in an ergodic world than in a non-ergodic one. Centralization