Matt Yglesias has a number of long-running themes on his blog. Two of them are fairly interrelated: Local government has far more impact on people's day-to-day lives (mostly through zoning and business and parking regulation) than most people recognize, and Americans tend to vote on far more issues, both in terms of direct ballot issues and electing people to office, than voters are willing to care about. Those themes collide in this post by Yglesias guest-blogger Jamelle Bouie. Bouie argues that state and local government officials are far more susceptible to corruption than elected federal officials. I disagree with his aside in the final sentence that Congress is less corrupt than we think it is (see the Lessig post from a few weeks ago on that), but generally, I think he has a good point.
There typically seem to be two motivating ideas behind pushing government authority towards state and local government: one size doesn't always fit all and vesting power locally will increase accountability. I think there's often a lot to be said for one size doesn't fit all. But I tend to agree with the Yglesias/Bouie position that localism does not increase accountability. It certainly increases the power of individual voters (you now represent 1 out of the 100,000 votes in your city instead of 1 out of 300,000,000 votes in the nation), but that increased influence has to compete with a huge gap in public attention. Not that many people truly pay to attention to national politics, but many people sort of pay attention to national politics, while almost no one pays any attention to local politics. And with the death of local newspapers (and the atrocious quality of local TV news), even if you wanted to invest in local politics, it's not easy to find good information. I think there are starting to be more blogs focused on the topic of local government (e.g., this excellent Arlington blog), but I'm not sure how widespread this sort of thing is.
So it would seem to make sense that power should typically be pushed towards the federal level unless it doesn't make sense from an administrative standpoint (e.g., zoning) or there is a compelling one-size-doesn't-fit-all justification for keeping it local. The counterpoint is to look at how absurdly dysfunctional the federal government is at present. But I see that as a separate and distinct problem in that, if we don't solve that problem we will all be seriously fucked regardless of how we distribute power across local, state, and federal government.