Is Local Better?

Ordinarily, I think that government or management is best at the lowest level possible. A story from Steven Malanga shakes my faith in that principle a little bit. The article is a summary of the large-scale corruption in New York, with "2,522 of its officials having been convicted of misdeeds since 1976."

The architects of those efforts sent billions of federal dollars into neighborhood programs to alleviate poverty, funneling the money to local groups that Washington bureaucrats assumed had the local knowledge necessary to uplift communities.

I have hope in the same premise: local groups have local knowledge to solve problems better than one-size-fits-all solutions. I wonder what could have been done to prevent this sort of corruption at a local level. Is it possible without people everywhere expecting integrity from everyone they deal with?