A total colapse of Domocracy

When I think of what the role of a government should be, what comes to mind is far different from what we've ended up with here in Canada, and in the USA. The government is supposed to be a body that acts in the best interests of the people on matters such as justice, safety, development, providing necessities, sustainability, providing a financial structure and things of that sort. All of those things can be provided on a very small scale. You could have a government that reprosents a very small population, and still be very successful, and yet, we have governments that are ruling vast areas, and millions of people. When dealing with such a wide variety of landscape, and cultures, you are going to have drastically different needs from a governing body, and yet, we get a blanket solution, that doesn't really meet the needs of the majority.
Take the USA for instance. 50% of the country wants Republicans to represent them and 50% want Democrats. The Dems and Reps have very different ideas on how the country should be run. Wouldn't it make sense to find out where the majority of Republican supporters live, and draw a line, separating them from the Democrat majority area, allowing each area to have their desired government? Instead of a constant battle between the two parties, each could rule the area that supports them. Wouldn't that make a far higher percentage of the public happier with their government? If that would work, why not break it down smaller? Why not have each state be their own country with it's own interests, and own way of governing. I know there would be some kinks to iron out, but the way the system is now, has more than a few kinks to iron out.
If things were on a smaller scale, there would be more accountability. You couldn't rely on votes from people all over the country, you would have to impress the people right at home, in your state, and make sure you keep them happy, or you'd be voted out.
I find that when dealing with the federal government, I am constantly frustrated, and feel my tax dollars aren't going to where I'd like to see them go. I think the federal government is very inefficient, and wasteful of resources. Mind you, the BC provincial government seems equally incompetent. I'm glad the city I live in does its best to separate itself from the provincial government. They opt to use their own police force instead of the RCMP, and are trying to get out of the Greater Vancouver Regional District, so they can run their own hospitals and such. Why are police and hospitals something that needs to be run on a provincial or federal level? A police officer that lives in the city he works in probably knows more of the problem areas, knows the culture, and knows they layout. Why send someone from the other side of the country, to do that job? They might not speak the same language, they might not understand procedures or happening that are common place in that particular city. Not to mention it cost more money to uproot someone, and train them to be able to work all over the country.  
A lot of small, successful companies fail after they try to expand. The reason for that is efficiency. As a small company expands, they need more space, more employees and more resources, which raises overhead, and it can be difficult to increase income in proportion to overhead. You might need to hire a manager, or secretary, when one wasn't needed before, and neither of those people are producing a product, so overhead goes up, but production only slightly increases. Or things that used to get done in house, now get subleted, to keep up with demand, increasing the cost of that procedure.
Smaller is better. What better way to control every aspect of something, than to have it small enough to to do yourself. The federal government has lost touch with the bulk of the population and no longer provides the service it is supposed to. The inefficiency is costing millions of dollars that are needed to help the country stay afloat, and help it's people. If you look at the percent of the population that is working in one way or another, for the government, you understand how wasteful the government is. If government was run on a much smaller scale, you could manage with fewer employees. There are too many Chiefs and not enough Indians, which is causing overlapping jobs and major delays in the ability to process anything, and it's costing us as tax payers.