If you want to see what a loose confederation of provinces, etc. looks like, how it doesn't work but instead creates and encourages corruption & despotic warlords, take a hard look at FATA, Waziristan, the NWFP, all in Pakistan.
Mr. Singleton, what do you think about the theory that the overall state of FATA and the NWFP is not due to decentralization, but rather excessive centralization on the part of the Pakistani state?

A friend of mine's father (a former Senator of Pakistan for the PPP) once expounded at great length to me on how federalism in Pakistan was a dead letter due to the Pakistani military's fondness for coups. Military governments naturally centralized power rather than distributed it outwards to the provinces, and Pakistan has spent as much time under such governments as under civilian rule. Sindh's complaints about inequitable distribution of funds have existed since Partition, and the NWFP and Balochistan have been more often treated like colonies rather than actual provinces with rights and representations, especially given how often their provincial governments were dismissed by the center. With an eye towards exploitation of Balochistan's resources and simple maintenance of control in the NWFP rather than making either integral parts of the state, Pakistan's center instead created violent insurgencies in both.