Organising an examination for Britain's teenagers should not be too tough a job. For half a century, local government managed it. Yet from the moment testing was nationalised under the Tories it went berserk. Ministers floundered, claiming to "need to know" everything about the nation's young. In the decade from its introduction by John Patten in 1993, the cost of testing and league tables rose from £10m to £610m. Each July saw a flood of "exam fiasco" stories. Nobody could agree over standards. A secretary of state - Estelle Morris - resigned, and officials and private companies came, went, resigned or were sacked.

Last summer the testing regime reached its nadir. Nobody had been found in all Britain up to the task of running an attainment test for 14-year-olds. The "market price" for such a paragon was eventually fixed at a salary of £328,000, a flat in west London, membership of a yacht club in Sydney harbour and six club-class tickets round the world. This obscene reward went to an Australian, Ken Boston, who proved unable to do the job without spending a further £156m on an American company, ETS (Educational Testing Services). In July hundreds of thousands of exam papers were delayed or improperly marked, and another fiasco was declared as such by Lord Sutherland in his Sats inquiry report last night.

Exams are not alone. Yesterday's newspapers contained tales of woe from the following corners of the public sector: a pensions overpayment, a BBC audience voting farce, a transport department efficiency scam and a knife-crime statistics shocker. Only the ID card and NHS computer shambles disappeared briefly from the spotlight.

Each of these stories demonstrated the inability of large organisations to handle simple bureaucratic tasks. Yesterday there was no suggestion that blame for the Sats racket should attach to any minister, let alone the schools one, Ed Balls. The reason why public-service privatisation, once excoriated by Labour, is now so popular is that it privatises blame, in this case to Australia.

In all these cases the one thing never contemplated by politicians or commentators is that the fault might lie in bigness. The axiom of government by London, from London and for the benefit of London, is that any service must be better if it gets bigger, more centralised, more costly, more computerised and preferably run by our friends in the City. Schumacher's small-is-beautiful is for hippies, hobbits and yesterday.

Every survey of social contentment or satisfaction with public services has the same message. Small states perform better than big ones. The superiority of New Zealand, Singapore, Norway, Switzerland or the Netherlands might cause some to ask whether Britain's poor record might be due to diseconomies of scale, but no. I once asked an NHS manager why the Danish health service scored so much higher on every count than Britain's. He called the question ridiculous, "because Denmark is a small country". To him, big means worse, but nothing can be done about it.

Anyone inquiring after the £12bn NHS computer will know that this useless piece of equipment has nothing to do with efficiency or public benefit. It is merely the ultimate macho investment, a vast contract suitable for real men to play with, bespeaking big jobs for ex-officials and big freebies for ministers. The computer is to NHS bosses what ID cards are to the Home Office and aircraft carriers are to the MoD. They confer virility on ministers and managers alike, more so than equipping the poor bloody infantry on their respective frontlines. Gordon Brown at the weekend lauded the "bravery" of dead marines in Afghanistan, ignoring the added bravery required because he's blown billions on jets, submarines and aircraft carriers rather than boring field armour.

Yesterday's revelation of 30 years of overpaid public service pensions arose from the familiar mix of computers, privatisation (to a firm called Xafinity Paymaster) and plain carelessness with public money. When the tax credit fiasco broke three years ago, the fault lay in Brown's refusal to listen to the warnings of his officials. To him the risk of disaster was outweighed by the short-term glory of the initiative and, anyway, someone else was paying. The same hubris caused last week's fiddling of knife-crime statistics. There is no way of sensibly collating every "knife-carrying incident" in Britain but who cares, as long as it can be spun into a story?

The transport department fiasco was occasioned by someone being sold a computer that promised to "save £57m on shared corporate services". Who could have believed such snake-oil salesmanship? The computer cost £121m and might just save £40m, a loss of £81m. According to a Commons report, this "stupendous incompetence" has led to not a single official being "dismissed or properly held accountable".

This casual approach to taxpayers' money has blossomed since the fad for privatising public administration began in the early 90s. It is now embedded in Whitehall's DNA. Like the salaries paid to "public servants" such as Boston or the heads of the BBC, such expenditure defies reason. It reflects the transfer of William Whyte's "organisation man" from private corporate to public sectors, except that the associated perks are underwritten by the taxpayer.

Britain's audit and regulatory regime, feeble enough in the City, is near non-existent in the public sector, because the National Audit Office and the Commons Public Accounts Committee are overborne by executive arrogance by the fact that ministers are never about long enough to carry the can.

Having interviewed people in power over the years, I am intrigued that those who accept the failings of over-centralisation declare themselves rigid with fear at the prospect of taking corrective action. David Miliband, when schools minister, issued 3,840 pages of control-freak instructions to head-teachers in a single year. When chided for this he added another one headed "bureaucracy-cutting tool-kit".

Those with power never surrender it. No matter how many Whitehall fiascos hit the headlines, the prime minister and the civil service chief, Sir Gus O'Donnell, will do nothing. They cannot do small. The challenge is not intellectual, but one of professional aggrandisement. As they slide into this slime of public waste, the irony of democracy is that the only remedy appears to lie in its antithesis, revolution.

simon.jenkins@theguardian.com