Yes, and the places on Earth that have those of the kind that would wipe out portions of it's own population for fear of rebellion are generally considered some of the worst places on the planet.
If by "works" you mean "Keeps those in power, in power" then yes. If you mean "works" as in "creates a functioning society that is able to grow and develop"...not so much.
It's funny, but at the end of the day, the Naruto world is basically a lot like the world in Metal Gear Solid 4. It basically boils down to "What if the world was run by a bunch of Private Military Corporations." Because that's essentially what the ninja villages are.