Prince Charles: What a guy! What a boss! What?

Don't you just love Prince Charles? More to the point, wouldn't you like to work for him? The Prince is such a generous employer that he simply couldn't help himself when his closest aide resigned last week, under a cloud no bigger than a man's hand – but a cloud nonetheless.

Take a generous cheque! Have some help with the rent! What's this I have in my pocket? Good heavens, a nice little £100,000-a-year contract, just to get your new business of the ground!

In a brilliant piece of role reversal – the Prince of Wales is usually an enthusiastic recipient of free tiles for his bathroom and all that sort of thing – his personal assistant, Michael Fawcett, departed St James's Palace with his pockets crammed with royal largesse. The severance package comes on top of the presents Fawcett accepted from people keen to benefit from his royal connection, including a Rolex watch and membership of a £3,000-a-year club. Fawcett also received a Tiffany watch – for his other arm? – and a Cartier alarm clock, presumably in case both watches stopped and made him late for his gruelling duties at Prince Charles's side.

These, to judge by hugely entertaining pictures in last week's papers, included wearing the same silly suits as his employer and giving the Prince a helping hand as he performed intricate royal tasks such as walking along the street. When he accepted gifts, Fawcett clearly bent the rules forbidding presents from outsiders, even though Sir Michael Peat exonerated individuals in his report on the inner workings of the Prince's household. It was all the fault of the organisation, Peat concluded, even though Fawcett promptly chose to fall on his sword (possibly a gift from a Middle Eastern billionaire, although that has yet to be established).

The Prince's generosity to Fawcett will astonish anyone who is aware of the meagre wages habitually paid to royal servants, some of whom have to moonlight in other jobs to make ends meet. Such insights into the royal households usually emerge in books and articles published abroad, to avoid court action here, but the 111 pages of the Peat report reveal a state of affairs that is as hilarious as it is disgraceful. Their contents have been described as seamy, scandalous and "hugely damaging" – the latter a quote from the royal biographer Robert Lacey, who concluded on Friday that "most of the popularity [the Prince] clawed back in recent years has been eroded".

Peat's report paints a picture of an organisation where envy, gossip, greed and petty rivalries were the order of the day. The tone was set at the top, with Fawcett attracting the nickname The Fence as his role in flogging unwanted gifts on behalf of his employer became known. Proper records were not kept, capital-gains tax was not paid and unwanted presents were sold or exchanged, as if the Prince had been given the wrong size jumper from Marks & Spencer. Most damningly, an allegation of male rape was not treated with sufficient seriousness because the alleged victim was supported by the Prince's nemesis, Diana, Princess of Wales.

Much of this emerged when Paul Burrell, the Princess's butler, was cleared of stealing a long list of her possessions last year; more light was shed last week on Prince Charles's role in failing to stop that disastrous, unnecessary and (for the taxpayer) expensive prosecution. But the killer blows to the Prince's reputation have been inflicted not just by last week's report but by an accretion of detail over a period of months. What a study of Peat's report adds is the inescapable conclusion that a man so evidently incapable of running his own household could scarcely be less suited to becoming the next head of state.

The heir to the throne emerges not as pathetic, although I am sure he is very sorry for himself this morning, but as unable or unwilling to exist in the modern world. For a man of his age, the Prince leads a lifestyle which can best be described as infantile, depending on servants to perform the simplest everyday chores. Fawcett was to Charles what Burrell was to Diana, a creepy combination of flunky, nanny and confidant, with the consequence that the Prince is now fixed in the public imagination as an overgrown baby who cannot even squeeze his own toothpaste.

At the same time, he shows a keen sense of self-interest when he sees a chance to make a few bob on the side, on one occasion part-exchanging an oriental carpet worth £10,000 – a generous gift, one might think – for a more expensive rug. For a man of such wealth to be so money-grubbing is bad enough, yet Charles also appears to have had an imperfect understanding of his liabilities to Her Majesty's tax inspectors as a consequence of such transactions. His irresponsibility in this area is matched by a misplaced confidence in his intellectual capacities, which has led him to bombard government ministers with reactionary advice on everything from political correctness to rural pursuits.

The thread that ties all this behaviour together is an invincible sense of entitlement, instilled in the Prince since childhood. Along with the folly of drawing heads of state from such a restricted gene pool, which inevitably produces duds such as Charles from time to time, it is one of the most compelling arguments against the British monarchy. To put it bluntly, the Prince does not even realise how dim he is. What's more, he has surrounded himself with sycophants and dependants who have an interest in keeping this knowledge from him.

Stripped of rank and wealth, the Prince would be lucky to get a letter published in The Daily Telegraph, yet he has been encouraged to think of himself as a bit of a philosopher. How Diana tolerated this self-important bore is hard to imagine, and it is ironic that these two people, at loggerheads on everything else, should have jointly inflicted such damage on the institution they claimed to love. Diana is gone but vivat Charles, the best argument against the hereditary principle that ardent republicans such as me could ever wish for.