James d. Gwartney

Constitutional Principles for Prosperity
a. Decentralization such that economic policy decisions are, to the maximum extent
possible, made at the level of government closest to those affected
Sometimes referred to as subsidiarity
(?)
, this principle is found in the Tenth

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Amendment to the United States Constitution, which states, “The powers not
delegated to the United States by the Constitution, nor prohibited by it to the States,
are reserved to the States respectively, or to the people.” Subsidiarity is also “a
general principle of European Union law” under the 1992 Treaty of Maastricht. As
modified by the Lisbon Treaty of 2009 “under the principle of subsidiarity, in areas
which do not fall within its exclusive competence, the Union shall act only if and in
so far as the objectives of the proposed action cannot be sufficiently achieved by
Member States, either at the central level or at the regional or local level…”
The logic of subsidiarity stems from several sources. The more direct contact
between government and citizens at the local rather than national (or supranational)
level allows better discovery of needs and desires. As discussed earlier, competition
among governments results in incentives to better serve citizens. As a result of
different local groups of citizens being incentivized to address common problems,
the diversity of approaches to problems utilized by different localities will increase
the odds that effective policies will be discovered and adopted by other
governmental units.
While the specific term “subsidiarity” arose from Pope Pius XI’s encyclical
Quadragesimo anno in the early twentieth century, the idea was understood well
before the term came into wide use. Observing early nineteenth-century America,
Alexis de Tocqueville concluded:
Decentralization has, not only an administrative value, but also a
civic dimension, since it increases the opportunities for citizens to
take interest in public affairs; it makes them get accustomed to using
freedom. And from the accumulation of these local, active, persnickety
freedoms, is born the most efficient counterweight against the claims
of the central government, even if it were supported by an impersonal,
collective will.
(84)
b. Checks and balances that keep governmental power clearly divided across

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