Increasingly obvious perils of government debt have given rise to public concern, and even alarm. Though some people argue the alarm is exaggerated, there is a growing segment of the population that is thinking long and hard about the future of our country in ways we have not seen before. In this article, I discuss the principled basis for practical solutions. In particular, I argue the principle of subsidiarity should be central in our deliberations as we forge ahead.
The Oxford English Dictionary defines subsidiarity as “the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level.” One notes the variant “subsidiary” is used in the definition, hardly the proper way to define a term, but perhaps revelatory of the difficulty we have with a principle that is often lacking in serious deliberations of public life.
The state violates subsidiarity is when it takes on complex problems that smaller units can resolve on their own. This is a crucial shift and one that generally reflects an overly pessimistic view of human nature—that people don’t know what is good for them—and an overly optimistic view of the state and its ability to plan and execute.
In no area do people expect the state to apply the principle of subsidiarity more than in the regulation of commerce through fiscal and monetary policy: what to tax, how to tax, and how much and whom to tax, and how to control money. And whereas monetary and fiscal policy are intertwined, fiscal policies that lessen the tax burden generally support the individual, the family, business, and social organizations—and are therefore more aligned with the principle of subsidiarity.