December 2001
The Fundamentals of Democratic Reform—Part III, Subsidiarity
by Gordon Gibson
This is the third in a series of articles on democratic reform. The first two made several fundamental points. The most important is this: Democracy is not equal to freedom, though the words are often used interchangeably in sloppy speech. Democracy, which is really the institutionalized coercion of minorities, may indeed work against freedom. It is, nonetheless, if carefully constrained, the best control system we have where government activity is required.
The articles pointed out that because of this inherent tension between democracy and freedom, a first principle of democratic reform is minimizing the size of government. And they argued that where reform is required to the institutions of democracy, as is surely the case in Canada, the watchwords must be humility, caution, and clarity of intent. The Law of Unintended Consequences is nowhere more powerful than in constitutional matters, and yet the Law of Equal and Opposite Reaction acts to guard the status quo, and must be overcome for true reform.
This article will deal with the design principle of subsidiarity and the distribution and division of governmental powers among various power centres. Future articles will deal with checks and balances within power centres, but as with the first principle of keeping government activity overall as small as possible, this second principle of division of power immensely simplifies the control of government by building in limits, and competition, and minimizing the size of mistake any single power centre can make.
"Subsidiarity" is a word much used by the architects of the European Union, though curiously the principle is often violated there. Subsidiarity is the concept that decisions should be taken by the smallest decision-making authority with the information, resources, and enforcement ability to take them. A basic rule of subsidiarity is that the onus of proof is on those who would move any given power "upstairs."
The more familiar concepts of "decentralization" and "federalism" are encompassed by the idea of subsidiarity, but it is a broader way of thinking about things. "Decentralization" is a one-way street of downward devolution, but sometimes centralization instead may be the right way to go. (It is ridiculous, for example, that our federal government does not have the required power to enforce interprovincial free trade in Canada.)
"Federalism," as we use the word, is restricted to the federal and provincial orders of government, but in fact other actors—towns and cities, or regional districts, or even international agencies—may be the better decision makers in particular areas.
Subsidiarity is an idea that is philosophically harmonious with liberty and freedom, unlike, for example, the legal foundation of Canadian authority, which is that sovereignty resides in the Crown or the state. Subsidiarity, properly understood, sees the individual as the sovereign, as the fundamental decision-making unit, with all "higher" authorities drawing their legitimacy only from upward delegation.
Thus the fundamental unit is the citizen. He or she may delegate powers upward to the family, the community, the city, the regional district, the province, the central government, NAFTA, the WTO or even the United Nations, but the legitimacy that underpins those powers is always on sufferance, with the ultimate sovereigns—individual citizens— always free to withdraw powers, or change the levels or executives exercising them.
Of course, this is theory. In practice, power, once ceded, is extremely difficult to retrieve, and power centres, once created, invariably act to extend their powers and the domain in which they may be exercised. In practice, individuals have almost no chance of changing things, except by one of two devices.
One is the ability to act in common with other like-minded individuals. The other is to balance the great forces in play so that the individual may play off one force against another, whether by "voice"—direct influence—or "exit"—the ability to go somewhere else more congenial.
Thus, a major consideration in the actual design of subsidiarity systems is to enhance the opportunity of individual power whereby people can act in common with each other, or use the balance of power, or, in extremis simply "vote with their feet." In practical terms, that means a bias in favour of smaller decision-making units, for one has much more clout with City Hall, say, than with Ottawa. One also has a better chance of acting with "like-minded people" in a smaller jurisdiction, where one can actually know and communicate with a significant fraction of the citizenry. Thus, one might often decide that while a concentration and centralization of power might be more "efficient" in other ways, citizen control considerations over-rule such arguments in favour of a smaller, less "efficient" local rule.
In practical terms that also means a proliferation of units of the same hierarchical level—lots of cities rather than "megacities," lots of provinces rather than a few large provinces, so that mobility, or the "exit" option, has real meaning.
But to demonstrate again that things are never simple, a regime of too many, too small provinces inevitably escalates the power of the central authority. The United States central government has no giants (in relative terms) such as Ontario and Quebec to deal with, and thus Washington, DC finds centralization to be an easier thing than does Ottawa, notwithstanding the fact that the Canadian constitution was explicitly designed to be centralist, and the American version to be decentralist. Through an irony of history, the framers of the US version could not have guessed that the electorate would force a constitutional amendment removing the power to appoint senators from state governments (and thus significantly weakening the control of the states over Washington), nor did Sir John A. and his colleagues foresee that the growth in party discipline in the provinces, and the rulings of the British Privy Council (Canada's highest court until 1950) would give premiers considerably more power.
But the complexity does not detract from the overall lesson—division of power enhances freedoms.
The other matter to be addressed in designing subsidiarity systems is that of inherent economies of scale versus the locus of knowledge. Readers of this journal will be familiar with the Hayekian thesis that knowledge is essentially local and distributed, which is why the voluntary market is more efficient than a centrally-planned system. On the other hand, large governments are likely to be much more efficient at extractive things like collecting taxes, and scalar things like buying national defense. World-wide organizations are likely to be best at restraining individual governments from interfering with global rights like the freedom to trade.
Detailed considerations for the division of power are beyond the scope of this article, though (for Canadian purposes) I have addressed them in The Fraser Institute book, Thirty Million Musketeers.
As important as power distribution are issues of communication and coordination among governing agencies, and issues of accountability and transparency vis à vis the citizenry. These and other issues will be addressed in future articles.
For current purposes the message is this: subsidiarity is one of the most powerful organizing concepts for those concerned with maximal freedom and efficiency at any given level of governmental activity, and thus one of the matters always to be kept in mind when considering proposals for democratic reform.
Gordon Gibson (gordong@fraserinstitute.ca) has an MBA from Harvard and is The Fraser Institute’s Senior Fellow in Canadian Studies. He has served in the Prime Minister’s Office under Pierre Trudeau and as both an MLA and as leader of the BC Liberal Party (1975-79).
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