Subsidiarity is overrated?

Subsidiarity is the political principle holding that whenever a decision can be made at more than one level of governance, we should prefer to make the decision at the more local level. In the American context, federalism is an approach to implementing subsidiarity.

The problem comes when local governments compete with one another to make themselves increasingly friendly to businesses, as we see in the attempt to attract the planned new Amazon campus. Special tax breaks, subsidies, and favors proliferate - ironically - for the largest players in the market. Small businesses and startups just just don’t have the same kind of political power; in effect subsidiarity ends up meaning not smallness, but bigness.

The ability of local governments to offer tax breaks to attract corporations should be withdrawn. Its effects might be locally good, perhaps, but considered globally the race to attract the next big thing is not a net benefit. It was going to go somewhere in any case.

And given that so many municipalities are offering so many favors, the locally beneficial effects are probably substantially dissipated anyway. What’s gained when one set of proposed favors succeeds will be lost the next time around when another city outbids you.

All that’s left are the distortions to the tax base. These distortions further entrench incumbents by shifting the tax burden away from the well-connected. An impartial government, a government of laws and not men, would not behave this way.