Federalism and Subsidiarity: NOMOS LV

8. Subsidiarity and Robustness: Building the Adaptive Efficiency of Federal Systems

231 8 SUBSIDIARITY AND ROBUSTNESS: BUILDING THE ADAPTIVE EFFICIENCY OF FEDERAL SYSTEMS JENNA BEDNAR 1. Introduction Subsidiarity—a systemic predilection for locating authority at the most local level feasible—has long been admired for its ability to protect localized, diverse interests from the tyranny of a national majority. In this chapter, I suggest a novel benefit of subsidiarity : it boosts the adaptive efficiency of federal systems. To remain relevant, federal systems must adapt to meet changing circumstances . The process of adaptation involves both pushing federalism ’s boundaries in search of improved national-state balance and selecting beneficial changes and rejecting harmful ones, a job most efficiently conducted by a set of diverse, complementary safeguards. By drawing a distinction between policy subsidiarity and safeguard subsidiarity, I describe how each form of subsidiarity contributes to the process of constitutional adaptation and federal system robustness. Subsidiarity is, in a very real sense, the soul of federalism. Subsidiarity is the animating philosophy of the European Union, and it pervades the federalism doctrines of Canada and Germany.1 It is discreetly, but no less powerfully, the vision behind many other federations, including—the New Deal notwithstanding—the 232 Jenna Bednar United States. The federal system, with its layers of decision making , is the scaffold bearing the downward weight of this premise of decentralization. Federalism, in turn, is sustained by a system of safeguards. But why presume decentralization—why value subsidiarity? Support for it is generally tied to two effects: better satisfying the preferences of a diverse population and promoting efficient use of taxes by creating a horizontally competitive environment.2 Oates prescribes subsidiarity as one of the tenets of fiscal federalism. His decentralization theorem states: “In the absence of cost-savings from the centralized provision of a [local public] good and of interjurisdictional externalities, the level of welfare will always be at least as high (and typically higher) if Pareto-efficient levels of consumption are provided in each jurisdiction than in any single, uniform level of consumption that is maintained across all jurisdictions .”3 In this volume, Calabresi and Bickford underscore this reasoning, calling it the “Economics of Federalism.”4 As long as there are no policy spillovers, and as long as either people, firms, or capital can move, decentralization benefits society. Diverse, geographically clustered populations can create policy tailored to fit their own needs. And with a Tiebout mobile voter, local governments compete with one another for citizens (and their tax dollars ), driving down the likelihood of corruption and other inefficient practices. In these accounts, subsidiarity improves social welfare by satisfying diverse preferences and by encouraging efficient government. These are important features, but they address only the immediate , and static, policy environment. The distribution of national and state authorities is calibrated to optimize social welfare. If the policy environment changes, then a different weighting of national and state authorities may better serve the public. A theory of authority assignment in federations should satisfy not just efficiency but adaptive efficiency. In this chapter, I make the case for a third benefit of subsidiarity: it improves the adaptive efficiency of federal systems. In order to perform well over time and to recover from shocks and changing circumstances, federations must adapt. Adaptation requires exploration of the boundaries of federalism and a system of diverse, complementary safeguards to determine whether alterations to Subsidiarity and Robustness 233 the boundaries represent improvement. Subsidiarity contributes to that process in two ways: it diversifies the constitutional modifications tested, and it increases the range of interpretive signals used in judging the advantage of the modifications. I will lay out the model of federal robustness and then in separate sections describe subsidiarity’s two roles in constitutional adaptation: through policy subsidiarity, it can promote experimentation , and through safeguard subsidiarity, it multiplies the perspectives that judge the acceptability of new policies, reducing the likelihood of harmful authority migration. The chapter offers a positive justification for subsidiarity, invoking a theory of system robustness and adaptive efficiency. 2. Robust Federal Design A constitution is a system blueprint; the government that it creates is composed of intersecting components shaped by the constitution , but with an effect that can only be understood in situ.5 It is akin to the DNA of an organism or the recipe for a cake. The components (legislature, executive, judiciary, electoral system, expressed rights, etc.), as well as the auxiliary institutions the constitution endows through these components (lobbyists, political parties, the...