Federalism and Subsidiarity: Perspectives from Law

We live in an Age of Federalism. All over the world nation states are withering away as free trade and defense functions are assumed by transnational entities and as power is devolved to local entities. As nation states disappear, a central question arises as to what functions each level of government ought to perform in federal unions? One response is that federations ought to be governed by the principle of subsidiarity: i.e., that matters ought to be decided at the lowest or least centralized level of government that is competent to handle a problem. We agree with this view and think that constitutional federalism ought to be enforced by courts exercising the power of judicial review. We summarize the economics of federalism and of subsidiarity and offer an explanation as to when activities are best conducted at a lower level of government and when they are best conducted at a higher level of government. We argue that the principle of subsidiarity suggests power ought to be left presumptively at the State level unless the advocates of federal action can show an economics of federalism need for national intervention. We offer two perspectives from law on the federalism-subsidiarity debate. First, we address the U.S. Constitution’s enumeration of national powers. We consider the origins of the enumeration of federal power in the U.S. Constitution and the Framers’ rudimentary instincts as to the economics of federalism, as well as the U.S. Supreme Court’s case law construing the Necessary and Proper Clause of the U.S. Constitution. We conclude that President Obama’s 2010 National Health Care law is unconstitutional when analyzed with the economics of federalism in mind. Second, we address the national constraints the Fourteenth Amendment to the U.S. Constitution imposes on the States -- again in light of the economics of federalism and of subsidiarity. We consider whether and to what degree the Fourteenth Amendment incorporates the Bill of Rights and applies it against the States -- a question the Supreme Court recently addressed in McDonald v. City of Chicago. The Court held in McDonald that the Second Amendment right to keep and bear arms was incorporated – a conclusion we agree with. We argue, however, against most forms of new national rights creation by the Supreme Court on economics of federalism grounds. We conclude by showing that the European constitutional ideas of subsidiarity and a margin of appreciation are directly relevant to U.S. constitutional law. We argue for learning from these doctrines as U.S. constitutional federalism develops in the years ahead.