Centralization Is a Tool, Not a Value

A serious defender of freedom must be able to say an uncomfortable sentence: sometimes it makes sense to centralize.

  • Not everything can be decided at home.
  • Not every community has sufficient capacity.
  • Not every harm remains within a municipality.
  • Some functions lose their meaning when fragmented, and some emergencies require command, resources, and large-scale coordination.

Denying this would turn subsidiarity into dogma. And a liberal dogma is still a dogma.

The important question is not choosing between two absolutes—everything below or everything above—but knowing when a decision should move upward, to what level, for how long, and under what controls.

  • Centralization can protect freedom when it contains violence, enforces contracts, or prevents local conduct from harming third parties.
  • It can also destroy freedom when it turns a technical exception into a permanent project of power.

That is why we need criteria, not intentions.

The First Cause: Genuine Incapacity

A responsibility should move upward when the nearest level cannot perform it, even when it acts sensibly, receives adequate information, and has the right incentives.

The word “genuine” prevents many abuses. It is not enough for a higher administration to claim that it will manage better. Nor is it enough to compare the best imaginable result from above with the worst case that occurred below. There must be a structural limitation.

  • A small municipality cannot sustain on its own a highly specialized medical center that needs millions of potential users.
  • A family cannot organize air defense.
  • An isolated company cannot create a judicial system that binds competitors and customers equally.
  • A region cannot control an epidemic if people cross its borders every day.

In these cases, moving up in scale does not express moral distrust. It responds to an operational incapacity.

But even then, we should ask whether the answer requires replacing the lower level or merely supporting it.

  • A small municipality can share a fire service with other municipalities.
  • A local hospital can join a regional network without losing all of its management capacity.

Power can coordinate without absorbing.

Economies of Scale: An Advantage That Must Be Measured

Some services have a lower average cost as their scale increases. Sharing infrastructure, information systems, procurement, or technical knowledge can avoid expensive duplication.

However, “economy of scale” has become a password used to justify almost any concentration.

  • Scale also creates costs: distance, rigidity, slowness, uniformity, and reduced adaptability.
  • A large organization buys more cheaply, but it may buy the wrong thing for everyone.

The test must compare the full balance:

  • verifiable economic savings;
  • loss of local adaptation;
  • coordination costs;
  • monopoly risk;
  • ability to measure results;
  • less centralizing cooperative alternatives.

Moreover, a productive economy of scale does not necessarily imply political centralization.

  • Several entities can purchase together.
  • Different administrations can use a common platform.
  • Independent companies can share a standard.

The size of the solution and the size of power do not have to coincide.

Externalities: When Your Decision Is No Longer Yours Alone

Freedom includes the right to assume one’s own risks. It does not include the right to impose serious costs on third parties without their consent.

  • If a factory pollutes a river that crosses several regions, the decision no longer belongs only to the factory or to the municipality where it is located.
  • If someone smokes in an enclosed establishment, the smoke affects workers and customers.
  • If a contagious disease spreads rapidly, individual conduct changes other people’s risk.

Here there is a clear justification for intervention. But we still do not know which intervention is correct.

  • Information may be enough.
  • Sometimes a price that incorporates the cost works.
  • In other cases, civil liability, compulsory insurance, emission limits, or a ventilation rule may work.
  • A general prohibition should come after less intrusive measures have been explored, not before.

The existence of an externality opens the debate; it does not provide a blank check. We should also distrust unlimited externalities.

  • If every personal decision can be remotely connected to public spending, the state could regulate diet, exercise, sleep, leisure, and every risky behavior.
  • All of life would become an administrative matter.

To justify moving power upward, the harm must be significant, identifiable, and difficult to resolve through less coercive means.

Systemic Risks and Effects That Cross Borders

Some problems do not merely harm a specific third party. They can trigger cascading failures.

  • An interconnected electricity grid,
  • a financial system,
  • an epidemic,
  • water infrastructure, or
  • a strategic supply chain can transmit an error far from where it began.

Prevention and response require a broader view than that of the individual actor.

This argument is sound, but dangerous. “Systemic” can mean almost anything when used by someone seeking to expand their authority. That is why we must:

  • describe the transmission mechanism;
  • estimate its probability; and
  • compare the cost of intervention with the expected harm.

The COVID-19 pandemic showed both sides.

  • Higher-level coordination made it possible to mobilize information, procurement, research, and hospital capacity.
  • At the same time, some extraordinary measures were approved with incomplete information, weak controls, and highly unequal effects.

The lesson is not that centralization should never occur. The lesson is that an emergency does not remove the obligation to justify, review, and return power.

Asymmetric Information: Protecting Without Declaring Citizens Incapable

In some markets, one party knows much more than the other.

  • A patient cannot easily evaluate a medicine.
  • The average saver does not understand a bank’s solvency.
  • A homebuyer cannot inspect every structural element of a building.

That information imbalance may justify:

  • accreditation;
  • mandatory transparency;
  • audits;
  • guarantees; or
  • safety standards.

It does not justify claiming that government knows better what kind of life is right for each person.

Regulation should improve the ability to choose, not replace it by default.

  • A clear label increases autonomy.
  • A registry of professionals helps people compare.
  • An inspection prevents hidden harm.
  • By contrast, a single catalog of options may protect citizens from a bad decision at the cost of also preventing many good ones.

The criterion is simple:

  • legitimate intervention corrects information or fraud;
  • paternalistic intervention replaces preferences.

Functions That Do Not Easily Allow Fragmentation

There are areas in which centralization has an especially strong justification.

External defense requires common strategy, command, and resources. Fragmenting it among municipalities would be absurd.

Justice requires general rules, independent courts, and the ability to enforce decisions. Without a common arbiter, a contract is worth whatever the stronger party wants it to be worth.

The police and the legitimate monopoly on force require coordination and democratic controls. The alternative is not freedom, but armed private powers competing with one another.

Borders, international relations, and trade agreements require common representation at the appropriate level.

Large-scale disasters may require temporary command, shared logistics, and rapid mobilization.

Critical infrastructure may need common standards, reserves, or oversight when there is a genuine natural monopoly or an interdependence that is difficult to divide.

Basic research can also justify public support when the time horizon is long, returns are uncertain, and knowledge benefits people who did not pay to produce it. But funding open science is not the same as selecting winning companies or directing all innovation.

In each case, centralizing the rule does not require centralizing execution. The state can set the framework and contract, delegate, accredit, or allow multiple providers. Again: coordinating is not occupying.

The Seven-Question Test

Before transferring a decision upward, it should be subjected to a demanding test.

  • Proximity. Who has the specific information and directly bears the result?
  • Capacity. Is the nearest level genuinely incapable, even with support, cooperation, or shared resources?
  • Third parties. Is there significant harm that cannot be resolved through agreements, prices, insurance, information, or liability?
  • Scale. Does the higher authority provide a demonstrable economy or resolve a function that cannot be fragmented?
  • Minimum intrusion. Has the effective measure that destroys the least autonomy been chosen?
  • Accountability. Does the decision-maker bear any cost, explain results, and remain replaceable?
  • Reversibility. Does the transfer include review, expiry, and a genuine path for return?

If a proposal does not pass these questions, we are probably not dealing with subsidiarity. We are dealing instead with a concentration of power supported by a good communications campaign.

An Emergency Must Have an Exit Door

Governments acquire extraordinary powers easily and return them with difficulty. The reason is human: a power creates budgets, positions, procedures, suppliers, and groups interested in preserving it.

That is why every exceptional measure should include from the outset:

  • a defined cause;
  • an expiration date;
  • public indicators;
  • independent review;
  • substantive limits;
  • automatic return unless new authorization is granted.

It is not enough to promise that power will be used well. The structure must force it to justify itself again.

  • An emergency without an end becomes a regime.
  • Coordination without review becomes dependency.
  • An irreversible power ceases to be subsidiary, even if it began with a legitimate cause.

Centralize What Is Essential, Decentralize the Response

The best solution usually combines scales.

  • During an epidemic, the national level can collect comparable data and coordinate reserves, while local teams adapt the response.
  • In education, the state can define basic rights and qualifications; regional governments develop policy, schools organize their projects, and families choose.
  • In infrastructure, an authority can establish interoperability while several operators compete.

This architecture seems more complex than issuing orders from a single center. It is.

  • Freedom always carries a certain complexity because it allows diversity.
  • Uniformity simplifies the organizational chart, not necessarily life.

Subsidiarity means placing each function where it works best,

  • while remembering that knowledge, cost, and responsibility should remain as closely connected as possible.
  • When one person decides, another pays, and a third is accountable, error finds shelter.

A Strong and Limited State

For years, a false choice has been presented:

  • a large state or a weak state.
  • The more interesting alternative is a state limited in scope and strong in its nondelegable functions.

A state that upholds the law, protects rights, contains violence, arbitrates disputes, and coordinates genuinely collective risks is not an enemy of freedom. It can be a condition for freedom.

It becomes an enemy when it uses those essential functions to justify unlimited guardianship.

  • When it regulates preferences as if they were harms.
  • When it turns support into substitution.
  • When it claims powers because it already possesses the structure to exercise them.

Centralization is a tool. Like any tool, it should be used for a specific job and put away afterward.

It deserves no moral loyalty. It deserves scrutiny.

The final rule can be stated as follows:

  • move upward only what cannot be resolved below;
  • move it only to the level required; and
  • return power as soon as the reason for moving it upward disappears.

That does not weaken the state. It forces the state to focus on what we truly need it for.

Verified Sources and References

  • Pope Pius XI, Quadragesimo anno, paragraphs 79–80: https://www.vatican.va/content/pius-xi/en/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno.html
  • Treaty on European Union, Article 5: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12016M005
  • Spanish Constitution, distribution of powers: https://www.boe.es/buscar/act.php?id=BOE-A-1978-31229
  • Law 42/2010, smoke-free spaces as an example of protection from a direct externality: https://www.boe.es/buscar/act.php?id=BOE-A-2010-20138