In thinking about a federation one view is that decisions should be made at the lowest suitable level, that is nearest the voters. In the European Union the term Subsidiarity is used for this. Thus those who fear that Europe would become a unitary state (only one government) are supposed to be reassured that other governments are also necessary. The European Commission would therefore handle only those affairs defined for it.

However, who is to decide what is the appropriate level, as this is bound to be a subjective decision, in practice the result of politics?

In the United States the Federal Government has defined powers. Other powers remain with the constituent state governments. In other federations, such as Nigeria, the Central Government devolves powers to the states. However, in a devolved state the powers can be resumed by the Center. The Soviet Union was a state of this kind.

In Britain all powers remain with Parliament which can suspend or abolish any subordinate government. Thus subsidiarity does not exist within Britain. If the European Political Union comes into formal being with Britain as a member, there may be strong pressure to create subsidiary governments within the United Kingdom. Already an independence movement in Scotland is related to the lack of subsidiary powers. Since that was written in 1995 the Scottish Parliament can now (2007) be considered to have subsidiary powers, even though formally it is devolved.

In Switzerland the powers of the Federation government, including its revenue, are in theory derived from the constituent Cantons. Only they can vote taxes for the Federal government.

The term is believed to have originated with Pope Pius the eleventh in a 1931 encyclical in a protest to the Fascist governments about the abolition of Catholic Trade Unions, as a justification for the individual rights against the fascists, who believe that the state has rights over individuals.

If the concept becomes accepted generally, can it be applied to economic matters so that economic decisions are made by the people concerned rather than by distant corporations? What would its effect be on world decision making? Would it lead to increased powers for local (County, regional and City) governments in Britain and France where they are weak?