From the Compendium of the Social Doctrine of the Church
(Bolded sections added for emphasis by CCGI)
PRINCIPLES OF THE CHURCH’S SOCIAL DOCTRINE
IV. THE PRINCIPLE OF SUBSIDIARITY
a. Origin and meaning
185. Subsidiarity is among the most constant and characteristic directives of the Church’s social doctrine and has been present since the first great social encyclical. It is impossible to promote the dignity of the person without showing concern for the family, groups, associations, local territorial realities; in short, for that aggregate of economic, social, cultural, sports-oriented, recreational, professional and political expressions to which people spontaneously give life and which make it possible for them to achieve effective social growth. This is the realm of civil society, understood as the sum of the relationships between individuals and intermediate social groupings, which are the first relationships to arise and which come about thanks to “the creative subjectivity of the citizen”. This network of relationships strengthens the social fabric and constitutes the basis of a true community of persons, making possible the recognition of higher forms of social activity.
The Catechism on Subsidiarity
1883 — Socialization also presents dangers. Excessive intervention by the state can threaten personal freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which “a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activity with the activities of the rest of society, always with a view to the common good.” 
186. The necessity of defending and promoting the original expressions of social life is emphasized by the Church in the Encyclical Quadragesimo Anno, in which the principle of subsidiarity is indicated as a most important principle of “social philosophy”. “Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them”.
On the basis of this principle, all societies of a superior order must adopt attitudes of help (“subsidium”) — therefore of support, promotion, development — with respect to lower-order societies. In this way, intermediate social entities can properly perform the functions that fall to them without being required to hand them over unjustly to other social entities of a higher level, by which they would end up being absorbed and substituted, in the end seeing themselves denied their dignity and essential place.
Subsidiarity, understood in the positive sense as economic, institutional or juridical assistance offered to lesser social entities, entails a corresponding series of negative implications that require the State to refrain from anything that would de facto restrict the existential space of the smaller essential cells of society. Their initiative, freedom and responsibility must not be supplanted.
b. Concrete indications
187. The principle of subsidiarity protects people from abuses by higher-level social authority and calls on these same authorities to help individuals and intermediate groups to fulfill their duties. This principle is imperative because every person, family and intermediate group has something original to offer to the community. Experience shows that the denial of subsidiarity, or its limitation in the name of an alleged democratization or equality of all members of society, limits and sometimes even destroys the spirit of freedom and initiative.
The principle of subsidiarity is opposed to certain forms of centralization, bureaucratization, and welfare assistance and to the unjustified and excessive presence of the State in public mechanisms. “By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending”. An absent or insufficient recognition of private initiative — in economic matters also — and the failure to recognize its public function, contribute to the undermining of the principle of subsidiarity, as monopolies do as well.
In order for the principle of subsidiarity to be put into practice there is a corresponding need for: respect and effective promotion of the human person and the family; ever greater appreciation of associations and intermediate organizations in their fundamental choices and in those that cannot be delegated to or exercised by others; the encouragement of private initiative so that every social entity remains at the service of the common good, each with its own distinctive characteristics; the presence of pluralism in society and due representation of its vital components; safeguarding human rights and the rights of minorities; bringing about bureaucratic and administrative decentralization; striking a balance between the public and private spheres, with the resulting recognition of the social function of the private sphere; appropriate methods for making citizens more responsible in actively “being a part” of the political and social reality of their country.
188. Various circumstances may make it advisable that the State step in to supply certain functions. One may think, for example, of situations in which it is necessary for the State itself to stimulate the economy because it is impossible for civil society to support initiatives on its own. One may also envision the reality of serious social imbalance or injustice where only the intervention of the public authority can create conditions of greater equality, justice and peace. In light of the principle of subsidiarity, however, this institutional substitution must not continue any longer than is absolutely necessary, since justification for such intervention is found only in the exceptional nature of the situation. In any case, the common good correctly understood, the demands of which will never in any way be contrary to the defense and promotion of the primacy of the person and the way this is expressed in society, must remain the criteria for making decisions concerning the application of the principle of subsidiarity.
 John Paul II, Encyclical Letter Sollicitudo Rei Socialis, 15: AAS 80 (1988), 529; cf. Pius XI, Encyclical Letter Quadragesimo Anno: AAS 23 (1931), 203; John XXIII, Encyclical Letter Mater et Magistra: AAS 53 (1961), 439; Second Vatican Ecumenical Council, Pastoral Constitution Gaudium et Spes, 65: AAS 58 (1966), 1086-1087; Congregation for the Doctrine of the Faith, Instruction Libertatis Conscientia, 73, 85-86: AAS 79 (1987), 586, 592-593; John Paul II, Encyclical Letter Centesimus Annus, 48: AAS 83 (1991), 852-854; Catechism of the Catholic Church, 1883-1885.