From this artilce in the NYT:
Mr. Thaler and Cass Sunstein of the University of Chicago Law School suggested that it is proper for the government, or an employer, to set boundaries to choice to achieve desired social objectives, an approach they call “libertarian paternalism.”
Government, employer. Same thing.
Rumination:
This last clause of that sentence captures the deep tension between paternalist welfarism and democracy as the means of republican self-government. If it is known in advance which “social objectives” it is “desirable” to achieve, then the technocrats can “set boundaries to choice” to bias the process of social choice in the favor of these objectives. This is not, in itself, a bad thing. A constitutional convention, for example, is all about setting boundaries to achieve desired social objectives. But at the post-constitutional phase, the state’s “setting boundaries” in this way can amount to an illiberal and anti-democratic imposition of parochial values. Liberals who see the basis of state legitimacy in a kind of deliberative democratic procedure have to eschew technocratic framing or bounding of the choice set. But it’s easy to press too hard on this point. If you’re going to have an adminstrative bureaucracy, it’s going to issue regulations. And I sure want to say that some regulatory institutions (a market in pollution credits, for example) are better than others (say, demanding an across-the-board reduction). I think the distinction has to lie in they WAY boundaries to choice are set, and the KIND of constraints the boundary setting process imposes.
I’m sure it’s been said before by someone else (perhaps the Public Choice folks) in a more eloquent manner, but it has always seemed that there is a nearly irreconciliable conflict between democracy and various sorts of paternalism.
Suppose people are wise (well-informed, self-disciplined, rational) enough to find out which politician best represents their long term interests. (Or at least representative democracy is the least-bad system.)
How is it that they are not wise enough to directly manage their own lives, instead of delegating that authority? (Or at least self-ruling liberty is the least-bad system.)
I suppose one could argue that if I am rationally ignorant or know that I have a self-control problem, I could benefit by delegating some of the power to rule me to a specialist (aka financial planner) or disciplinarian (personal trainer, private legal system such as rabbinic law).
But it would seem that all of us have different weaknesses in this way, and so would be best served by all personally selecting our ‘life coach’ to suit our particular needs. Having 51% decide on the life coaches for a 100% of the population seems distinctly suboptimal.
BTW, love the blog, Will. Happy Easter.
The funny thing about that NYT article is that it characterizes Thaler and Sunstein as saying gov’t or employers should “set boundaries to choice”, but then the examples they give are of changing defaults to make generally-good things opt-out and generally-bad things opt-in: defaulting to 401(k) contributions to low-fee index funds, etc. This is a very different thing (though potentially problematic for its own reasons), and I wonder why the article writers didn’t cite any examples of outright *restrictions* that T+S want to impose; perhaps they realize that doing so would put T+S in a much less sympathetic light?
I’ve heard Matt Rabin (a behavioral economist at UC Berkeley) call this kind of thing ‘cautious paternalism’ instead of libertarian paternalism.
I think his phrasing is much more apt.
And yes, it does seem a vast improvement to
change super oldschool “1 size fits all” to
slightly more libertarian “default to bad size 1, you can choose good size 2 by overcoming inertia and exerting choice”
to still more libertarian, but more efficiently paternalistic “default to size 2, but you can change to size 1,3, or 4 if you’re the non-intertia-ridden self-choosing type”
Shades of gray, etc.
…a rose by any other name, would still wither and die.
I like the way Cafe Hayek covered this.
Default rules are inevitable, and should not be a problem for libertarians. You have to divide estates on intestacies, defeine what are and are not rights incident to land ownership (subject to changes by restrictive covenants, etc.), employment, sale, etc., etc. If the parties can agree to change the default rule, when they put their mind to it, it is hard to see how liberty or efficiency are compromised.
The real Hayek thought that default rules (e.g., intestacy) could justly be used to increase material equality. I don’t really see the problem with using them to overcome cognitive quirks. The common law does this in innumerable invisible ways already.
I’m sure it’s been said before by someone else (perhaps the Public Choice folks) in a more eloquent manner, but it has always seemed that there is a nearly irreconciliable conflict between democracy and various sorts of paternalism.
Suppose people are wise (well-informed, self-disciplined, rational) enough to find out which politician best represents their long term interests. (Or at least representative democracy is the least-bad system.)
How is it that they are not wise enough to directly manage their own lives, instead of delegating that authority? (Or at least self-ruling liberty is the least-bad system.)
I suppose one could argue that if I am rationally ignorant or know that I have a self-control problem, I could benefit by delegating some of the power to rule me to a specialist (aka financial planner) or disciplinarian (personal trainer, private legal system such as rabbinic law).
But it would seem that all of us have different weaknesses in this way, and so would be best served by all personally selecting our ‘life coach’ to suit our particular needs. Having 51% decide on the life coaches for a 100% of the population seems distinctly suboptimal.
BTW, love the blog, Will. Happy Easter.
The funny thing about that NYT article is that it characterizes Thaler and Sunstein as saying gov’t or employers should “set boundaries to choice”, but then the examples they give are of changing defaults to make generally-good things opt-out and generally-bad things opt-in: defaulting to 401(k) contributions to low-fee index funds, etc. This is a very different thing (though potentially problematic for its own reasons), and I wonder why the article writers didn’t cite any examples of outright *restrictions* that T+S want to impose; perhaps they realize that doing so would put T+S in a much less sympathetic light?
I’ve heard Matt Rabin (a behavioral economist at UC Berkeley) call this kind of thing ‘cautious paternalism’ instead of libertarian paternalism.
I think his phrasing is much more apt.
And yes, it does seem a vast improvement to
change super oldschool “1 size fits all” to
slightly more libertarian “default to bad size 1, you can choose good size 2 by overcoming inertia and exerting choice”
to still more libertarian, but more efficiently paternalistic “default to size 2, but you can change to size 1,3, or 4 if you’re the non-intertia-ridden self-choosing type”
Shades of gray, etc.
…a rose by any other name, would still wither and die.
I like the way Cafe Hayek covered this.
Default rules are inevitable, and should not be a problem for libertarians. You have to divide estates on intestacies, defeine what are and are not rights incident to land ownership (subject to changes by restrictive covenants, etc.), employment, sale, etc., etc. If the parties can agree to change the default rule, when they put their mind to it, it is hard to see how liberty or efficiency are compromised.
The real Hayek thought that default rules (e.g., intestacy) could justly be used to increase material equality. I don’t really see the problem with using them to overcome cognitive quirks. The common law does this in innumerable invisible ways already.