Libertarian Paternalism--Posner's Comment

The term is indeed an oxymoron. Libertarianism, as expounded in John Stuart Mill's On Liberty, is the doctrine that government should confine its interventions in the private sector to what Mill called "other-regarding" acts, which is to say acts that cause harm to nonconsenting strangers, as distinct from "self-regarding" acts, which are acts that harm only oneself or people with whom one has consensual relations authorizing acts that may result in harm. So, for example, if you are hurt in a boxing match, that is a "self-regarding" event with which the government has no proper business, provided the boxer who hurt you was in compliance with rules--to which you had consented--governing the match, and provided you were of sound mind and so could give meaningful consent. Paternalism is the opposite. It is the idea that someone else knows better than you do what is good for you, and therefore he should be free to interfere with your self-regarding acts. Paternalism makes perfectly good sense when the "pater" is indeed a father or other parent and the individual whose self-regarding acts are in issue is a child. In its more common sense, "paternalism" refers to governmental interference with the self-regarding acts of mentally competent adults, and so understood it is indeed the opposite of libertarianism. The yoking of the two in the oxymoron "libertarian paternalism" is an effort to soften the negative connotation of paternalism with the positive connotation of libertarianism. I would further limit the term "paternalism" to situations in which the government wishes to override the informed preferences of competent adults. The dangers of smoking are well known; indeed, they tend to be exaggerated--including by smokers. (The increased risk of lung cancer from smoking is smaller than most people believe.) Interventions designed to prevent smoking, unless motivated by concern with the effect of smoking on nonsmokers (ambient smoke, which is not much of a health hazard but is an annoyance to nonsmokers), are paternalistic in the sense in which I am using the term. Thus I was not defending paternalism when I defended the ban on trans fats in New York City restaurants. If people are aware of the dangers of trans fats but wish to consume them anyway, the only nonpaternalistic ground for intervention, which I would be inclined to think insufficient by itself, is that they may be shifting some of the costs of their medical treatment for heart disease to taxpayers who forgo consumption of trans fats. If, however, people don't know the dangers of trans fats and it would not be feasible for them to learn those dangers (prohibitive transaction costs), and if as I believe the dangers clearly exceed any benefits from trans fats compared to substitute ingredients, then the ban can be defended on nonpaternalistic grounds, as I attempted to do. Another way to put this is that it is not paternalistic to delegate a certain amount of decision making to the government. There are some goods that government can produce at lower cost than the private sector, and among these is the banning of trans fats from food served in restaurants. It might seem that the good could be produced just by competition-impelled advertising by restaurants that do not use trans fats. But such a suggestion ignores the difference between disseminating and absorbing information. If you have a peanut allergy, and the label on a package of cake mix says that the mix contains peanut oil, you know not to buy it; the cost of absorbing the information on the label is trivial. But if you are told that a restaurant does not use trans fats in its meals, determining the significance of that information to you would require you to undertake a substantial research project. You would have to learn about trans fats, somehow estimate the total amount of trans fats that you consume every year, estimate the amount of trans fats in the restaurant meals you consume relative to your total consumption of trans fats, and assess the significance of that consumption in relation to other risk factors that you have or don’t have for heart disease. Few people have the time for such research, or the background knowledge that would enable them to conduct it competently. Given that trans fats have close substitutes in both taste and cost, it is not unrealistic to suppose that the vast majority of people would if consulted delegate to government the decision whether to ban trans fats. One of the great weaknesses of "libertarian paternalism" is failure to weigh adequately the significance of the operation of the cognitive and psychological quirks emphasized by libertarian paternalists on government officials. The quirks are not a function of low IQ or a poor education; they are universal, although there is a tendency for the people least afflicted by them to enter those fields, such as gambling, speculation, arbitrage, and insurance, in which the quirks have the greatest negative effect on rational decision making. As Edward Glaeser has pointed out, the cost of these quirks to officials--who are not selected for immunity to them--is lower than the cost to consumers, because the officials are making decisions for other people rather than for themselves.

Comments

[Nelson]

Yet, is there any conflict in the doctrine when individuals choose to subject themselves to a sovereign authority to make decisions for them in order to overcome things like transaction costs and a lack of information.No. However some libertarians (the anarchists) would argue that no one has made a non-coerced choice to subject themselves to that authority. Overt rebellion means imprisonment or death.

I'm a bit more practical leaning than the anarchist group. I do appreciate some government regulation. I do like the idea of governments using the power of eminent domain to acquire property for roads without some individual ruining efficient transportation for the rest of us by refusing to sell, which is a totally non-libertarian stance. But I still fear our government trys to do too much too often. Sometimes people should just be told the facts and be left alone to make their own choices.

[Jack]

Nelson Thanks......

Higer prices are a highly effective disincentive for consumption.

....... we're all familiar with the supply/demand "equilibrium" theories. But what I pointed out is that those nations who used their brains and predictive powers to change their "equilibrium" points three decades ago are FAR better positioned than are we. As you can see? Now that the "crisis" is upon us we are individually STUCK with the fleet of gashogs, inefficient homes and lengthy commutes that we "signed up for" under a very different "market". How long to get these dogs off the highway? To shorten the contracted commute? To retrofit what could have been very inexpensive upgrades in 20 million obsolescent homes?

I end up with these conclusions; in fast moving small markets (my shoe industry example is good for illustrating) government micro-managing would be a disaster, and in the USSR the proved the case, in that very industry.

For larger issues and a tone to be set for decades, such as environmental policy, etc. I conclude "The Market" will not "get it right" or on the occasions where it does it will be, as in energy, the "information" will be too little and FAR too late and we'd better have our public debate and try to get the tone right in advance of the predictable crisises.

When it works right (not getting cold cocked by all too strong, corporate lobbyists) democratic action too, is a "market" and if conditions change so too can public policy.

Even now your comment of:
Lets assume for the sake of argument that incentives for conservation are good.

is emblematic of there being "two kinds of people"

One being those who HAVE looked at peak oil and how, under any scenario, falls dramatically short of even the most modest predictions of consumption. (It takes about half an hour to join the club from a standing start.)

The rest are flopping around listening to jelly-spined politicos talk in glowing terms of readily available "alternatives" either because their states will cash in on subsidies for the ethanol super-scam, or simply because even the mention of conservation is akin to political suicide in the grand tradition of killing the messenber.

Lastly, please consider that as the US uses/wastes one quarter of all of the world's energy production (for 5% of its population) that it is we and our economy that is, by FAR, most vulnerable to price increases and/or shortages, and that were one the "CEO" of America he'd be something of a negligent fool to sit back and trust that "The Market" will stand us in good stead.

Would you be willing to educate yourself on peak oil and the utterly predictable crises that are but a decade or so out? Jack

[Jack]

Wulf aren't some of these exercises just word games? As if we can stick a name on something then we know more about it? Or can then compartmentalize it? Sometimes as "good" or "bad?"

Some one said:
"Another way to put this is that it is not paternalistic to delegate a certain amount of decision making to the government."

Wulf sez:
I can delegate a certain amount of decision making to my wife. Having that done for me by somebody other than me would not be "delegation". In fact, that is more like the relationship I had with my parents when I was a child.

So, is it not paternalistic to mandate (for everyone, not just those who would prefer it) a certain amount of decision making to the government?

Jack asks:
Don't most of us opt for some delegation? and favor some mandates/paternalism? Such as mandating a speed limit in our neighborhood and delegating its enforcement to "the police"? To be sure the mandate must not be elective or voluntary or there'd be no mandate at all. Is this "paternalism?" or "like the relationship you had with your parents?"

I suppose you could tag the speed limit mandate as being "paternalistic" but that would seem to ignore it being put in place by democratic action and subject to change by the same.

It's different for parents, of course as they ARE our all powerful oppressive dictators for 15 or 20 years and we didn't delegate them their powers. Hopefully they are just and benevolent dictators as we've little recourse to vote them out.

As a side note, somehow it occurred to me early in my boy's childhood that kids are inherently oppressed by parents, teachers and society, and while it has to be that way, understanding their oppression was very helpful in raising him.

Sometimes it was better not to say "Don't!" and pull him back from taking the bottom can out of a store display, but to let him complete his scientific inquiry and then work together to put the display back in shape again.

Our delegations or mandates can be very frustrating, as when we're in a strange city and realize we've left a prescription drug at home, or gotten nailed violating our own agreed upon speed limit, but would WE or even ME be better off were all drugs sold openly over the counter and no speed limits in effect?

[Anonymous]

Nelson Thanks......

Higer prices are a highly effective disincentive for consumption.

....... we're all familiar with the supply/demand "equilibrium" theories. But what I pointed out is that those nations who used their brains and predictive powers to change their "equilibrium" points three decades ago are FAR better positioned than are we. As you can see? Now that the "crisis" is upon us we are individually STUCK with the fleet of gashogs, inefficient homes and lengthy commutes that we "signed up for" under a very different "market". How long to get these dogs off the highway? To shorten the contracted commute? To retrofit what could have been very inexpensive upgrades in 20 million obsolescent homes?

I end up with these conclusions; in fast moving small markets (my shoe industry example is good for illustrating) government micro-managing would be a disaster, and in the USSR the proved the case, in that very industry.

For larger issues and a tone to be set for decades, such as environmental policy, etc. I conclude "The Market" will not "get it right" or on the occasions where it does it will be, as in energy, the "information" will be too little and FAR too late and we'd better have our public debate and try to get the tone right in advance of the predictable crisises.

When it works right (not getting cold cocked by all too strong, corporate lobbyists) democratic action too, is a "market" and if conditions change so too can public policy.

Even now your comment of:
Lets assume for the sake of argument that incentives for conservation are good.

is emblematic of there being "two kinds of people"

One being those who HAVE looked at peak oil and how, under any scenario, falls dramatically short of even the most modest predictions of consumption. (It takes about half an hour to join the club from a standing start.)

The rest are flopping around listening to jelly-spined politicos talk in glowing terms of readily available "alternatives" either because their states will cash in on subsidies for the ethanol super-scam, or simply because even the mention of conservation is akin to political suicide in the grand tradition of killing the messenber.

Lastly, please consider that as the US uses/wastes one quarter of all of the world's energy production (for 5% of its population) that it is we and our economy that is, by FAR, most vulnerable to price increases and/or shortages, and that were one the "CEO" of America he'd be something of a negligent fool to sit back and trust that "The Market" will stand us in good stead.

In this matter of the "fully informed citizen" making a correct "market based" choice do think there's quite a shortage of those having looked at peak oil and the utterly predictable crises that are but a decade or so out? For a country addicted to gobbling 20 million bbls of oil per day, shouldn't there be, at least, a sketchy outline of how we'll deal with 10 million bbl shortfalls in the very near future? BTW I filled up today, putting my short term needs well before any consideration of future shortfalls. Jack

[Anonymous]

hi

[Jack]

Off topic....... I guess the boys have rudely closed a former thread without the courtesy of notice?

Ben, thanks, and I guess your comments are addressed to me? Let's take a look:

"The presumption has to be you have no idea what a trade deficit is or how it could create or be associated with harm."

......... What did you base such a presumption on? In any case it seems to be wrong from my perspective.

"I actually share your concern about government spending and public debt."

.... Great! Despite being appointed by those responsible for the largest expansion of government since the ramping up for WWII and putting most of it on the cuff, Ben Bernanke actually dared to point out to the new Congress the folly and utter un-sustainability of the present course and that the best time to have implemented a different course would have been about 10 years ago, or lacking that option, perhaps Monday.

Anyway, you could work from this base and develop from there a concern over private debt, declining wages for many and an inability to service that lip-deep debt. Absent another "miracle" such a roaring stock market or doubling of home prices it's difficult to predict how the whole house of cards will withstand even a soft summer breeze.

Your new base could then provide you with a platform from which you could consider each household further indenturing itself by borrowing another $8,000 per annum from China, Japan, India, Italy, and others who are saving their surpluses, with which to pay for non-durable consumer goodies from those countries along with 70% of the oil we consume/waste and a rapidly rising quantity of imported natural gas. Perhaps you could compare and contrast how any of these forms of deep indebtedness might differ one from the other?

....."from the outside it looks like a competition between two parties to make government ever larger, albeit in different ways."

...... Good! I learned my own lesson back in the early 80's. Having seen carny hucksters before, I certainly didn't fall for the Reagan-Stockman claims of "starving the beast" by lowering taxes and THEN lowering spending enough to actually cast a vote for him, I did kind of shrug and thought perhaps giving government a good wringing out might be good and form a solid foundation for the next wave of progressive advancement. As you know? Stockman was quickly jettisoned and the Pentagon boys more than filled the vacuum and went one QUITE a spree. Re-hiring this same cabal "under" Bush & Co has given us the same deal..... on steroids, or worse.

Even though Al Gore presided over a relative shrinking of government he too may have fallen prey to further expansion of government, but instead of the Haliburton receipts perhaps our corporations would have been made far more competitive in the "global economy" by our relieving them of much of the burden of health care and/or addressing some of our energy and environmental issues. Of course it's up to each voter to decide what is worth more to our nation and its future and none of us get "overs".

"For what it is worth, I am a traditional liberal - basically the opposite of a modern liberal and not obviously related to modern conservatives either."

......... I think you could make an interesting and informative post just by clarifying the above sentence. By "traditional" are you speaking of FDR/Truman? and "modern" being LBJ/Nixon? or the "Chamber of Commerce, Blue Dog, liberalism" of Bill Clinton?

I don't think you need to express much about "modern ""conservatives""" as the word itself survives only for the lack of a convenient term to describe their neo-age policies of spend-spend-spend and borrow, unprovoked warmongery, and giving what's left of the farm to nationless corporate marauders of the world.

BTW for those favoring monstrous trade deficits we did top out over $800 billion and with a continued lack of concern or leadership should be well positioned to crack the trillion buck record next year! I don't know if we can achieve a deficit of ten percent of GDP before the "New World Order" (all for the corpies) set again leaves the stage but perhaps we can come close. Are those projections good enough for you?

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