08 April 2010

libertarian paternalism

This has been circulating a bit lately, not because it's perceived as a peculiarly dangerous idea for libertarians, but because it's not being used (by the popular purveyors of it) to propose drawbacks of existing government interventions back toward the "nudge" theory in the same way that it is being used to expand new interventions, which may or may not be advantageous, helpful, or even necessary based on justifications provided by strong externality claims. For example, one of the strongest externality claims for public intervention is for immunization programs. Communicable diseases that can be vaccinated against provide considerable advantages to life and liberty by not having potentially millions of people getting sick every year, some of them even fatally so. So some sort of nudge to encourage people to get their children vaccinated or their families is considered justified so that the concept of herd immunity on which vaccination rests much of its effectiveness is not compromised by too many people free riding on the vaccination of others (and thus weakening the utility of those vaccinations). We can see similar justifications for all sorts of programs. Public education is justified along these lines. Though I disagree that the manner we fund and supply it is justified (force the funds to go to the government and its schools rather than to the educational institution of the taxpayer's choice), I agree that seizing funds from the public through taxation or a like method may be justified here because of significant externality gains that can be provided. So it's pretty clear that there are ways to justify externality intrusions into markets through some form of legal or social pressure. I even accept a few proposals that don't currently exist. More accurately that is there are no legal markets for these things. I think we should allow the voluntary sale of organs along side donation to provide for a wider and cheaper access to organ transplants for example. I think congestion pricing on controlled access roads, like interstate highways, making them into toll roads is appropriate to provide smoother traffic patterns and waste less fuel and time. I accept "sin" taxes on alcohol and tobacco, and would have no objections to similar taxes and fees levied on narcotics in exchange for legal markets for their purchase and production, or even for the consumption or production of carbon based energy like coal or gasoline. I expect this makes me appear somewhat reasonable to such approaches of governance or even friendly to the concept of paternalism as a result.

As for the nudge proposals, things like opt-out clauses on 401ks are nice and effective means of getting people to save for their retirement. What confuses me is why those same methods are not provided for an opt-out clause on say, social security, or this new health insurance mandate, and so on. One assumes that many people from inertia or because they believe they are extracting some personal benefit from whatever it is they are "forced" to do now would still continue to do so if they are capable of choosing not to do it but continued to choose to do so. After all, polls suggest many people believe social security is not to be cut, suggesting they think it's a good idea. Presumably those people would stay in the game. The problem is those annoying people like me who happened to notice the emperor has no clothes and want out of the silly three card monte scam, but cannot get out legally in the present environment. This is not proposed as an option, to allow people to rely completely on private savings or investment (or, if they are particularly (un)fortunate, their families) for provisions of old age. We're stuck with what we're told to do here.

Likewise, I'm not as sure as I once was about the wisdom of taxing "unhealthy" food choices. There are a couple reasons here. First, I'm not sure that obesity is nearly the public epidemic that smoking or alcohol use is, at least in terms of externality effects. Alcohol creates violent, dangerous or abusive behavior along with posing significant individual health risks. Smoking has potentially massive health care costs associated with it, as well as potentially significant productivity gains for employers (no "smoking breaks" for one very modest "gain", but more importantly less sick time is used by the median non-smoker). I'm less convinced of some of the utility of some of our laws relating to these products. For example, I think the drinking age (that is, the legal age of purchase) should be lowered to 18 and I don't think public bans on smoking in public places like bars or restaurants or places of work are necessary. Maybe airplanes or other confined places with recycled air pressure and where the cigarette may be a minimal fire hazard, but that's about it. Food on the other hand has some potential for massive health risks, but almost no potential for externality costs. Second, the main reason I've become convinced a tax is unnecessary on such foods is that we provide massive subsidies to precisely the food groups that might be targeted by a tax. This is the most inefficient means imaginable to deal with the problem as a result. We will be taxing something and then throwing money back at it. Doesn't this provide no real incentive for government to deal with this as an actual problem when it gains revenues from higher consumption and has no significant public costs associated with use and abuse (where it does with higher alcohol or narcotic consumption)? As a result it seems far simpler to start out waging a concerted war against the trade barriers and subsidies that we provide for agriculture rather than a tax on Coca-Cola as an end product manufactured at lower cost because of these absurd subsidies on corn and the trade barriers on sugar. If there then results some reason to apportion additional fees and taxes on a food or consumable substance, from public health concerns, then we can discuss it. But I think shaking out the money already in the tree ought to fix the "problem" of cheap meat (and especially meat byproducts that end up in fast food) and soda or whatever else is on the hit list this week a lot faster and cheaper.

Still. The primary libertarian concern over these things is that they become arguments for further fine-tuning and interference. Public highways and interstates were a nice little bonus for travel and tourism in this country, as well as a possible utility during a time of war (should anyone ever become crazy enough to invade the US). I'm not so sure they justify continued federal support and intrusion into the management of state transportation funds in the form of an entire cabinet department, much less more intrusive things still like the federal drinking age requirements tied to funding of roads or a mandated federal speed limit (as we used to have) and, especially, the always pork-laden infrastructure funding bill that comes from Congress. An argument that the states should fund the repair and construction of new roads by and large through congestion pricing mechanisms relieves much of this pressure of federal/top-down intrusion into what are generally local or at best state concerns (something as trivial as where to build new roads or what roads need fixes or revisions). We might benefit by suggesting such a half-measure by alleviating some intrusion to the local and private affairs of citizens and residents of this country whilst still resolving a potentially serious externality or tragedy of commons issues. It does not relieve the obligation to be on guard against new and unnecessary or even dangerous intrusions, even if they take the form of polite nudges.
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