Simplistic summary of a long debate on paternalism:
Hard Paternalist: Government should force weak human beings to do what’s in their own best interest.
Knee-Jerk Libertarian: No, that’s totalitarian.
Soft Paternalist: Government should nudge weak human beings to do what’s in their own best interest.
Thoughtful Libertarian: You define “nudges” so elastically that you still end up being pretty totalitarian.
Rizzo and Whitman’s Escaping Paternalism exemplifies the Thoughtful Libertarian position; indeed, as I’ve already said, they’ve probably written the best book on paternalism. Only after the Book Club ended, though, did the following compromise position occur to me: Instead of using all means at its disposal to nudge people to do what’s in their own best interest, government should limit itself to using the welfare state to nudge its beneficiaries to do what’s in their own best interest.
Let’s call this “Ward Paternalism” – paternalism limited to people who are dependents of the government. For example, rather than give welfare recipients cash to spend, a Ward Paternalist might give them food stamps instead. Why? To nudge them into buying groceries instead of alcohol.
Key point: Under Ward Paternalism, anyone who doesn’t want to be nudged can simply decline to become dependent on the government. You can spend your own money your own way, no questions asked. If, however, you ask taxpayers for help, the help comes with strings attached to encourage you to get your life in order. He who pays the piper, calls the tune – and why shouldn’t the tune be, “Get your life in order”?
Soft paternalists often call their position “libertarian paternalism.” Ward Paternalism, however, better fits the label, because Ward Paternalism preserves the right of independent adults to do as they please. The restrictions are limited to those who opt in by pleading inability to support themselves.
Why, though, would anyone support Ward Paternalism? Top two reasons:
1. While irresponsibility is not the sole cause of desperation, it is plainly a major cause. The very fact that you’re asking for government help therefore raises serious doubts about your own prudence. And it makes sense to focus paternalistic energy on you.
2. The standard moral constraint to leave others alone does not apply. “Leave me alone, I don’t want your help” has great force. “Help me, but don’t presume to tell me how to live my life” has little.
Before you dismiss it as an eccentric or arrogant position, notice that Ward Paternalism is already enshrined in a wide range of government programs. Governments routinely redistribute in kind; they much prefer to hand out food, health care, schooling, or housing than cash. Much of the reason, no doubt, is that governments want to make sure that children in poor families get food, health care, schooling, and housing even if their parents have other priorities. The rest of the reason, though, is that governments are nudging the adults themselves to prioritize food, health care, schooling, and housing over alcohol, tobacco, drugs, and gambling. The same goes for government pensions; you can’t start spending your retirement when you’re fifty, because the government wants to ensure that you won’t be starving on the streets when you’re seventy. If an independent adult can fairly protest, “It’s my money and I’ll do what I want with it,” why can’t taxpayers just as fairly protest, “It’s our money and you’ll use it as we think best”?
What about the slippery slope? Rizzo and Whitman powerfully argue for its potency. Yet in this case, we face multiple slopes. If we scrupulously avoid the slope where government uses conditional redistribution to dictate our lifestyles, we expose ourselves to the slope where government hands out money like a drunken sailor. And in any case, attaching endless strings to government money is a sneaky route to austerity, a policy program that deserves our full support. If government nudges the people aggressively enough to inspire a massive wave of declarations of independence, so much the better.
READER COMMENTS
Jose Pablo
Oct 3 2020 at 11:54am
“Governments routinely redistribute in kind; they much prefer to hand out food, health care, schooling, or housing than cash. Much of the reason, no doubt, is that governments want to make sure that children in poor families get food, health care, schooling, and housing even if their parents have other priorities.”
Disagree. The main reason behind these handouts is that teachers, doctors, food producers and subsidized housing builders are very successful in lobbying the government to sell more of their products.
https://www.sup.org/books/title/?id=29269
Cogan’s book contains a detailed history of the real forces behind the growth of in-kind welfare programs. And, sure enough, providers of subsidized goods and service are behind that. The incentives are pretty clear, guess what happens with your margins when your “clients” pay you with other people’s money and cannot switch suppliers.
And government worrying about kids that do not vote does not make any sense. Where would be the incentives for doing so?
As you show very well in The Myth of the Rational Voter, what governments are looking for with these programs is “cultivating” the “feeling good for free” sentiments of the voters.
Virtue signaling is a powerful driver of voting preferences, but you lose these votes if the welfare recipients use the money for buying alcohol or drugs. That is the reason behind the in-kid programs.
David R. Henderson
Oct 3 2020 at 5:24pm
You wrote:
That’s incorrect.
See my review of Cogan’s book.
Jose Pablo
Oct 4 2020 at 11:11am
Pg. 193 [Under Johnson in 1964] “legislative logrolling tried food stamp and farm price supports together in a single legislative package”.
Chapter 12 references to the Potato Control Act of 1935, illustrate how this program was tied to “foodstuffs that had been designated as “surplus commodities” …”.
Pg. 284: on the extended vendor fraud around food stamps programs under Carter, benefiting firms involved in the cash transactions related with the program (“… even fire stations”).
See pg. 145-147 and 255-58 to understand the American Medical Association role in shaping the American public health system first under Truman and later with Obama. AMA lobbying efforts were instrumental in the US not having a public health system because, in this case, this is in the interest of the professional lobby. Precisely my point: that it is the lobbying of the professionals and not the worrying about the children the main force shaping the in-kind welfare programs.
Pg. 126 on the GI Bill of 1944, the origin of the in-kind benefits: “Under the GI Bill, educational institutions, college professors, training instructors and school administrators … Bankers and financial institutions … These service providers had a vested financial interest in the program. Along with veterans’ organizations, their lobbies were powerful advocates for maintaining and expanding benefits”.
It is true that the reader of my comment could have though that the main topic on Cogan’s book is to illustrate this relationship between in-kind welfare programs and the interest of this service providers. My mistake. It is not that at all and I should have been more clear about that in my comment. Your review offers a much more precise account of Cogan’s book focus and conclusions.
But been Cogan’s book wonderfully detailed, the scent and trail of the “industry interest” lobbying to shaping the in-kind welfare program is all over the place.
My thesis is that the economic interests of the subsidized services providers and the appealing of the programs to the “feeling good for free” sentiments of the voters are the key characteristics to understand the design of the in kind welfare policies. Not the government worrying about the “non-voting” children of “almost disenfranchised” parents.
Being the professional service providers and the virtue signaling voters much more politically active, I think my thesis captures better the true incentive scheme. For both constituencies the fact that the benefits are in kind and not in cash is instrumental for the appeling of the program.
RAD
Oct 3 2020 at 12:02pm
The largest opportunity seems to be finding consensus between Soft Paternalists and Thoughtful Libertarians. I think the solution is for both groups to embrace what I think of as Positive Sum Analysis: only “nudge” or “ward” the problems that are at least empirically correlated to some measure of the greater good. Libertarians should demand that progressives show their work when they claim that their nudges will serve the greater good.
The State Capacity Libertarian discussion made me realize that many libertarians unknowingly apply the precautionary principle to potential government overreach in the same way progressives apply it to potential exploitation/oppression and conservatives apply it to potential degenerative behavior (the irresponsisble or Caplan’s deserving poor).
The engineering principle of “change control” should be applied to existing systems, that is, brownfield projects as opposed to the rarer greenfield projects; don’t fix what isn’t broken or don’t throw the baby out with the bath water or don’t let the perfect get in the way of the good.
Mark Z
Oct 3 2020 at 12:22pm
Ward paternalism makes a lot of sense if one believes poverty (or dependence on the state) tends to be related to bad decision making, which I think is true and have thus long favored vouchers over cash transfers (thanks for giving this view a name). But if one believes poverty is mostly due to bad luck, one may not think poor people need such paternalism. Ironically, many progressives may be less inclined to paternalism for poor people than libertarians.
Speaking of great books on paternalism, Bryan: you should read Robert Sugden’s Community of Advantage: A Behavioral Economist’s Defense of the Market, if you haven’t already. Very similar in scope but a bit more philosophically oriented.
Alex Mazur
Oct 4 2020 at 6:43am
This approach, coupled with a sufficiently large welfare state, will not be any different from a bad old hard paternalism. I am sufficiently sick and tired of British state imposing restrictions on alcohol, tobacco, and now even ‘unhealthy’ food under the disguise of “protecting the healthcare system”. Of course, under such system I could theoretically live free of such restrictions if I refuse to ever use the government-provided healthcare system, however there are three practical problems:
1. I would still pay taxes to support the system (roughly a quarter of overall government spending)
2. How can I get a full-calorie Irn Bru? Buy cigarettes without the tax? Do I need some sort of license to do so? Will establishments offering such things exist?
3. Should I get ill, will the government really have the guts to refuse healthcare to me? I think this is not very likely, so in reality the politicians will then say “since we are providing you healthcare anyway, it is only fair if you comply with some simple rules”.
Gabriel Weil
Oct 5 2020 at 1:48pm
Bryan, you might be interested in my argument that the behavioral science findings on cognitive bias make a much stronger case for reforming the way we make non-paternalistic regulatory policy than they do for paternalism: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3424332
Floccina
Oct 5 2020 at 4:16pm
The problem with in-kind welfare is it tends to be very inefficient.
I think Arnold Kling mentioned a way to make it a little more efficient, a card that be spent on any of housing, food, medical care, schooling or education.
Phil H
Oct 5 2020 at 10:00pm
I think the potential problem with this approach is that it kinda defines away what is distinctive about government. It recasts government as essentially an employment option, where you can go and work for the government and receive benefits in return for following their strictures.
The conceptual problem here is that government rules generally apply to everyone. That’s what makes it government. If this is simply a stealth method of introducing a no-government situation, then fine, but that’s a different argument.
The practical problem is that if the government becomes like an employer, and government rules become essentially company regulations applying specifically to “wards”, then it is inevitable that other employers would follow suit and start to regulate more of their employees’ lives. To me this sounds horrible.
nobody.really
Oct 6 2020 at 2:08pm
1: Nudging
Perhaps. But the archetypical example of nudging was putting healthy food on the most easily visible shelf in the cafeteria. There is finite shelf space, and even more finite shelf space that is most easily visible. Even if cafeteria workers WANTED to act even-handedly toward all food, it’s impossible because ANY choice they make will advantage some choices over others. The concept of “nudging” simply acknowledges that 1) governments offer people choices, 2) the manner in which the choice is offered can influence the choices people make, and 3) governments can choose to offer choices that will foreseeably result in more people making the choice that government deems best.
The chief insight is 2): The manner in which you present a choice will influence the choice people make. There is nothing new about 2). We are always being influenced by our environments, and whatever environment we create will unavoidably influence others who encounter these environments. The only novelty arises when people first learn about these ever-present dynamics—and freak out.
You can call this insight totalitarian—but then you must acknowledge that totalitarianism is unavoidable.
2: I don’t have any huge objection to “welfare state” nudging. Mostly, I regard social programs as promoting the goals of the PUBLIC, not the goals of recipients/clients specifically. There may be many reasons to think that a poor person would be better able to spend money on his own welfare than others would be to spend money for his welfare. But if it’s the PUBLIC’s money, then I see no conceptual problem with employing the PUBLIC’s values (as implemented through the public’s agent, government), rather than the recipient’s.
Now, as students of Public Choice theory will recognize, there is a world of difficulty in identifying the public’s values—and large opportunities for the process to be hijacked by minority interests. So, while I have no conceptual problem with designing social programs to promote the public’s interest, prudence may prompt me to reduce most assistance to cash.
3: What does the “welfare state” entail? Government provides vast wealth to for-profit business interests, e.g., in the form of low-cost access to mineral rights, grazing lands, no-bid contracts, etc. May government impose tangentially related conditions on these interactions, too? (Note: Government already does; there are various civil rights/affirmative action clauses in many government contracts.) Or would it make more sense for government to issue narrowly focused contracts, and then separately offer bounties for private firms to implement affirmative action programs?
4: Related to this last discussion: I have occasionally reflected on the merits of policy unbundling—that is, government separating each policy objective into its own program, and permitting people to opt in (or not) on an individual basis. Basically, all my chiding notwithstanding, I share some of the Thoughtful Libertarian’s anxieties about the constricting effects of combined governmental policies. Unbundled policies would doubtless be LESS EFFECTIVE and MORE WASTEFUL, but would help preserve individual autonomy.
For example, in Agency for Int’l Development v. Alliance for Open Society Int’l, Inc. (2013), SCOTUS held that government could not make grants to US citizens/organizations conditional upon the recipient espousing a (tangentially related) government-specified message. That was a small blow for policy unbundling: Even the person who pays the piper has limits on calling the tune. But this year SCOTUS issued the sequel, Agency for Int’l Development v. Alliance for Open Society Int’l, Inc. (2020), holding that government COULD impose such conditions when making grants to foreign people/entities outside the US. So much for unbundling.
Jackson
Oct 7 2020 at 9:02pm
A Response; Nudge: Welfare State Edition by Bryan Caplan
The article summates the opinion that when dealing with welfare policy, the Ward Paternalist approach takes the strengths of the authoritative and libertarian perspectives while ditching that in which is a liability on both sides. The authoritarian would promote government to force the spending habits of those who need financial assistance to promote correct financial decision making. However, you are incorrect about the “knee-jerk” libertarian’s reaction to paternalism. A true libertarian would want little to no government assistance received, rather than simply implementing the free spending of moderate to high amounts of government assistance.
As far as if paternalists view on welfare is economically viable to the majority, I would argue partially. The paternalist would be pro-excise tax, which makes sense on paper. However, all excise taxes do, are force addicts and irresponsible people into poverty. Under your proposed welfare system, the nudge would be one of force through food stamps, etc. This is a slippery slope, high excise taxes cause more of the earned money of the lower class to go to alcohol, drugs, and gambling. This means those people are more reliant on food stamps and can never get off. Do not argue that the high excise tax will cause the weaker to find their path economically because, as we know, these products are proven to be inelastic, and are taxed for that very reason. Instead, the solution is simple, low excise taxes and low government assistance. This would be the libertarian model. The government will save more money from a lack of government spending in the form of welfare than the government would have made off the excise tax.
It is the governments job to do what is best for the citizen. However, it is the citizens role to do what is best for themselves. The regulation of the government should be limited to the law and order of protecting those in which are harming society through their pursuit of self-interests, nothing more. If a citizen is lawfully pursuing wealth that should always result in a positive externality under the libertarian model. This will open opportunities due to free markets and trickle-down economics runoff. The unemployment rate will go down, without reaching zero as to maintain competition. Welfare should not be given any forceful strings attached because it should be insignificant in its allowance of free spending to harm the citizen.
Large welfare systems create dependency. Dependency creates less workers. Less workers equate to less need for entrepreneurship and cyclically less jobs, but also less competition because the satisfaction rate of the unemployed will increase with higher welfare. This is why the “Knee-Jerk” Libertarian you are trying to label would actually be correct in avoiding totalitarian policies involving forced spending of citizens or high taxation.
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