Libertarian Paternalism

Tim Hartford argues against libertarian paternalism in today’s Financial Times. It’s a rather soft critique; Hartford accepts the basic premise of L.P.—using state power to “nudge,” rather than force, people to make decsisions favored by the state (e.g., requiring employers to change “opt-in” retirement plans to “opt-out”)—but worries about its implementation by British bureacrats. “[R]ather than understanding behavioural economics, the Tories have adopted nudging as a convenient label for a jumble of gimmicks.” OK, fine. But there is a more fundamental critique of libertarian or “soft” paternalism, namely that it is inherently self-contradictory. As Mario Rizzo explains, in an exchange with Richard Thaler:

Libertarianism is a political philosophy that seeks to reduce the activities of the state to a very low level. It is very much about less government. Paternalism is a political or moral philosophy that seeks to override the actual or operative preferences of individuals for their own benefit, however defined, according to Donald VanDeVeer’s 1986 book on the subject. When applied to the actions of government, paternalism cannot be libertarian. It can only be more or less intrusive.