Putting Our Bourgeois-Bohemian Rulers in Their Place

Let me begin by saying that I’m far more unimpressed by the contribution of behavioral economists  than even Wright and Ginsburg. The perception that people aren’t hardwired, so to speak, to always act — in their own interests has only been challenged by those who have made the error of imagining that all human behavior either is or should be all about rational choice on the level of interests. Similarly, Simon’s alleged breakthrough that people are content to “satisfice” rather than maximize when it comes to choice is little more than common sense. Most people, most of the time, don’t have either the time or the inclination to do the calculating required to achieve maximizing. Economists have given a lot of thought, for example, to calculating about how much to tip, but most people barely give it a thought.

A gentleman or a generous man appears not to care—and really doesn’t care—about being precise when it comes to such trivialities. Is his disinclination to calculate contrary to his self-interest? That question can be answered only by someone who knows what his true interests are. That answer, it seems to me, is obviously beyond the competence of the economist.  The economist does have the inclination to believe that the person moved by honor or glory is a sucker, while the “entrepreneur” oriented around wealth and power is the model of human excellence. But we might say the economist as economist has no right to make that distinction. Economists do have to acknowledge that General George Washington and General Nathan Bedford Forrest were much greater risk takers than Bill Gates. And people who put their lives, fortunes, and sacred honor on the line (I don’t mean Newt Gingrich) have laughed at the thought that the point of life is autonomy, at least as understood by John Stuart Mill.

The economist has no way of knowing if the artist or statesman or philosopher (such as Thomas Jefferson) who was so lacking in prudence that he took in huge amounts of money but still died poor was happier than, say, the Steve Jobs who died really, really rich. Nobody knows whether Blaise Pascal or Friedrich Nietzsche or Charley Parker would have been happier had they calculated—in the manner of one of today’s “risk taking” bourgeois bohemian innovative entrepreneurs—more about their health and wealth. We wish they could have displayed their excellence while being more sensible, but it’s not for us to say that they could have successfully “satisficed” had they had better guidance. Pascal and Parker were nothing if not risk takers, but economists at are a loss when it comes to explaining their behavior. And the behavioral economist would have nudged the heck out of them against their true inclinations—allegedly for their own good.

So I agree with Wright and Ginsburg that libertarian paternalism is, in principle, an oxymoron. Policies that nudge people in the direction of giving greater attention to their health and wealth, it seems to me, don’t really have the interests of the nudged most in mind. The impulse to nudge originates with members of our bourgeois bohemian elite who just happen to be economists. Our country, as Charles Murray, David Brooks, and others have described, is now divided into what Brooks calls two tribes. There is the “upper tribe” or meritocratic elite that’s smarter, more productive, more bourgeois (or only bohemian—or intellectually/emotionally libertarian—on the level of talk), and more thin and fit than ever. And there’s the increasingly nonproductive, uneducated,, socially detached “lower tribe” that seem to be stupider and fatter than ever.

Nudging people to be healthier and wealthier is in the “upper tribe’s” self-interest and in accord with their relentlessly puritanical moralism when it comes to health and safety. We used to think only the good die young—that is, we used to think that high virtue was connected to a kind of reckless indifference to health and safety. Now we think only the stupid and self-indulgent die young—criticizing them for being too “risk taking” or not attending to all the “risk factors” obsessed over by the enlightened few who put health and safety first. The nudgers are more repulsed than error by the sheer stupidity of those who need to be nudged. After all, type-2 diabetes is almost completely avoidable disease that’s become an epidemic. We can’t outlaw refined carbs, but we can help people avoid the life-threatening inclination of eating too many of them. The impulse for nudging here comes from those inhabiting the truthful and moral world of “whole foods” reacting against the tribe that’s more attached, for a variety of reasons, to “fast foods.”

For the liberal economists of this upper tribe, Wright and Ginsburg’s defense of the risk-taker might seem perverse. It’s one thing to take risks in business. If things go sour you don’t actually die. You can, in America, declare bankruptcy and start over. That why it never seemed to me that the virtue of courage (despite Ayn Rand’s dramatic efforts) really applies to the “heroic” entrepreneur. And stuffing one’s face with the Twinkies or Whoppers may, in a way, be laughing in the face of death, but it’s not really courage—being devoid of noble purpose—either. Not only erroneous but pointless risk-taking surely is not worth defending. That’s not what Kant was thinking about when he praised autonomy!

It surely would be better if members of the lower tribe calculated more about the health consequences of their diets. It might not be better, however, if they obsessed as much about or were as afraid of food as so many members of the upper tribe. So Wright and Ginsburg remain on firm enough ground when they say that government experts just don’t know enough to know what balance would be best for human happiness. Too much and too little concern with health and safety, we might speculate, rob people of ordinary happiness or enjoyment. . It’s easy to add that we really are pretty clueless—even with our social science—about who’s happy. All we have to go on is self-reporting, which may be self-deception or bragging.

But the liberal economist (and many conservatives too) are actually worried about the burden the fat, stupid tribe impose on the rest of us. Imagine all the unnecessary health costs and loss of productive days of employment!  The same sort of thinking applies when thinking about the lower tribe’s indifference to saving and providing for their economic futures. In a time when defined benefits are everywhere being replaced by defined contributions, if they don’t get smarter about their choices they’ll end up being impoverished burdens on us all. In both cases: We need to nudge them to take care of themselves so we don’t have to take responsibility for them. Their freedom to err—combined with their stupidity—are threats to the upper tribe’s inclination to be indifferent to their existence.

We can see here, if we look closely, the “liberal guilt” or compassion that was the foundation of welfare-state redistribution morphing into a kind of libertarian inclination to not be bothered by those less fortunate or gifted at all. So I have to disagree with Wright and Ginsburg that the behavioral nudgers don’t take autonomy seriously. They are, as rational choosers, concerned above all with their own autonomy. We could easily wish that our elites were less libertarian and more paternalistic in the manner of, say, Atticus Finch—or were less tribally segregated and displayed a genuine concern for every member of the whole community.  We could even wish they were more attuned by the Christian insight that every human person is unique and irreplaceable and of infinite value as a being with a soul. One of my objections to behavioral economists is their lack of genuine class or sense of personal responsibility..

Someone might say that I’m asking behavioral economists to be more than economists. But anyone who makes public policy has to be more than an economist. Political science, as Aristotle says, is the comprehensive science of the human good, and one that requires considerable—if far from complete—knowledge of the human soul. An economist, to me, is a technician. He or she shows us how to maximize our wealth and power. It’s up to us to use that knowledge as we think best. Maximizing wealth and power may not be in our true interests, and the economist as economist should have no opinion on whether or not it is. I, for one, want economists to know their place.

Wright and Ginsburg understand being an economist quite differently or more comprehensively. It’s the economist who teaches the relationship between liberty and responsibility or the intrinsic value of freedom or autonomy. It’s the economist who resists the popular demand for institutions that insulate individuals from responsibility. It’s the role of the economist “to remedy” the “widespread failure to understand” that the independence offered by the market should be the model for all of society and maybe for all human relationships. The more freedom to fail the better. The more we understand ourselves as “sovereign individuals” in the manner of the free market the better. The logic of the market should be the calculation that informs human life as a whole. It’s easy to ask what in the training of the economist equips them to engage in comprehensive reflections on the human good. Certainly Wright and Ginsburg could be accused of mining the philosophers for quotes to support for what they already believed to be true about who we are. They might read Tocqueville (in the fabulous Liberty Fund edition) for political and religious evidence of the emptiness—not to mention impossibility—of autonomy so radically understood.

There’s no denying that when that comprehensive claim of the libertarian economist, when applied politically, displays, surely against its principles, its own form of paternalism. Libertarians consistently fail to convince people that they should abandon every social safety net that insulates them from individual responsibility. Many libertarians actually don’t like democracy or popular choice much. They prefer an interpretation of the Constitution that has a huge role for judges who, applying the “presumption of liberty,” declare unconstitutional all sorts of democratically enacted laws. As Randy Barnett has explained, a consistently libertarian interpretation of the Constitution is both pro-Roe and pro-Lochner or minimizes democratic choice in favor of what’s basically an elitist view of individual choice. So we can say that the economist as comprehensive thinker has, in either the libertarian or behavioral mode, an ambivalent relationship to claims for self-government. The least we can say is that the whole autonomy issue is much more complicated than libertarians think. I’m tempted to add that, thank God, libertarian economists with philosophical pretensions or behavioral economists in the same mode don’t actually rule. That’s why I’m closer to Justice Scalia—or judicial restraint—than Judge Ginsburg on many issues of constitutional interpretation.

From a more political view, it’s obvious that we’re already engaging in soft forms of behavioral economics with the intention of influencing individual behavior in somewhat non-individualist directions. The tax deduction for charity is one foundation of a kind of American distinctiveness that quite effectively limits government. All sorts of American social, educational, religious, and local institutions are sustained by personal and corporate donations, and the ability of individuals to rely on these singularly strong social institutions makes them less dependent on government. The goal here is not quite autonomy in the sense defended by John Stuart Mill or Wright and Ginsburg. It’s assumed that radical autonomy is impossible, that promiscuous distrust of all authority makes free and responsible thinking and action impossible. The best way to limit the political dimension of human life is to support the social dimension, and the best kind of political support for those “intermediary institutions” is indirect. Elimination of the charitable deduction might, from a consistently libertarian view, serve individual autonomy, or it might, from an Aristotelian view, undermine the conditions that sustain autonomy in our country.

Another form of behavioral economics in the service of a political end are the family-friendly features of the so-called “Bush tax cut.” Rick Santorum, of course, has taken a lot of libertarian heat with his suggestion to triple the deduction per child. The thought here is our individualistic behavior (which includes obsession with one’s own health and safety) has produced a nation with a lot of old and unproductive people and fewer young and productive ones. And there’s at least some connection, we now see clearly, between economic growth and at least a certain level of fertility. So the Santorum approach might be justified with the claim that some people contribute to our nation’s future primarily through money, others through children. We need both. It goes without saying that this approach—which regards thinking of people not only as autonomous individuals (with rights) but as parents (with duties)—is contrary to the libertarianism shared by both the fashionable version of behavioral economics and more consistently libertarian economics. Arguably our Supreme Court can be understood to have said, in ­Planned Parenthood v. Casey and Lawrence v. Texas, that our Constitution’s view of liberty commands that we must think of each of us as a free and equal individual and not as a biological man or women. But that may be only on the level of coercion, not on the level of nudging. According to Santorum’s book It Takes a Family, thinking politically about what’s required to sustain families is indispensable for sustaining the inculcation of moral virtue required to exercise one’s one virtue responsibility. On that point: Both Aristotle and Locke agree.

Let me close by mentioning that both forms—paternalistic and nonpaternalistic—of libertarian economics are simply blind to the criticism found in philosophers from Leo Strauss to Martin Heidegger that too absolute or empty a view of autonomy can’t sustain the free individual from the imperatives of productivity or technology these days. Consider the example of surgical enhancements—nipping, tucking, Botoxing, enlarging, reducing, and so forth. According to a literal reading of the Hippocratic Oath, they should be illegal. They turn a person into a patient for reasons having nothing to do with his or her health. That’s why health insurance generally doesn’t cover such procedures. But out of a concern for autonomy, we allow individuals to choose them.  They most often choose to look younger and more pretty and pleasing. They choose them, in other words, to be more productive, more marketable. When some choose them, others are pretty much compelled to do the same to remain competitive.

So radical or undefined autonomy is readily trumped by productivity. I could go on, of course, to show how this rule applies and will apply more reliably to mood control and various cognitive enhancements. Individuals will remain free to choose against them, but not if they want to be successful in their chosen professions or avoid loneliness. We can see that even autonomy-freak professors are succumbing, gradually but steadily, to the imperatives of productivity. One big reason: They are unable to give autonomy any more content than one’s own subjective preferences.

Peter Lawler

Peter Lawler is Dana Professor of Government and former chair of the department of Government and International Studies at Berry College. Lawler served on President Bush's Council on Bioethics from 2004-09. He writes at National Review Online's Postmodern Conservative blog.

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Comments

  1. John Lewis says

    I agree with you, and as a philosophy undergrad with a focus on J.S. Mill, with half an MA in Economics, earned in the army while not really risking my life and almost a JD… it is likely that I am supposed to.

    “An economist, to me, is a technician. He or she shows us how to maximize our wealth and power. It’s up to us to use that knowledge as we think best. Maximizing wealth and power may not be in our true interests, and the economist as economist should have no opinion on whether or not it is. I, for one, want economists to know their place.”

    I actually think the economist knows less than the lawyer, and is in some ways less of a technician, than the Lawyer.

    The problem here is really in how you define the client. Both the economist and the lawyer are generally talking about situations where the client situation is already answered.

    Consider that if the client is a corporation, your suggestion of greater philosophical scope is ridiculous, and borders on malpractice depending upon how you think about the buisiness judgement rule. “Maximizing wealth and power may not be in our true interests”, possibly, but this just means that naked attempts to maximize wealth and power might not be the most efficient ways of maximizing wealth and power. That is “true interests” are fiduciarily contrained by a duty to maximize profit.

    The business judgment rule leaves room open for tactics, but a good chunk of the time lawyers and economists are working to maximize the wealth and power of the clients they serve.

    Notice that your criticism seems typical of those who try to escape being technicians. “The perception that people aren’t hardwired, so to speak, to always act — in their own interests has only been challenged by those who have made the error of imagining that all human behavior either is or should be all about rational choice on the level of interests.”

    Notice that if isn’t about rational choice on the level of interests, then there is no way to determine what constitutes malpractice for those who owe duties to “clients”.

    I am more impressed with behavioral economics for answers to specific questions (i.e. what is the signficance of a rule for organ donation that is check the box to accept vs. check the box to opt-out.) than I am impressed with Murray and David Brooks.

    I am not sure the two cultures don’t just follow from the Labor law/Buisiness association law. Another way of rediscovering blue collar/white collar, only in a rather un-technical way that doesn’t really address which occupations can be lumped together to make up a suitable collective barganing class.

    Notice that the upper class rules only by virtue of having answered a lot of classification questions intuitively. No one in the class even knows all the law that structures the society. But it would stand to reason that the upper class as the most heavily regulated class with the most fiduciary duties, would end up displaying these characteristics.

    “criticizing them for being too “risk taking” or not attending to all the “risk factors” obsessed over by the enlightened few who put health and safety first.” A rather denigrating view of the “enlightened few”, but many of these would have or would be expected professionally to be able to develop policies that put health and safety first.

    If you are trully Aristotelian, then you understand human beings to be political animals who are predominately creatures of habit. Why shouldn’t the development of professional work habits come to structure society?

    • says

      that last bit seems contradictory one might masuse that everyone being solely responsible for their own welfare would pit each individual against one another in a total competitiveness the Hobbesian thing it would result in a Somalia type of anarchy but the people there are not freely choosing that disorder with everyone totally self-reliant in a less traumatized state we would be able to see more clearly the need we have of other people to make a living for ourselves -being solely responsible for your welfare does not mean having to make a living solely on your own with everyone on their own people would see the need for forming associations, just as we do now, so that everyone could pursue their self-interest in a reasonable mannerlooking out upon the social landscape with the burden of one’s existence squarely upon one’s own shoulders each and every individual would want to create an economic and banking system that was primarily if not exclusively concerned with providing optimum conditions for small to medium sized businesses to thrive and thus creating plenty of jobsand would not each and every individual want to create communities whereby everyone could pursue a life for themselves while conditioning one another with the good habits that contribute to maintaining a vibrant agreeable society good habits like governing oneself, which is implied in the idea of self-governmentbeing solely responsible for your own welfare means that there would be no reliance on government entitlement programs so that people would not only have to work but also save money which of course loops back into having the kind of economic and banking system that would allow for self-reliance

    • says

      The connection wbeteen finance and macro-economic effects seems pretty straightforward to me. But I very much disagree that this crisis has vindicated the Keynesian.A recession/depression happens when a massive bubble pops. Usually that bubble has been in the credit markets, as a result of maturity transformation in the banking sector. The collapsing credit bubble causes stock market and real estate bubbles to also collapse.When a bubble bursts people’s total paper wealth drops sharply. Every person has a target paper wealth to expenditure ratio. If paper wealth falls, a person must cut spending or else they will run out of retirement money.When people cut spending they do so by cutting purchases on luxuries and durables. Businesses producing luxuries and durables see their income fall, and lay off thousands of workers. If the fall in paper wealth is large (10+%) mass unemployment will result.When aggregate demand and aggregate income falls, the deficit goes up. As the deficit goes up, the private sector increases its holdings of treasuries bills, and thus has a net increase to its balance sheet. As total paper wealth goes back up again, the recession subsides.The government could speed this process up considerably by initiating a policy of balance sheet repair. The easiest way to do this would be to simply take all outstanding currency and bonds ( bank accounts, CD’s, treasuries, investment grade bonds) , multiply the face value by 20%, and print enough currency to back the new higher values. The policy is clean, quick, and would avoid the unemployment altogether. Another slightly slower method of balance sheet repair is to declare a tax holiday and print money to fund government operations. The Keynesians have this weird idea that aggregate demand falls because of animal spirits or lack of confidence . Thus a stimulus is needed to get people to spend their money. This is nonsense. People are not spending money because their paper wealth is much less. If you prod them to spend more, they will run out of savings. Restore the balance sheets, and the problem is fixed.Keynesians also believe that the government should step in and make for the lost spending. All this does is transfer resources to the government (often permanently due to the ratchet effect) while businesses continue to shed workers because people are not spending money. The government spending may alleviate some unemployment. But even this is not guaranteed, as the stimulus money is often spent in areas where there is not much job loss (for instance, much of the current stimulus went to univerisities, but the worst job loss is in home construction and manufactured goods)The other response is to blow another bubble. This is basically what Greenspan did in 2001 ( and Krugman at the time called it the necessary way to restart the economy). As you point out, this only creates more problems down the road. Eventually the bubble pops again, and then you have to deal. Meanwhile, the process of blowing these bubbles transfers a lot of money to Wall St.Blowing the bubbles is totally unnecessary. The dollar is a fiat currency. The government should provide enough currency to meet demand. If paper wealth and aggregate demand fall sharply, the government should step in with enough newly printed money to restore the balance sheets.

    • says

      yes, they had worried. The ronpesse of the economists was different:More than one-third of Ihe economists either refused to answer the question regarding what is fair, or gave very complex, uncodable ronpesses. It seems that the meaning of fairness’ in this context was somewhat a]ien for this group. Those who did respond were much more likely to say that little or no contribution was fair.Another study involved a game played by an allocator and a receiver . The allocator was given $10 and asked to divide the cash between himself and the receiver. The receiver could either accept the division (in which case, both parties kept the sums proposed by the allocator) or refuse it (in which case, both got nothing). Fairness calls for an equal split. But what does self-interest tell the allocator to do? Only a non-economist could ask. The answer is: keep $9.99, and give the receiver one cent. The receiver will not refuse because one cent is better than nothing (and self-interest does not understand spite). Note also that the game was played just once for each pair, so there was no reason for the receiver to refuse in the hope of prompting a better offer next time. As before, the study found that economics students performed significantly more in accord with the self-interest model than non-economists.Other studies have found the same. A survey asked 1,245 randomly selected college professors how much they gave to charity each year. About 9% of the economics professors gave nothing; the proportion of professors in other disciplines giving nothing ranged between 1.1% and 4.2% (despite generally lower incomes than the economists). The median gift of economists to big charities such as the United Way and viewer-supported public television was substantially smaller than the median gift of non-economists.The prisoner’s dilemma a game where two players have to decide whether to co-operate with each other or cheat has long been of great interest to economists. The key feature is that for each player, defecting secures the best outcome regardless of what the other does. But if both players accept this logic and defect, they end up worse off than if they had co-operated. The Cornell team conducted an experiment involving 267 prisoner’s dilemma games. Economics stu- dents defected 60% of the time; noneconomists defected 39% of the time. Does training in economics make you mean or is it just that mean people are somehow attracted to economics? To find out, the Cornell team did a further experiment, to see whether students became more or less honest in a hypothetical situation, after doing some economics. They compared three sets of students: the first took a course in mainstream microeconomics, taught by an instructor with an interest in industrial organisation and game theory; the second took a similar course, but taught by a specialist on development in Maoist China; the third took a placebo (astronomy). Across a range of questions, the pattern was consistent: the first set contained the largest proponion of students who became less honest; next came the second set; honourably in the rear were the astronomers, with the smallest proportion of students who became less honest.Perhaps, then, there is a public interest in curbing the study of economics. Or alternatively a conclusion that this column would prefer to endorse economics needs to take psychology more seriously. The fact is that people do co-operate more than the self-interest model (useful though it is) seems to predict. As the Cornell team points out, recent research sheds light on one reason for this.Imagine a world in which people move from one prisoner’s dilemma to the next (ie, the real world). If people can choose their partners freely, and if honest types can spot each other in advance, co-operators will be able to interact selectively with each other and will therefore do better than cheats. Experiments have shown that people are surprisingly good at telling co-operators and cheats apart, even on the basis of what seems to be limited information.So there you have it: narrowly self-interested behaviour is ultimately self-defeating. Economics practised with that in mind could become the uplifting science. If economists can only incorporate a bit of psychology, they’ve got it made. -* Does Studying Economics Inhibit Co-operation? By Robert Frank, Thomas Gilovich and Dennis Regan. Journal of Economic Perspecives, Spring 1993.

  2. says

    I’m a libertarian sauecbe I’m a liberal.Likewise, I’m a libertarian sauecbe I’m a conservative. Libertarianism is only an individualistic wing of liberalism or conservatism. Most liberals take the tabula rasa argument of classical liberalism and turn them into the idea that man is clay which society and the state can mold into a higher, freer, better man. The New Man Through Communism idea came directly out of this view of the nature of man. Likewise, the conservative belief in original sin or the basic tendency toward evil (or anti-social behavior, if you so prefer) is a powerful motivator to either restrain the state or unleash it to control society.In the case of your Mormon example, like Howley, you fail to account for the dichotomy of cultural libertarianism: cultural libertarians want to maximize personal choices, but when adopted as a set of social values, libertarianism drives libertarians to actively undermine a whole array of options. You are, in essence, adopting a somewhat softer form social ostracism like what used to be used to control sexual behavior.For right-libertarians like me, this is no problem. I could care less about those Mormon extremists so long as they aren’t beating their kids, marrying them off against their will and things like that. I’m down with Muslim men having four wives. If two men and a woman want to have a polyandrous relationship, that’s their business. I don’t personally approve of any of those choices, and would freely tell them such if asked. You can have my support in choosing your lifestyle, you just can’t expect me to uncritically nod my head in approval. No has a right to validation.

    • says

      I hate the fact that The Economist has such a misnomer name. gcanhe it! Your magazine’s not that much about economics as just politics and global affairs in general. Let a more economics-oriented magazine have the title.

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