Libertarian Paternalism is Clearly an Oxymoron

Blackwhite…this word has two mutually contradictory meanings. Applied to an opponent, it means the habit of impudently claiming that black is white, in contradiction of the plain facts. Applied to a Party member, it means a loyal willingness to say that black is white when Party discipline demands this. But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary. This demands a continuous alteration of the past, made possible by the system of thought which really embraces all the rest, and which is known in Newspeak as doublethink.

— George Orwell, 1984

“Hey, look, I’m not racist but…”. You just know that this statement is likely to be followed by a racist comment of some sort, right? Well, what about the statement — issued in the title of a paper — that libertarian paternalism is not an oxymoron. Yeah, you’re probably going to think that what is likely to follow is going to be oxymoronic and poorly argued.

Well, you’d be right. But even the term itself — “libertarian paternalism” — is so obviously a perversion of language that it should be immediately confined to the dustbin of duoblethink words along with “blackwhite” and “goodbad”. What the coiners of the term have done is fuse together two words that are mutually contradictory. In doing so they seek to obfuscate thinking and confuse people.

Don’t get me wrong. Politically and economically I’m very sympathetic to the argument put forward by the so-called “libertarian paternalists”. I certainly think that state intervention is a necessity in a modern economy; I certainly think that people do not always act in their own self-interest; and I fully agree that the less encroachment upon personal freedom that the state has to engage in to achieve the best results the better. But this does not excuse nonsense. We do not need to pervert language and reason to make this case.

Here is the basic argument as laid out in Sunstein and Thaler’s paper Libertarian Paternalism is Not an Oxymoron,

We elaborate a form of paternalism, libertarian in spirit, that should be acceptable to those who are firmly committed to freedom of choice on grounds of either autonomy or welfare. Indeed, we urge that libertarian paternalism provides a basis for both understanding and rethinking a number of areas of contemporary law, including those aspects that deal with worker welfare, consumer protection, and the family. In the process of defending these claims, we intend to make some objections to widely held beliefs about both freedom of choice and paternalism. Our emphasis is on the fact that in many domains, people lack clear, stable, or well-ordered preferences. What they choose is a product of framing effects, starting points, and default rules, leaving the very meaning of the term “preferences” unclear.

The substance of the above quote is actually true. When scrutinised in any meaningful way so-called ‘preferences’ in marginalist economics are fairly meaningless. Human beings are not robots and their decisions are usually made under the substantial weight of ‘framing’ and subject to all sorts of biases and blindnesses. Put more simply: sometimes people don’t make very good decisions.

The idea of the self-proclaimed libertarian paternalists then becomes to ‘nudge’ people to make good decisions but give them an opt-out clause so that the choice is not forced upon them. Basically, the idea is to use the superior intelligence of the policymakers to trick people into doing what the policymaker thinks will best ensure the welfare of both the few and the many. Advertisers have been doing this for years, as have many other in the public relations industry.

You see, the problem with this argument is that it basically doesn’t want to recognise that while such ‘soft paternalism’ — let’s not delude ourselves with terms like ‘libertarian paternalism’ — is undoubtedly preferable to ‘hard paternalism’ it is only sometimes adequate. Economic policymakers often have to confront decisions that they must make that will have very ‘hard paternalistic’ outcomes.

For example, if your country was facing down a massive speculative attack on the currency it would be likely a good idea to counteract this with capital controls. These would limit the freedom of people to move money in and out of the country and this would likely be very unpopular. The inflation that would result without these controls, however, would provoke far more damage and would ultimately be much more unpopular.

The same case can be made with respect to almost all economic policies: from interest rates, to the taxation and spending system, to the minimum wage. Even policies with a substantial component of free choice — like the MMT Job Guarantee which offers anyone willing and able to work a job at a set rate — has a ‘hard paternalistic’ element to it in that we know that this will likely increase worker bargaining power and put upward pressure on wages. Many of us may like this outcome but we should recognise that it is coercive on certain groups.

Look, the libertarian paradigm is ridiculous. It rests on the idea that people exist as atoms in a world where each atom has no effects on other atoms except through completely free contractual arrangements. As a starting premise for a political philosophy this should be ridiculous to anyone who is not completely mentally insulated from the world around them. What such fantasies then generate is the obverse nonsense that any form of paternalism by the state is basically as bad as a forced labour camp or something similar.

This rubbish is propaganda, of course. It persuades people by framing issues in a certain way and appealing to primitive emotions. Ironically, it is a manifestation of precisely the sort of ‘nudging’ or ‘soft paternalism’ that Sunstein and Thaler advocate — and that the libertarians claim to hate. In short, anyone who buys such primitive arguments is the very rube that the soft paternalistic professions like advertisers, political strategists and public relations people target.

Just dump the libertarian stuff. Sensible people will recognise that we should try to maximise individual freedom unless this is not possible given a certain set of circumstances. The libertarian rubes — numbed as they are through the propaganda they are spoon-fed — will always paint these people as tyrants. But no matter. It’s better to keep our language and our reason intact than to try to appeal to people who are clearly brainwashed by using doublethink-oriented brainwashing techniques.