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Coase Theorem, Smoking, and “Libertarian Paternalism”

I am a little short on time (and motivation) this weekend but Sumner (who you may remember suffers from utilitarian sympathies) is doing my job for me so I will defer you to this post and this one.

For my part I will just mention that the Coase Theorem is my area of expertise and he has it right.  Also “libertarian paternalism” is stupid but he’s right in saying that it would be a vast improvement over our current harder forms of paternalism.  Also his test is the appropriate test and it will surely fail.  Oh and I can’t help myself from addressing this quote by Thaler.

In short, the risk of the slippery slope appears to be a figment of Professor Whitman’s imagination, and clear evidence of his bathmophobia. To be fair to him, this phobia is hardly unique to him and Professor Rizzo. Slope-mongering is a well-worn political tool used by all sides in the political debate to debunk any idea they oppose. For example, when the proposal was made to replace the draft with an all-volunteer army, the opponents said this would inevitably lead to all kinds of disastrous consequences because we were turning our military into a band of mercenaries. The argument is perfectly versatile. If we allow (blacks, women, gays. . . .) into the military then (fill in the awful but inevitable consequence here). If we allow free speech then we will give voice to the next Hitler. “Allowing a partial privatization of Social Security will destroy the moral fabric of our society.” Never mind that Sweden did it a decade ago. You get the idea.

Instead of slope-mongering we should evaluate proposals on their merits. (We devote a chapter of Nudge to an evaluation of the choice architecture used in Sweden’s social security experience.) Helping people make better choices, as judged by themselves, is really not a controversial goal, is it?

He is right that we should evaluate proposals on their merits but one of the merits involved is the extent to which they put us on a slippery slope.  And his examples are absurd.  A clear thinking person is likely to realize that a “band of mercenaries” as described here is most likely a better fighting force than a band of conscripts.  And this is not a “slippery slope” it is precisely the change being proposed.  He is saying that people were worried that turning out military into a band of mercenaries was a slippery slope to having a military that is a band of mercenaries.  This argument consists entirely of finding and applying the most frightening term to describe the policy.  The same thing is true of free speech.  Having free speech does give a voice to the next hitler.  It’s not a slippery slope, it’s just the real tradeoff inherent in that policy.  In my opinion it’s worth it.  But to invoke a slippery slope argument here is basically to say that you want the good parts without the bad parts.  That’s all well and good but it ignores the reality of the situation.  Interestingly, that’s the same thing that progressives are doing when they dismiss the slippery slope argument.  They are just saying “don’t worry we can have the good consequences without any of the bad ones” (the bad ones being that it puts us on a slippery slope to something bad) but this is often a real tradeoff and to dismiss it is to ignore reality.  Comparing these situations to the situations where we libertarians get concerned about a slippery slope obscures the fundamental difference between them.  Of course I suspect that this is exactly what he is going for…

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