Time out from posting on Galbraith to note a current discussion. My next post on Galbraith will appear this afternoon.
Co-blogger Bryan Caplan has posted recently and cogently about libertarian paternalism and outright coercion. As it happens, I have a review of "libertarian paternalist" Cass Sunstein's latest book, Simpler. It will be out in the Fall 2013 issue of Regulation.
Here's an excerpt from my forthcoming review that goes to some of what Bryan blogged about.
Moreover, Sunstein, who has been a strong proponent of "libertarian paternalism" by government, advocates measures that go beyond libertarian paternalism to straight coercion. Many libertarians have feared that some of the "nudges" libertarian paternalists advocate would turn out to be simple coercion. I was an early, though cautious, defender of Sunstein's and co-author Richard Thaler's advocacy of nudges in their book, Nudge. (See my review of Nudge, "A Less Oppressive Paternalism," Regulation, Vol. 31, No. 2, Summer 2008.) But based on Sunstein's book, I must conclude that many of the libertarian critics' fears have turned out to be justified.
In at least three instances, Sunstein crosses the line from advocating nudges to advocating outright old-fashioned coercion: price controls, restrictions on the size of soda containers, and graphic warnings about smoking.
Take price controls. (Please.) One of the worst regulations Sunstein favors is price controls on health insurance. Sunstein, who is obviously economically literate, doesn't seem to feel the need to justify price controls, despite the fact that opposition to price controls and the distortions they cause is one of the things that the vast majority of economists agree on.
Or consider New York City mayor Michael Bloomberg's move in 2012 to limit the size of soda containers to sixteen ounces. Sunstein points out an obvious fact: that limit would not have allowed people to choose a larger size. Yet, in discussing comedian Jon Stewart's negative reaction to Bloomberg's ban of larger containers, Sunstein writes, "Stewart is capturing a pervasive and general skepticism about paternalism in general and nudges in particular." Here, Sunstein himself is incoherent. As he had admitted a few lines earlier, Bloomberg's regulation was a ban, not a nudge. Sunstein might argue that it is a nudge because one can always buy multiple containers. But that is costly. Moreover, what if someone wants 20 ounces of a soda? It's hard to buy a 4-ounce drink. I hate to say it, given his earlier huge investment in advocating what really are nudges, but Sunstein seems to be illustrating precisely what many libertarian critics had feared: one of the primary advocates of nudges and libertarian paternalism seems quite comfortable with old-fashioned coercive paternalism.
Or, finally, consider the graphic warnings that the FDA wants to require on cigarette packs. Such warnings include disgusting pictures of people with bad health due to smoking. Sunstein claims that such warnings "are a distinctive kind of nudge." "However graphic," he writes, "the warnings maintain freedom of choice." It is true that, with the graphic warnings in place, people would still be able to choose to buy cigarettes. But there's more than one choice involved. Another choice is the kind of package people buy their cigarettes in. And the FDA regulation that Sunstein supports would substantially limit people's choice. Call it a hunch, but I think most smokers would rather not buy their cigarettes in such packages. My guess is that the reason Sunstein is oblivious to that lack of choice is that he's not in the market for cigarettes. I wonder how he would feel if, when he ordered a fattening dessert in a fancy restaurant, the server were required to serve it with pictures of people who are in poor health because of overeating such desserts.
Moreover, whether the issue is cigarettes, cars, drugs, or any other good, Sunstein consistently puts a zero weight on the freedom of producers. In discussing the various examples he cites, Sunstein devotes not a sentence of concern for their freedom--or lack of. His indifference to producers' freedom becomes explicit in his discussion of regulations on advertising airline fees. In 2011, notes Sunstein, the Department of Transportation introduced a regulation to require "airlines to disclose prominently all potential fees on their web sites." "Even better," he writes, "airlines have to include all government taxes and fees in every advertised price." Sunstein notes that some airlines sued to invalidate the regulation, "complaining especially about the requirement to include taxes and fees and invoking the First Amendment, no less, to say that the requirement was unconstitutional." Here's what he doesn't tell you: the airlines that sued, in Spirit Airlines, Inc. v. Department of Transportation, wanted to be able to state the government taxes on the ticket in a font as big as the font on the overall price. But the regulation prohibits them from doing so. So passengers won't be as aware of the government's role in high airfares as of the fares themselves. That sounds like a First Amendment case to me. You would think that Sunstein would understand that. After all, his book is a commercial product and he left out this important piece of information. In that sense, he's like an airline that leaves out information about high baggage fees. Yet I bet he would object to a law requiring him to tell the reader the whole story. To his credit, he earlier rejected his own tentative proposal for a "fairness doctrine" for the Internet; he had toyed with the idea of legally requiring bloggers to link to contrary views. That Sunstein even seriously thought of that idea, though, suggests that on the issue of free speech, he has a tin ear.