Paternalism, Utility, & Choice

When you were a child, it is likely that your parents told you to behave in certain ways “for your own good.” Out of concern for your safety, they directed you to avoid playing in the streets and sticking your fingers in electrical sockets. Out of concern for your future relationships, they instructed you to avoid unruly behavior at the dinner table and to learn basic manners.

As you grew up and became an adult, maybe the thought of living in a world without this sort of benevolent, careful direction intimidated you? Let me ease your mind and inform you that the friendly federal government is more than willing to take on some of these parental burdens and instruct you on the best possible way to live.

Since you are not able or motivated to adequately plan for your future, you should be encouraged that the Social Security system exists to involuntarily take a portion of your earnings and put it aside for your retirement. Since you may or may not care about preserving your life, you should be relieved that laws exist to force you to wear seatbelts while driving. Since you are quite likely to blow all of your money on lotteries or other betting activities, you should rejoice that the government severely restricts gambling. Since you could seriously damage your health through the use of certain drugs, you should be encouraged that the government has outlawed all sorts of narcotics.*

This sort of behavior on the part of the government is known as paternalism, which can be defined as the practice of subordinating individuals for their own best interest.

According to many economists, however, it is assumed that individuals are rational and already able to make decisions based on their own interests, without additional direction. Individuals maximize their utility (basically their satisfaction, happiness, etc.) by making choices based on a particular set of unique tastes and preferences. This view assumes the following:

a) individuals act based on their self-interests and try to maximize their utility
b) each individual has unique preferences, which means that optimal decisions vary depending on the person involved
b) because of these unique preferences, utility is maximized via choice
d) because of the previous three assumptions, individuals (as opposed to outside forces such as the government) are best able to maximize their own utility**

These assumptions lead to a number of questions/concerns regarding the paternalistic behavior of government.

  1. If people are already motivated to look out for their own interests, why does government need to step in and command individuals to behave “for their own good?” It seems that most people value their lives and would use seatbelts and/or drive carefully without government mandates. Similarly, if saving money for retirement is a wise, self-beneficial thing to do, it seems that most people would do this on their own. If people chose not to put money aside for retirement, this would reflect unique utility-maximizing preferences on the part of the individuals involved. Maybe these people do not expect to live into retirement, see no purpose in saving money for the future, and thus, have a very different idea on how to maximize utility than the government. This leads to the next question.
  2. Assuming the government’s view of an individual’s “best interest” is different than the individual’s view, what qualifies the government to make this distinction? Do we believe that a small, elected group of people have somehow been enlightened to know how millions of others should live for their own good? For example, drinking a large soda will likely have negative effects on my health in the future. But maybe I value the present benefits of this decision over the future costs. The government is free to say that my decision is unwise and inform me of the consequences of my action, but can they legitimately say that my decision to drink a large soft drink is not out of my own interest? Can they truly say that I would be happier foregoing the soda in order to (potentially) live a longer, healthier life?
  3. If individuals maximize their utility through choice, how do inflexible mandates really allow individuals to act “for their own good?” If unique preferences and situations dictate differing decision-making criteria, how do one-size-fits-all commands allow individuals to maximize their utility? Let’s say that preventing an addict from gambling actually works. Due to legal restrictions, this person no longer wastes his/her money and makes more prudent financial decisions. What about the person who has the self-control to place a few bets here or there without causing complete financial ruin? The inexact, unnuanced nature of the law forces all people to behave in ways that might benefit some, while simultaneously hurting others.
  4. Do these paternalistic laws actually work to benefit people?
    – I will probably never see any of the Social Security tax that is being withheld from my paycheck. In terms of aiding me in planning for my retirement, the mere non-existence of the Social Security system, which is a drain on my income, would be incredibly beneficial. If I did not have to pay into such a broken system, I would have additional money to set aside for the future, invest, and earn interest.
    – On another note, do seatbelt laws actually help promote safety? Research has shown that these laws have no effect on driver safety and have a negative effect on pedestrian safety.
    – In terms of gambling, it seems that if I’m determined to blow my paycheck, I have many other opportunities besides betting. That’s not even considering the moral inconsistencies that come into the picture when outlawing certain types of gambling, while only allowing government-regulated gambling activities. If the government is truly concerned about the dangers of gambling addiction, why do they even allow any forms of gambling?
    – It seems that even if the answers to the first three questions necessitate government involvement, the actual results of these paternalistic laws show that this type of intervention has been far from effective.
  5. Does government actually have the right to order people to act “for their own good?” This is a complex question, which would take a considerable amount of time to answer fully. To briefly deal with it, I would argue that people have a right to use their life and property how they see fit and government infringement on these rights necessitates substantial justification, in order to be deemed appropriate (if ever). Furthermore, small paternalistic steps to micromanage and shape certain aspects society can lead to increased government power and future abuses and injustices. Along these lines, economist and historian, Murry Rothbard, argues that paternalism “leads straight down the logical garden path to [a] totalitarian cage, where people are prohibited from eating candy and are forced to eat yogurt ‘for their own good'” (from “For A New Liberty,” page 136). As noted earlier, one’s own good (from an economic standpoint) can be quite subjective and by allowing the government to legislate utility-maximization, we create numerous opportunities for tyrannical, unnecessary legislation.

Let me conclude by clarifying that I am not advocating moral relativism of any sort. I believe that moral absolutes exist regardless of personal feelings. However, analyzing actions from a moral perspective is different than analyzing them based on the amount of personal utility derived from the action. A murderer can derive significant satisfaction from a blatantly immoral action, making it easy to label this action as immoral, but impossible to say that this individual failed to maximize self-interest.***

And even if a person makes a decision without fully realizing some of the benefits or costs, it makes much more sense to use persuasive means than coercive means to attempt to alter behavior. For if a person is rational and an action will truly be self-beneficial, why would that person need to be forced to perform the action?

This gets to the heart of paternalistic legislation, which revolves around the government’s arrogant assumption that individuals cannot make rational, self-beneficial decisions for themselves. To end where this post began, good parents order their children to do things for their own benefit when they are young. But as these children grow up and become adults, parents tend to take on advisory roles, rather than purely authoritarian positions, allowing their children to make their own decision. The federal government, on the other hand, does not affirm individual rationality and capability and continues to treat individuals as children, even into adulthood.

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Hopefully, this post made you think a little bit. I did not intend to fully deal with all of the topics mentioned, but rather, give a brief overview of a few issues that I have been thinking about lately. Whether you support government paternalism or agree with my critiques, I’d love to hear what you have to say. Feel free to send me an email or leave a comment below. Thanks!

NOTES:

*Some of the laws mentioned here may have other non-paternalistic motives behind them. For example, prohibitions on drug use may be motivated by protecting society or limited some of the negative externalities created by drug use (i.e violence). However, in this post, I am limiting my analysis to the area of paternalism. Therefore, any analysis of these other issues/motivations will have to be dealt with at a later time.

**I’ll try to illustrate these four assumptions using a real world situation. When going to an ice cream parlor individuals act based on their self-interests and try to maximize their utility by choosing their favorite flavor of ice cream. If you’ve been craving cookies and cream ice cream, it makes sense that you would choose that flavor. Additionally, each individual has unique preferences, which means that optimal decisions vary depending on the person involved. So although you might desire cookies and cream, not everybody will share that preference. Therefore, because of these unique preferences, utility is maximized via choice. If you are not able to choose the flavor that you prefer, chances are you will be unhappy, or at least less happy than you would have been if you were allowed to choose. Because of the previous three assumptions, individuals (as opposed to outside forces) are best able to maximize their own utility. If your friend has to pick your ice cream for you, he/she may not choose the flavor that you prefer. Even worse, if someone who doesn’t know you chooses the flavor for you, you are even more likely to be disappointed by the ice cream selection. The worst situation, however, would be someone, without intimate knowledge of the individuals involved, choosing one flavor that everybody has to consume.

***Hopefully it is clear that when I refer to individuals acting “for their own good,” I am referring to an economic weighing of benefits and costs that vary depending on the individual and the situation. This is not to discount the existence of moral/spiritual absolutes which would declare certain actions “good” and other actions “bad.” And if, in the cases discussed, the government were legislating purely based on these moral absolutes, that would be one thing (and that would lead to questions about government’s role in legislating morality, etc.). However, this post is limited to analyzing legislation that forces individuals to act “for their own good.”

My Political Ideological Journey Part #2: Civil Disobedience

Another book that shaped my initial thoughts on government was “Civil Disobedience” by Henry David Thoreau. Now I definitely disagree with Thoreau on a number of points, but I appreciate the fact that he implies a higher standard of justice than human law.

“Must the citizen ever for a moment, or in the least degree, resign his conscience to the legislator? Why has every man a conscience then? I think that we should be men first, and subjects afterward. It is not desirable to cultivate a respect for the law, so much as for the right. The only obligation which I have a right to assume is to do at any time what I think right […] Law never made men a whit more just; and, by means of their respect for it, even the well-disposed are daily made agents of injustice” (Page 4).

While this quote could be taken as an argument for moral relativism (and maybe that was the intent?), I think it is helpful in noting that the law does not always equal justice and that there are higher standards (the conscience, according to Thoreau), which should enable us to critique the justice and validity of various laws.

In terms of the role of government, Thoreau practically argues “that government is best which governs least,” but ideally “that government is best which governs not at all” (Page 3). It’s unclear if Thoreau is legitimately advocating anarchy, but it seems clear that, at the least, he is advocating an extremely limited government. The more limited, the better, according to him.

Thoreau is also helpful in explaining that there is a point where citizens must be willing to resist and fight against government injustices. He writes, “Unjust laws exist: shall we be content to obey them, or shall we endeavor to amend them, and obey them until we have succeeded, or shall we transgress them at once? ” (Page 11). And while he would probably advocate a greater level civil disobedience than I would, I think this is an important issue to consider. Most principled individuals would say that if government did “X” or outlawed “Y,” they would have to disobey. It’s interesting, therefore, to think through where that line should be drawn and what level of injustice or tyranny would necessitate civil disobedience.

While I definitely don’t agree with Thoreau on every point, this book was helpful and formative in the process of my political ideological journey.

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I’d love to hear your thoughts on Thoreau’s ideology and my interpretations of his ideas. As usual, leave a comment or send me an email, if you’d like. Thanks for reading!

The Second Amendment and the Right to… Hunt?

I was blessed to be able to travel over to England a few years ago. Among many other unique characteristics of this trip, my Father, Grandmother, and I were able to stay with a few hospitable English families during our travels.

These visits were largely pleasant and good natured but at one point a divisive topic came up. Out of nowhere, our kind, elderly host asked something along the lines of, “Why in the world do you all insist on owning automatic weapons? Couldn’t you hunt just as effectively with far less dangerous weaponry?”

We laughed the question off without really answering it, but in my head I was thinking, “If that’s what you think the Second Amendment is all about, your government has brainwashed you all very effectively.”

I kid to some degree but at the same time this is quite a serious issue. It is no secret that many tyrannical dictators have succeeded in their endeavors by disarming their subjects. Chinese dictator Mao Tze Tung blatantly admitted this fact when he said, “All political power comes from the barrel of a gun. The communist party must command all the guns, that way, no guns can ever be used to command the party.”

Nazi tyrant Adolf Hitler expressed similar ideas, “The most foolish mistake we could possibly make would be to allow the subject races to possess arms.  History shows that all conquerors who have allowed their subject races to carry arms have prepared their own downfall by so doing.  Indeed, I would go so far as to say that the supply of arms to the underdogs is a sine qua non for the overthrow of any sovereignty. So let’s not have any native militia or native police.”

This is not to say that all disarming of citizens undoubtedly leads to tyrannical behavior. However, it is far easier for dictators and tyrants to achieve their nefarious goals when they do not have to worry about resistance from their people.

This type of resistance against overreaching government was exactly why the Founding Fathers emphasized the right to bear arms. It amazes me when people say that the Second Amendment is “merely about hunting” or “was written with muskets in mind and doesn’t apply to modern guns.”

President Thomas Jefferson said, about this issue, “No free man shall ever be debarred the use of arms. The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.” George Washington, Patrick Henry, George Mason, John Adams, James Madison, and many other Founding Fathers echoed this same sentiment repeatedly. The right to bear arms is certainly about self defense, but it also serves to dissuade government from despotic behavior.

Based on that idea and the fact that Colonial revolutionaries had weapons identical to the arms of  the British military of the day, one could make the argument that, rather than having their gun ownership limited, modern Americans should actually be allowed much greater access to military-grade weaponry?

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If you have thoughts or questions on this important issue, please leave a comment or shoot me an email. Thanks for reading!

Best Economics/Business/Public Policy Books of 2016

In this spirit of “end of the year lists,” here is a list of the best Economics/Business/Public Policy related books that I read this past year:

 

Turn Neither to the Right Nor to the Left: A Thinking Christian’s Guide to Politics and Public Policy by D. Eric Schansberg

Having studied under Dr. Schansberg this past semester I was especially eager to read this book. And after reading it I can honestly say that I don’t know of another book that attempts and succeeds at describing how Christians ought to think about Public Policy from a Biblical perspective. Schansberg maintains a unique level of consistency and subordination to the doctrines of scripture. While you may or may not agree with every single argument, I believe this book brings up issues that are very necessary for believers to consider.

 

Specialization and Trade: A Re-Introduction to Economics by Arnold S. Kling

Dr. Kling uniquely describes Economics as a focus on how specialization and trade impact decisions and outcomes. This book is refreshing in how it states that Economics is not a magic formula that can give correct results based on proper data. Rather, it is a process of looking at historical outcomes and realizing patterns and similarities that might continue into the future. Overall, a unique and interesting take on the study of Economics as a whole.

 

The Law by Frederic Bastiat

This book does a fantastic job of diving into the issue of the purpose of law and how law is often perverted from its proper goal. While dealing with philosophical issues at times, it also looks at a handful of real life examples of government successes and failures. I highly recommend this book for anybody interested in the issue of liberty and the role of government.

 

Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports by Howard Schilit

While the study of Accounting can be quite dull at times, this book is probably the most interesting and non-boring Accounting-related text that I’ve come across. It deal with common fraud schemes that individuals have used over the years and gives its readers advice on how to detect businesses that are being deceitful. This book is definitely geared towards those who are interested in Accounting or investing and it does a phenomenal job of pointing out which areas of the financial statements individuals should pay attention to.

 

The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt

Written in the form of a novel, this book describes Goldratt’s well-known concept of the Theory of Constraints. For those interested in Operations Management or just Business in general, this book presents the Theory of Constraints in a very interesting manner, which is informative but also easy and exciting to read.

 

All Marketers are Liars: The Underground Classic That Explains How Marketing Really Works–and Why Authenticity Is the Best Marketing of All by Seth Godin

Marketing is a fascinating topic to me and this book does a good job of outlining Marketing principles in the context of story-telling. It describes marketing as telling stories that people want to hear and believe, but that do not take advantage of people. There is still a lot that I’d love to learn in this field of study, but this book was a really good start.

 

The Armchair Economist: Economics and Everyday Life by Steven E. Landsberg

This is certainly a good book to read whether or not one has formally studied Economics at all. Each chapter deals with a different real-world issue and shows how the issue at hand relates to the study of Economics. Definitely a riveting read but also very informative and beneficial.

 

Business for the Glory of God: The Bible’s Teaching on the Moral Goodness of Business by Wayne Grudem

While not really ground-breaking in the ideas it presents, this book deals with common myths and misconceptions about Business as it relates to Christianity. Using Biblical evidence it shows that Business goals can often be in accord with the goal of glorifying God. This is a helpful book if you are struggle with reconciling Scriptural evidence with the way businesses operate or if you are engaging with someone who is wrestling with these issues.

 

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As always I’d love to hear what you think about this post and/or these books. If you read other books this year, I’d love to hear about those as well. Feel free to leave a comment or send me an email. Thanks for reading!