Libertarian Paternalism: An Essay on Political Compromise

Getting ahead as a modern politician is all about mastering the art of compromise, and where better to start than with your ideas? Who anywhere on the sane reaches of the political spectrum is now prepared to put the case for unbridled libertarianism? Likewise, very few politicians are prepared to put forward the case for a nanny-style paternalistic relationship between the government and its people.

So it was that many of our politicians began to converge on a concept known as Libertarian Paternalism (LP). It started life in a 2003 paper by Sunstein and Thaler, and its novelty was to move away from the stale dichotomy between state regulation and personal freedom, accepting that we should be free to choose, while at the same time the government is free to ‘nudge’ us in the right direction. LP takes its cue from the fact that peoples’ preferences are ill-formed and often contradictory, the product of our disordered psyche – I think this idea ties in well with Herbert Simon’s concept of ‘Bounded Rationality’ and the Behaviourist school of economics, but I’d need another article or seven to do justice to that topic.

What is missing from the freedom we enjoy as consumers, advocates of LP argue, is any means of ranking the different choices that we want to make. For example, a person might love smoking but simultaneously hate themselves for it while aspiring for a healthier, smoke-free life. A political and economic philosophy that only registered the immediate desire for a cigarette would look stupid, as very few of us are such slaves to desire that we can be said to be unaware of the consequences of our own actions. Likewise, a philosophy that stamped on my ability to choose would end up looking brutal and austere. What LP does is to step into that breach, with ‘soft’ policy tools for moral persuasions, such as public health initiatives – things designed to save us from ourselves, but without relieving us of the burden of decision-making. In our preferences, we are creatures of habit and as a government can never be entirely neutral, it is only right for our elected representatives to be honest about that, and to second-guess our desires and point us in the direction of more ‘informed’ choices. By that same lack of true neutrality, it’s also only right that said government does not restrict one’s freedom to choose the ‘wrong’ thing.

At the end of June 2006, the Tory leader David Cameron, doubtless nudged into action by his policy wonks, threw in his lot with libertarian paternalism. The new Conservative party, he argued, should steer clear of both immoral indifference and social engineering, and operate by ‘persuasion, not power’. Daddy knows best, in other words, even though he refuses to tell you how to run your life.

It was an astute piece of politicking, but New Labour got there first – much of Labour’s strategy for its third term election was based on second-guessing our behaviour through ‘soft’ policy tools for moral persuasion. The government-funded ‘Dad Pack’ for new fathers, for example, was one such wheeze – fun enough to not look preachy, but with a serious message.

But the question to ponder on now is that of LPs future, not its past. With both the Conservatives and Labour moving back to more nostalgically traditionalist positions – May’s Conservatives appealing to the traditional-yet-aspirational 1950s, and Corbyn’s Labour idealising the ‘Who Governs Britain?’ days of the mid-1970s – there seems to be nobody left in the upper echelons of British politics to advocate a smallish-government approach. A choice between internet censorship on one side and wholesale nationalisation on the other is, for advocates of LP, finding oneself between the devil and the deep blue sea.


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