‘Nudge’ by Thaler & Sunstein is one of the in books of the moment. I agree with this (page 10):
The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else. We claim that this assumption is false — indeed obviously false. In fact, we do not think that anyone believes it on reflection.
They are right about the assumption — of course it is false. We quite clearly do not have the capacity to make all the decisions that are required of us to manage a modern life. Without others taking most of them for us (others often, but by no means always, being backed by government) chaos would ensue and the quality of life for all would be vastly lower, however defined, than that most enjoy now. Thaler & Sunstein are right, of course, in that respect. It is why they quite openly promote a system of paternalism.
They’re wrong to say that on reflection everyone would agree with them. Far too many professional economists still base their work on the assumption that not only is it possible for an individual to make all the necessary decisions required to determine their well being, but that we should assume that this is what actually happens and we should base our economic planning on this assumption — however false it clearly is. Worse, they so clearly think this possible they are quite unable to identify the influence of others on their own work — and so claim they are objective when making this absurdly wrong claim — and at the same time suggest that anyone who challenges their obvious error is casting aspersions on their objectivity. Of course those who make that challenge are doing just that — because the claim of objectivity is as false as the claim that Thaler & Sunstein identify.
The situation they create is worse than that though. Because these economists now dominate their profession — and allow no one into it who disagrees with them — those who hold this belief influence government, the media, politics and society. Hence we get a false agenda of ‘choice’ — which is seen as the prime virtue of desirability — when it is now known that choice is often crippling and most people simply want something that works — nothing more or less.
There is something more sinister still about their agenda though.These people openly promote the idea that government is wrong because it supposedly denies people choice. So tax is a bad thing because it denies people the choice about how to spend their money — even though the vast majority of people are clearly happy that we have an NHS, state education, security forces, and much more besides that they could never enjoy without having passed over the decision making authority on these issues to government — knowing the government will (most of the time, but not always) decide on these issues better than they could themselves — which is why we have had so few changes of government in the last 30 years.
Why sinister? Because this economic viewpoint — invariably right wing — feeds straight into the libertarian views of the likes of the Taxpayer’s Alliance — an organisation with no intention of representing taxpayers at all but with every intention of undermining the vey process of government which underpins our well-being by denying it the revenues it needs and by deliberately undermining its working by turning those for whose benefit it works against it by spreading false accusation of maladministration — almost none of which stand up to real scrutiny.
Day in day out that same message is seen in papers like the Daly Mail and Express — suggesting that government is daily undermining the freedom of their readers. And yet, the moment the government really does threaten to return a decision to the readers of such papers there is uproar — as the Express yelled on Monday when saying that a charge to visit a GP would be outrageous — although clearly any libertarian would have to support that market based logic.
What this therefore says is that Thaler and Sunstein are right again — no one can actually hold these views upon serious reflection, but that the capacity to reflect in that way has been drummed out of many professional economists and their slavish, non reflecting journlaitisc followers who promote this cause out of what is, in this case, clearly misguided self-interest, but who do in the process provide a platform to fanatics who do immense damage to many in this country.
That though is ultimately the flaw in the logic of Thaler & Sunstein’s ‘Nudge’ thesis. They call it ‘libertarian paternalism’. I’ll agree with the latter. The former is pure pretence. It is about providing the illusion of choice when the reality is that either none is available, or it is incredibly constrained, or in fact (as fashion evidences day in, day out) the desire to make ‘choice’ is actually all about the need to conform under a veneer of difference.
That is the reality of much of life. Advertising sells the lie of choice when it is actually selling a person dissatisfaction with their state of compliance with societal norms. Economics as taught at present says we are all free to choose when that is absurdly and obviously wrong. And Nudge offers the appearance of choice whilst saying its really only exercised at the very margins of service supply.
In which case let’s be honest. Let’s say in this complex modern world some things can’t be done with choice on the agenda. There is room for only one health service if we want a truly excellent one — as the contrast of the UK’s NHS with the US debacle proves only too clearly. There is room for only one education system if all children are to get access to excellence. We can only have one police force in an area, one fire service, one provider of refuse services — and only one regulator of an activity if it is to be done properly.
Of course we can have choice on a great many issues. Many consumer goods, despite their obvious similarities in many cases, can be offered in a bewildering variety of options if that does not result in waste (a big proviso, I might add). And, for example, there is no reason why the country cannot support the vast number of market based service organisations it enjoys without apparent problem of any sort. That’s all fine.
But let’s not pretend one size fits all — and that we can choose on everything. We can’t. We don’t even want to. And if we did we’d probably get it wrong. So it’s up to the state to do the most complex things — to take the stress of these decisions away from us — but to then supply these services at an excellent standard.
Which is what actually happens, by and large. Most people are big fans of the NHS, their local school, the police, our troops and much more besides. Which gives a lie to the claim that people don’t like what government does. They do.
I know the Left is looking to redefine its purpose right now — James Purnell, Jon Crudas, Alan Simpson and others are planning to do this at Demos. I hope others join in. But James Purnell, at least (but not the other two, who I know somewhat better) is making a serious mistake when he claims the left is about ‘equality of capability’ (which sounds horribly like equality of opportunity when we do want greater equality of outcome — and should be honest enough to say it). He’s right that the Left is about a belief in equality — but one way of evidencing that is by saying we believe in the State supplying first rate services equally accessible to all that ensure that individuals have the freedom to devote time to the choices they face in other dimensions of their lives that matter to them sure in the confidence that in many key areas where they do not have the competence or resources to decide the job has been well done for them.
This requires tax.
This requires us to believe in democracy.
It requires pride in public services.
It requires that those services be well managed.
But most of all it requires us to have the conviction to say we can decide to do this. That we believe that collectively a government can make good decisions for others. That this is a significant part of what government is about. This is why it deserves support. This is why we fight for excellence in these services. Because on the basis of that excellence — which with renewed confidence we can deliver better then ever before — can be built better lives for all people in this country — lives which will include the freedom to decide on those things which as individuals are best reserved to us alone.
So no nudging please — let’s go out there and be explicit about what we believe in, what we want and what we stand for.
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Having “someone else” make a choice does not of course imply that that “someone else” has to be the state, whose entire list of criteria for making such a decision you may fundamentally disagree with but, in your scenario, are stuck with, coerced onto.
In a stateless society no doubt people would find out which decisions they were bad at, by making sme of them, and an opportunity would open up for professional advisers to help people make that choice. Just as exists today with organizations such as Gabbitas in the realm of helping people choose Higher Education.
With your argument, at which point can you possibly decide what’s the liimit of the state? It’s utterly arbitrary. We know, for example that a third of parents must be making truly awful, long term life threatening decisions about what food their children eat. Does that justify nationalizing the food supply? What about, say, household insurance – complicated terms and conditions, many people last year in the floods found to their shock that they were not covered for flood damage, for example. Would your bureaucrats have made sure that state insurance contracts contained just the right sort of threats for any particular individual household?
Jock
You are quite clearly out of your depth
Shipman was an exemplar and popular GP who complied with all the rules – he just killed people
We do have a private sector in health in the UK – and it free rides the state – and consultants do give it preference
And the ballot box limits the state
Your position is fundamentally anti-social and anti-democratic. It also utterly ignores the limits to human capacity
Please stop posting nonsense of this sort
Richard
[…] Richard Murphy skewers The Nudge for the drivel it is- That though is ultimately the flaw in the logic of Thaler & Sunstein’s ‘Nudge’ thesis. They call it ‘libertarian paternalism’. I’ll agree with the latter. The former is pure pretence. It is about providing the illusion of choice when the reality is that either none is available, or it is incredibly constrained, or in fact (as fashion evidences day in, day out) the desire to make ‘choice’ is actually all about the need to conform under a veneer of difference. […]
At first I thought your post was satire then I realized you were dead serious. Having the power to make decisions for us is not the same as having the wisdom. Certainly we have ample proof that those in government are every bit as capable of botching things terribly as the average citizen. Because “most people” are fans of an institution doesn’t preclude the possibility that the institution is flawed. Certainly there are some areas where efficiency can only be achieved by having one provider. That does not obviate the possibility that multiple providers any work as well. I will concede that one Police force is probably a good idea but I question the idea that one fire department is a good idea. What you are doing is attemting to justify a priori judgements with spurious arguments.
I’m not sure I do agree that there are areas where efficiency can only be achieved by having one provider. And certainly not if police is your primary example. Indeed that is not really even the situation we have today. We have many different forms of policing – private security guards for example – which people have decided they need to pay for on top of what they already pay for the public police because the monopoly public police are, as far as they are concerned, misdirecting their resources – unable to look after say their property, or ensure good order on their university campus, or whatever.
Such “inefficiency” by the public police, in failing to prevent, say, property crime, because it is not that great a priority, or not a priority everyone else who is paying for them necessarily shares, in turn leaves the property owner with a choice – pay more for insurance and expect to have to claim a lot more, or pay someone to help prevent the crime privately.
Mulitple fire departments? Now that has to be satirtical. let’s see. My house is burning down. Now I need to make choice about which fire service to use. Whoops, my yellow pages are on fire too.
Hi, I haven’t posted a comment here before, but this entry interested me so I read around a bit on the subject. It seems like Paul Krugman is thinking along these lines too, his blog entry about healthcare (posted one day after this one) agrees on the issue of choice. The most apt quote is:
“This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care.”
http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/
The paper he refers to was published in 1963, so this economic phenomenon has been recognised for some time. I wonder why despite this, the Conservatives were so keen to introduce choice and competition into the NHS, with their idea of an internal market. You would think the results would be predictable, and a research paper referenced by the Royal Economic Society on the effects seem to bear that out:
“This study finds that deaths were higher where competition was greater. In addition, the magnitude of the negative effect of competition on quality was not trivial: the researchers estimate that the impact of competition on death rates more than cancelled out the 7% per year fall in death rates that occurred over this period due to technological progress.”
http://www.res.org.uk/society/mediabriefings/pdfs/2008/0801/propper.asp
James, for mostly the same reasons, I agree that multiple fire departments would also be ridiculous, but also in that case, historically in London that’s exactly what there used to be. Insurance companies ran them, and apparently if they found a building on fire that wasn’t insured with them, they’d leave it to burn! More on that here:
http://www.london-fire.gov.uk/OurHistory.asp
On a more up to date issue, The Times reports today that “Digital Britain” is threatened because data centres are considering moving out of Britain due to high electricity prices and poor infrastructure, and moving instead to– France (where government-owned EDF does a better job of running their electricity grid than privatised British companies.)
It’s almost as if there’s a developing economic consensus that experiments in privatisation of essential services have mostly failed. Maybe the free market is all very well for the fun stuff, but not to be trusted with anything important. Just a thought…
Aidan, it seems quite a common thing to restrict one’s view of competition to “what happened when the Tories were last in power”. Be it rail, health internal market, whatever.
I would not say that this is the sort of competition that market anarchists envisage – it was false, dreamed up by the same people who thought that monopolies on train lines was “competition”. There is plenty of scope for competition in health care, and the scope is growing all the time.
Much of it is about your “wellness” regimen – who you go to and what you take for preventative care, but I see plenty of scope for competitive “firms” of surgeons operating round the country, going where they are needed – to a large general hospital one day or even a relative small community hospital the next. And with those hospitals offering different support regimes.
And then there is competition in terms of innovation – whilst an MRI scanner is still quite an expensive piece of kit, they are now so manufactured than people like Phillips even advertise theirs on TV.
We would also say that the barriers to entry are monopolistic – why should there not be competing registration agencies – why just the GMC’s closed shop for instance. I believe there is a substantial economic rent involved particularly in doctors – after all Bevan even said that to get them to participate in the NHS he would “stuff their mouths with gold”.
One of the problems with the US system is the protectionism enjoyed by the HMOs – again huge barriers to entry into health insurance are erected – there was a New York doctor recently for example who had to stop offering his fixed price low cost consultations offer to people in a relatively uninsured poor area of the city, because he was not an HMO. There is something very wrong when they can set ridiculous prices for simple things like bandages.
This is getting better all the time. Differing registration agencies? All this will mean is that ordinary patients won’t know whather they are seeing a professional or a quack. I’m impressed that you evidently have a wellness regimen, Jock, but actually most people don’t. They don’t have time seeing as they are juggling jobs, and parenting and other responsibilities.
The surgeons won’t go where they are most needed. They will go to the places where they are best paid in most cases. Of course, there will always be some heroic individuals who will deliberately choose to work for the most needy, but most doctors are not saints.
I am astonished by the lack of imagination. This seems to be at the heart of the problem – “oh, it’s all too difficult so let some bureaucrat take our decisions for us”.
What on earth is the problem with mutliple accreditation regimes? After all, the current one let slip Dr Shipman didn’t they? Not exactly a great job there. Do you not think that insurance companies would want to ensure the bona fides and quality of someone they were insuring for example?
The current system imposes huge extra costs – whether it is cosy deals with drugs companies, the state preventing choices of medication even where practitioners agree there could be benefits in using an alternative to what’s on offer. You make statements like “The surgeons won’t go where they are most needed. They will go to the places where they are best paid in most cases.” but in reality have no evidence to back that up as it has never been tried.
In other professions, however, it works fine – and yes, it is to do with money of course – economic incentives are important – but if you cut surgeons’ firms free from hospitals they can accept that paid work where they are needed at the right price. Just as if, if you have a simple legal issue you get a local lawyer to go with you to the county court, but if you’ve got a big issue and a circuit court hearing, you might get someone in from some Lincoln’s Inn hothouse.
The current system pays them the same money, a retainer, but makes me go to Papworth if I want to see the best heart person, rather than him having to come to me. Where’s the efficiency in that?
There is just this “can’t do culture” of blindness when it comes to looking at other potential ways of delivering these services the state currently monopolizes. Monopoly is *always* a bad thing, when it is created and sustained by the privilege of centralized regulation.
Cut out all these monopoly costs and you and I won’t *be* working all day and all night and not having time for a wellness regime, a regular trip to a health adviser for a check up and so on.
But hey – I don’t care – my forehead is bloody from the brick wall it is being slammed against by taking on such closed thinking as accompanies the “state must provide” attitude, so I’ll need to go inpinge on the precious resources of the National Illness Service.
And you are quite as judgemental as you come across in many of your posts. You have little imagination if you think a. the state monopoly is the best way to do something (anything) and b. that the ballot box limits the state (just look at how bloated it is now). When will you be happy? When the productive economy can no longer replenish what the state takes away from it and we start going backwards, fast?
It’s fine – I was once where you were. Indeed further, I was actually elected on a ticket of state efficiency being a great thing, answering everyone’s needs. But I learned.
Out of my deapth – how patronizing can you get!
Dr Shipman was certainly a disaster. However, as far as I am aware, such homicidal maniacs are quite rare in the NHS (to be even-handed, they are pretty rare in any health system). Unfortunately, no system can guarantee 100% certainty of avoiding error. I agree that insurance companies would be keen to avoid insuring lunatics. But I feel less confident that their procedures would be more effective.
I explained the problem with multiple accreditation in my last post.
Your example of the legal profession is good. Thank you. For most people, unless they have legal aid or insurance, even the cost of a small town solicitor is prohibitive. As for Lincoln’s Inn, well! Far from proving your case, you seem intent on proving mine!
The only thing that the salaries of lawyers “proves” is that there is a huge economic rent involved caused by the barriers to entry. All I was showing you was that professions do move around the country according to where their skills are needed. I could just as well have chosen lift engineers versus handy-men but it would not have been as good an analogy because you seem to have been saying that comfortably off professionals would not move around.
As to whether insurance would work, what did happen to the victims of Shipman or rather their families? Did the BMA/GMC/Government pay full restitution such as an insurance company might have to? No – that’s the problem with government – have an inquiry, oh let’s make sure it doesn’t happen again, we’re sorry for your loss but it’s not been in vain, yadda, yadda, yadda.
Whereas, an insurance company might well have picked up every single year on the number of deaths and checked to see whether they were odd because ultimately they would be liable to the last shirt on their backs (in an unlimited liability market anarchy) if they had gone ahead and insured him without looking into it.
But then, I’m “out of my deapth” so I’d better just shut up.
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