New Paternalism, Regulation and Cass Sunstein

May 17, 2010

by Mario Rizzo

The New York Times magazine has an interesting, if somewhat uncritical, article on Cass Sunstein, the Obama regulation czar. The “best” part is the section about me:

Some scholars dislike the strong, if subtle, governmental hand that is embedded in this last proposal. It seems more forceful than a nudge. “Once you get to a point where you have automatic enrollment, you raise the question, What kind of fund?” Mario Rizzo, a professor of economics at New York University, says. “The problem is that if you were enrolled automatically, you could complain later that you’d been put into either a too-risky or a too-conservative fund. So then you micromanage that and you say you have to have a balanced fund. But pretty soon you’re on a slippery slope, where you’re dictating people’s retirement choices.” Rizzo told me about an academic study of gift-giving that found that most people would value cash more highly than the gifts they get for holidays; if even your friends and family can’t figure out what you want, he asked, how can a distant bureaucrat? “Sunstein is very taken with the need for experts,” Rizzo says. “But it turns out experts are subject to these cognitive quirks, too.”

Of course, if you want a more scholarly examination of these issues, please take a look at my work with Glen Whitman on my bepress site. Here and here. There are also summaries in previous TM posts. (Here for the knowledge-problem critique of new paternalism, and here for the first of eleven parts on the slippery slope arguments against the alleged moderation of new paternalism.)  And there is the very interesting discussion launched by Glen Whitman at Cato Unbound.

One serious objection I have is the characterization of Cass Sunstein as exemplifying “the quintessential University of Chicago habit of mind” (quoting the former University of Chicago law school dean, Saul Levmore) 

Clearly, this is not accurate in at least two senses. First, he does not exemplify what is unique about Chicago’s social science traditions. I should have thought that would lie in the approaches of Milton Friedman, Frank H. Knight, George Stigler and others who were strong anti-paternalists.

Second, Sunstein’s style of thought is a little too imprecise for the “Chicago habit of mind” — mixing all sorts of concepts and labels in the frightful over-simplification called, “libertarian paternalism.”  As a vivid example, Sunstein’s claimed admiration for Hayek’s idea  of the decentralization of knowledge in society is totally superficial. I wonder if he has read Glen’s and my article, “The Knowledge Problem of New Paternalism” (linked above) which uses Hayek’s insight to pick apart Sunstein and Thaler’s “libertarian paternalism” as well as other new paternalist ideas.

Nevertheless, I recommend reading the Times magazine article.

6 Responses to “New Paternalism, Regulation and Cass Sunstein”

  1. chidemkurdas Says:

    It is amazing that Cass gets away with adding the “libertarian” moniker to his paternalism. This is someone who in 2008 proposed that government agents infiltrate chat rooms and message boards to debunk ideas he considers wrong. The NYT article mentions this at the very end but Mario’s comments are the only the real criticism included–aside from mentions of Glenn Back.

    The Cass 2008 proposal must be long implemented. Now, who are the government agents on TM? Step up and identify yourselves, please. You may win a stuffed polar bear.

  2. Crawdad Says:

    And let’s not forget this gem, “The Second Bill of Rights: FDR’s Unfinished Revolution–And Why We Need It More Than Ever by Cass Sunstein.” That was just published in “06. Sunstein is about as libertarian as FDR or Lincoln.

  3. Crawdad Says:

    Speaking of Sunstein, just came across this:

    http://althouse.blogspot.com/2010/05/word-voluntary-is-little-complicated.html

    From text of Sunstein radio interview in 2001:

    “Sites of one point of view agree to provide links to other sites, so that if you’re reading a conservative magazine, they would provide a link to a liberal site and vice versa, just to make it easy for people to get access to competing views. Or maybe a pop-up on your screen that would show an advertisement or maybe even a quick argument for a competing view. [break] The best would be for this to be done voluntarily, but the word “voluntary” is a little complicated, and sometimes people don’t do what’s best for our society unless Congress holds hearings or unless the public demands it. And the idea would be to have a legal mandate as the last resort, and to make sure it’s as neutral as possible if we have to get there, but to have that as, you know, an ultimate weapon designed to encourage people to do better.”

    Now if this guy (current regulatory czar) doesn’t frighten you a little then I’m not sure what would. He and Obama seem to be working from the same philosophical position. I’ve tried to resist the urge to use the f-word here, but what else describes his thought?

  4. John Papola Says:

    The man said “The word voluntary is a little complicated. Sometimes people don’t do what’s best for our society unless Congress holds hearings, unless the public demands it.”… regarding his desire to have congress mandate that all websites be forced to carry “opposing views”.

    Perhaps this is too strong, but I think this guy sounds evil. Evil people generally don’t think they’re evil. They may even be personally charming and affable. But his desire to lord over others and restrict the foundations of liberalism have more than the tincture of despotism.

  5. Andreas Hoffmann Says:

    Of couse.. which other part should be the best :-)


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