Libertarian Paternalism: Restating the Obvious

There's been a lot of hubbub in the blogosphere lately about Richard Thaler and Cass Sunstein's book, Nudge. Since they dub their central thesis "libertarian paternalism," and since this new label consists of what would otherwise be diametric opposites, it is not surprising that libertarian bloggers and others concerned with increasing liberty and decreasing paternalism have a strong inclination to reject this attempt to combine the two into peaceful coexistence.

Aside from a creative use of jargon, however, Thaler and Sunstein aren't really telling us anything we didn't already know, at least not with the concept of "libertarian paternalism" itself. Sure, some of their applications of this concept are novel and interesting, borrowing from the many fruitful insights of the young and burgeoning disciplines of evolutionary psychology and experimental economics, which help us discover the limitations of human rationality - areas where our beliefs are frequently biased and irrational. But apart from these new applications, the concept of libertarian paternalism is just another way of describing the problem judges are faced with when tasked with "discovering" the content of default rules. By definition, default rules have to be in some sense paternalistic; in cases where litigants haven't explicitly contracted around the default rule, judges have to decide for the litigants because the litigants failed to decide for themselves. Whether the judge's decision is based on notions of liberty, fairness, equality, utility-maximization, or some other standard is besides the point - the point is that the judge is deciding, not the litigants. If the litigants could reach an amicable settlement on their own, there wouldn't be litigation in the first place.

It seems to me that the only thing "libertarian" about libertarian paternalism is that we are given the choice to override the default if we so choose, by contracting around it or in some other way opting out. And that is a good thing. The freedom to depart from the default rule is surely preferable, from a libertarian perspective, to good old-fashioned paternalism, in which the default rule simply *is* the only rule we get to choose from: no exceptions, no ability to opt out or contract around it. But this isn't really libertarianism as it's generally understood; it's just what is left over when we don't have all decisions predetermined (and unoverridable) by a council of experts; what we are left with when people are free to contract with each other. Actually, on second thought, I suppose this is exactly what we mean by libertarianism: the complete absence of paternalism in both freedom to contract and freedom from contract. But once these initial freedoms are respected, how judges determine the content of contractual default rules is completely up in the air, so to speak, undetermined by libertarian doctrine.

On the other hand, Will Wilkinson argues for a notion of "thick libertarianism" that recommends the content of default rules be compatible with and reinforce cultural beliefs about liberty, beliefs which are necessary if a legal system is to remain libertarian and not devolve back into paternalistic bans on contractual freedom. But from a purely "thin" libertarian perspective, one that deals with only rights and not culture, libertarianism has nothing to say about the content of default legal rules, so long as the freedom to contract around them or to opt out remains.

In the particular example that Will uses - organ transplants - I think the paternalistic case is much stronger than the thick libertarian case. Granted, Will is right that there is a legitimate risk if the default rule for harvesting organs from cadavers is opt-out rather than opt-in, for such a default rule may reinforce the idea in people's minds, and reinforce the idea in the culture as a whole, that our bodies are not our own, but belong to the collective first. Will worries that this in turn may delay or ultimately prevent the liberalization of organ markets, leading to a net loss, measured both in lost liberty and lost lives. And if the choice was between changing the default rule or liberalizing organ markets, the answer would be clear: liberalize organ markets.

But that isn't the choice before us. The prospects of organ market liberalization are about as likely as the prospects of drug market liberalization, the prospects of law production and enforcement liberalization, or the prospects of labor mobility liberalization, which is to say: not very likely anytime soon. While all of these liberalizations would provide mind-bogglingly huge benefits both in terms of liberty and wealth, and while I can foresee any of them happening within my lifetime, I cannot foresee any of them happening in the very short-term, within the next 5-10 years or so. But I can see the default rule regarding opt-in versus opt-out for organ donation changing within the next few years. While changing the default rule may not save nearly as many lives as full organ market liberalization, and might even make organ market liberalization less likely, and perhaps have other pernicious effects on the culture as well, it would certainly save a considerably huge number of lives, thousands of lives that are needlessly lost because people lack the proper incentives to donate - a lack of incentives directly caused by both the default rule and the organ market ban. I just can't see how anyone can be so certain of the potential risks of changing the default rule that they would be willing to give up the enormous benefits in human lives and liberty relative to the status quo that would accrue by changing the default rule. Are we really willing to sacrifice an incredibly large (and much more certain) number of lives now out of fear that saving those lives now would prevent the saving of even more (though less certain) lives in the future, as a result of pernicious changes in cultural norms about liberty, property, and self-ownership?

I agree with Will that "thick libertarian" concerns should influence what we think should be the content of default rules; the organ donation issue is just a particularly poor example, given that the thick libertarian concerns pale in comparison to the enormous utilitarian benefit.

Is this the only issue on which I am less libertarian and more willing to bite the bullet and compromise than Will? I think it is.

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organ transplants

totally agreed on making organ donation opt-out. The first order effect (saving lots of lives) just seems way,way bigger than higher order effects about perceptions of liberty.

Libertarianism isn't so easy to sneak past

Actually, on second thought, I suppose this is exactly what we mean by libertarianism: the complete absence of paternalism in both freedom to contract and freedom from contract. But once these initial freedoms are respected, how judges determine the content of contractual default rules is completely up in the air, so to speak, undetermined by libertarian doctrine.

Not necessarily. Contract law is only a special case of law. Libertarianism has plenty to say about cases where something happens (e.g. murder, rape, robbery) between two random people who have not previously come to some explicit agreement. I think it is hasty to suppose that libertarianism has nothing to say about cases where two people have contracted with each other and something happens that had not been explicitly addressed in the contract.

Suppose that one of the two parties to a contract murders the other person. Do libertarians have nothing to say about this now that the two have a contract with each other? Maybe you will answer "of course they do, because the murder has nothing to do with the contract." But wait a second - now it seems that libertarians have something to say about what does, or does not, pertain to the contract. To continue the example, what if some judge trying the murder case arbitrarily decides that it is the default rule that the contract hands over to one of the parties the right to kill the other party? Is it truly "completely up in the air" and "undetermined by libertarian doctrine" whether this move by the judge is legitimate? (This is just meant as an easy example; I think it likely that libertarianism has a lot to say about the detail of contract law.)

Moreover, since my philosophy of law is that good law is decentralized law, indeed is a market in law, then I have no trouble imagining that the market in law will shape not only laws such as the law against murder, but also contract law, including defaults. Since it will be the market shaping the law, the law will be no more paternalistic than market prices. This may be anarcho-capitalist me speaking rather than libertarian me, but it seems to me a compelling point against the idea that the political philosophy of an anarcho-capitalist has nothing to say about fiddling with contract law defaults to achieve utilitarian ends.

It is not, by the way, immediately clear how opt-out can be worked into contract law as a default. If I die on the highway, with whom is my contract whose default is that I donate my organs? It seems, rather, that opt-out, and libertarian paternalism generally, does not fit nicely into contract law. That being the case, then the attempt to justify it to libertarians via contract law defaults fails in this respect (in addition to any other way it fails).

Suppose that one of the

Suppose that one of the two parties to a contract murders the other
person. Do libertarians have nothing to say about this now that the two
have a contract with each other? Maybe you will answer "of course they
do, because the murder has nothing to do with the contract." But wait a
second - now it seems that libertarians have something to say about
what does, or does not, pertain to the contract.

I don't understand your example. Are you saying that because the two parties agreed to a contract, even though the contract had nothing to do with a murder (as opposed to, say, a murder contract), that the murder is justified? That doesn't make any sense; the contract doesn't even purport to claim that the murder is justified. You don't need to be a libertarian to see that one thing has nothing to do with the other.

Or, are you saying that because the two parties agreed to a contract, even though the contract had nothing to do with a murder, that the contract should nevertheless be enforced in spite of the fact that one party murdered the other? This interpretation of your statement makes more sense to me, as a will that is executed as a result of the beneficiary murdering the author of the will would seem to put into conflict the question of how the will should be interpreted, and libertarianism might have something to say about that question.

I do agree with your general point, though, that I shouldn't have said that contract interpretation is "completely up in the air" with respect to libertarianism, only that contract interpretation is "mostly up in the air" with respect to libertarianism. In cases where there is more than one interpretation of a contract consistent with libertarianism (which is true in most, if not all, cases), libertarianism doesn't have much if anything to say about how we should choose between the two consistent interpretations. Libertarianism is good at ruling out, but not very good at ruling in.

And I should mention, of course, that by libertarianism here I mean to refer to a Rothbardian system of side-constraints, and not David-Friedmanesque deviationism, which is merely the observation that taking a utility-maximizing law-and-economics approach to legal theory generally leads to libertarian outcomes.

Since it will be the market shaping the law, the law will be no more paternalistic than market prices.

It doesn't follow that if law is shaped by the market, the result will not be paternalistic law. Some people might be willing to pay for paternalistic law. Consider the people who willingly check themselves into a drug rehab center or a mental hospital, under the condition that the caretakers will treat them paternalisticly (perhaps with the ultimate threat of financial penalty if specific peformance even in these cases isn't kosher).

I'm also not sure what you mean with your comparison to market prices. Are you saying that market prices too can sometimes be paternalistic? I could understand what it would mean for certain goods or services to be paternalistic, but what does it mean for a price to be paternalistic?

This may be anarcho-capitalist me speaking rather than libertarian me,
but it seems to me a compelling point against the idea that the
political philosophy of an anarcho-capitalist has nothing to say about
fiddling with contract law defaults to achieve utilitarian ends.

I don't understand what this sentence means either, perhaps because the compelling point you refer to is the previous sentence which I also didn't understand? It seems to me that the only thing an anarcho-capitalist has to say about the contract law is that legal systems should be competitive and not monopolistic. Whatever kind of law people ultimately subscribe to is up to them as consumers, so long as they are willing to pay for it.

It is not, by the way, immediately clear how opt-out can be worked into
contract law as a default. If I die on the highway, with whom is my
contract whose default is that I donate my organs?

Simple. To make organ donation opt-out rather than opt-in, a court could treat cadavers as part of the commons, and if someone didn't want to donate their organs, they would have homesteaded the right to control what happens to their body after they die. (i.e. burial, cremation, etc.) There is no reason to assume that everyone doesn't want to be an organ donor unless they specificly say so; we have just as much reason to assume that everyone does want to be an organ donor unless they specificly object.

Now, this does raise the interesting question: if, barring an explicit objection to opt-out (i.e. homestead one's own dead body for purposes other than organ donation), courts treat cadavers as part of the commons, who gets "first dibs"? Do people who actually need an organ for medical purposes get priority over people who just want to claim the organ in order to resell it to someone else? Standard Lockean (or perhaps Rothbardian) initial aquisition theory doesn't seem to answer this question, apart from divvying up organs on a first-come, first-serve basis. Perhaps the notion of "mixing one's labor" with property in order to actually lay claim to it would translate in the case of organs as "mixing the donated organ with one's own body", excluding, or at least giving less priority to, organ resellers.

Regardless, the point here is only to demonstrate one way opt-out organ donation can be worked into contract law as a default; the point is not to resolve questions of distribution.

Suppose I decide to become a Buddhist monk , and I relinquish all claims to my physical possessions, thereby turning all of my personal property into part of the commons. With whom is my contract whose default is that I donate my property? No one in particular, but that doesn't matter. Of course, part of what constitutes a contract is consideration between multiple parties; personal vows aren't enforceable with contract law. But the concern of the court here isn't resolving vows; after all, I am free to change my mind up to the point that property changes hands. Once my property does change hands, then there is a legal question that needs to be resolved: do I get to take back my property even after I have explicitly given it away, or are there "no takebacks"? The legal question with regard to opt-in versus opt-out organ donation also doesn't concern the opter (who is, of course, already dead by the time the dispute reaches the courts), except insofar as the opter has made his or her wishes explicit, by opting out. Rather, the legal question with organ donation is who gets to claim the cadaver's organs: the people who need the organs for transplantation, or the family members who, when asked to allow organ harvesting, refuse?

There may come a time, after my death, when two or more parties dispute who has rightful possession of my body. Maybe one of the parties is on a transplant waiting list and needs one of my organs for that reason. Another party, a relative or friend of mine, admits that she has no reason to believe that I ever objected to organ donation, but still thinks it is wrong to take my organs without my explicit permission. The judge assigned to this case can simply say to my friend or family member, "Too bad, the default rule assumes that, by not explicitly opting out before death, all people implicitly have given permission for others to use their organs for transplantation." Libertarianism tells us nothing about which default rule we should have, either opt-in or opt-out. Utility maximization tells us that we should have opt-out.

Brief responses

I don't understand your example. Are you saying that because the two
parties agreed to a contract, even though the contract had nothing to
do with a murder (as opposed to, say, a murder contract), that the murder is
justified? That doesn't make any sense; the contract doesn't even
purport to claim that the murder is justified. You don't need to be a
libertarian to see that one thing has nothing to do with the other.

No, not "the murder is justified", but, if a judge declares that the contract licenses the murder by default (i.e. unless explicitly stated otherwise), then going by your own comments, libertarian doctrine has nothing in it that contradicts this decision. My own view is that libertarian doctrine in fact contradicts this decision, and therefore your comments cannot be correct. (But once these initial freedoms are respected, how judges determine the content of contractual default rules is completely up in the air, so to speak, undetermined by libertarian doctrine.) You appear, utimately, to agree, changing "completely" to "mostly".

Or, are you saying that because the two parties agreed to a contract, even though the contract had nothing to do with a murder, that the contract should nevertheless be enforced in spite of the fact that one party murdered the other?

No, nothing like that.

In cases where there is more than one interpretation of a contract consistent with libertarianism (which is true in most, if not all, cases), libertarianism doesn't have much if anything to say about how we should choose between the two consistent interpretations.

My intuition is that libertarianism places sufficiently strong constraints on the interpretation of contracts to make a great deal of trouble for the libertarian paternalists.

It doesn't follow that if law is shaped by the market, the result will not be paternalistic law. Some people might be willing to pay for paternalistic law.

That's really not what I thought we were talking about at all. If somebody checks his own self into a rehab center, that's a whole different color of animal than if some interfering busybody uses the levers of the state to impose his vision on others without their consent. The latter includes libertarian paternalists, their protests to the contrary notwithstanding.

Whatever kind of law people ultimately subscribe to is up to them as consumers, so long as they are willing to pay for it.

But whatever that is, it is that, and not (except by coincidence) whatever libertarian paternalists want it to be. So the legal changes that libertarian paternalists want to implement in all likelihood contradict the law as it would be in a market. I don't think this is merely theoretical - I think that in many cases it's not that hard to figure out what laws will be more competitive than others.

Simple. To make organ donation opt-out rather than opt-in, a court could treat cadavers as part of the commons

Well, yeah, but treating a dead body as part of the commons is not merely a change to contract law: you are changing what is owned by whom when, and the change isn't implemented as a contract default. That's my point. You can't do it with just a change to the defaults of contracts.

Suppose I decide to become a Buddhist monk , and I relinquish all claims to my physical possessions, thereby turning all of my personal property into part of the commons. With whom is my contract whose default is that I donate my property? No one in particular, but that doesn't matter.

If you relinquish all claims, then you are not forming a contract with anyone, so contract law does not enter in. So again, it doesn't fit in the framework of contract law. Which was my point.

if, barring an explicit objection to opt-out (i.e. homestead one's own dead body for purposes other than organ donation), courts treat cadavers as part of the commons, who gets "first dibs"? Do people who actually need an organ for medical purposes get priority over people who just want to claim the organ in order to resell it to someone else?

People are also competing with other people in the same category: there are many people who need a kidney to replace their own failing kidney. The problem of what to do with property when it leaves the ownership of one person is solved in two basic ways. The first way is that some central authority makes the decision. The second way is that no central authority makes the decision. The first way is, well, state control. The second way has two basic alternatives. First, nobody is empowered by default to make a decision about where it goes. Second, somebody is empowered by default to make a decision about where it goes. The first of these is not pretty. The second presents us with the problem: who shall be empowered by default to make the decision? The obvious choice is the last owner. Thus we have that part of the institution of private property which empowers an owner to transfer his property to someone else. This is an improvement on an institution in which his property becomes unowned and there is a free-for-all. It is also an improvement on an institution in which the central authority, the state, takes control of his property.

This, in brief, is another reason why the institution of private property as we know it is a good thing.

I'm with Will

I actually worry that organ donation has already made society too accepting of an attitude that shortcutting ethical boundries in organ donation is acceptable because it saves lives. I'm curious what some of the physicians here think of cases like this .

A transplant surgeon charged with ordering excessive drugs to quicken a disabled patient's death last year clashed with a member of his team over whether organ recovery could begin, court documents show. Dr. Hootan Roozrokh insisted Ruben Navarro, who was born with a neurological disorder, did not have a pulse and wanted to proceed with harvesting his liver and kidneys, transplant coordinator Carla Albright told county authorities in court documents unsealed last week. Albright countered that organ recovery could not begin because she could still see his heart rhythm on the monitor.

Let's be clear about what it was, if it turns out to be true: Murdering a mentally disabled person to more efficiently harvest their organs. I don't know if cases like this are at all common, but I will say that because of these concerns, I have specifically not signed my organ donor card, while simultaneously letting my family know that I do wish to be a donor should something happen. I'm pro-donation, but I want medical decisions about me to be based on my welfare. I don't deny that opt-out would save lives, but I think the worry about medicine-based collectivism is very real, and opt-out is without question an acceleration in that direction.