A nudge towards libertarian paternalism?

Nudges are for markets not nations. Or so says Tim Harford in a column at FT.com. Harford writes

Libertarian paternalism is the brainchild of Profs Thaler and Sunstein, but nudging is not. Nudging is good architecture, good design or good marketing and most nudges have been invented by private sector companies. Prof Thaler’s best policy idea – a pension plan called Save More Tomorrow – was tried by a manufacturing company rather than a government.

Effective nudges are so common in the private sector that politicians should be asking themselves why. What is it about competitive markets that produces such clever wheezes?

The answer has been obvious for a long time: the market is a machine for producing good ideas, promoting experimentation and scything down concepts that fail, all the while giving the customer the power to choose.

The answer does not appear to have been obvious to most politicians, in the UK or New Zealand, who seem to want to control and direct markets rather than let them experiment and evolve, by rewarding good ideas and punishing bad ones. Harford goes on to say

With the right reforms, public services can show some of the same qualities of permitting experimentation, rewarding success and not propping up failure. Humble civil servants – or, better, the staff of schools and hospitals – are in a position to discover the best public-sector nudges, and with the right incentives they will.

But what evidence is there that they will be given the right incentives?

(HT: Marginal Revolution)