Thursday, 7 January 2010

Get rid of government experts: they do not know what is best for the people

So says James R. Otteson, Joint Professor of Philosophy and Economics at Yeshiva University in New York, and the Charles G. Koch Senior Fellow at The Fund for American Studies in Washington, D.C., in a new piece in Forbes. Otteson asks,
Is rule by government experts the wave of the future? A recent spate of books argues yes--despite the multiple, spectacular failed attempts to do so in the 20th century.
Why should governments allow people the freedom to make choices we know are bad for them? In the past since we didn't know much about what made people happy and healthy we could afford to limit government action to preserving people's "liberty" or "rights." But surely not anymore. Now we know a lot about what makes people healthy and happy, and it is only humane to guide people's choices - even, where necessary, coerce them - toward good ends. Such notions underlie the paternalism-is-good-for-you movement. Otteson continues,
Another leader in the paternalism-is-good-for-you movement is law professor Cass Sunstein. Sunstein's innocuously titled book Nudge, co-authored with economist Richard Thaler, argues that expert knowledge about what is good for you justifies their structuring your choices for you so that you are more likely to choose what they know you should choose. Sunstein endorses government experts as "choice architects" who will arrange everything from retirement accounts to the food in the school cafeteria, carefully designing everyone's environments so that the choices the expert architects believe are best seem to people the only ones they really have.
You may think that these ideas are confined to the ivory tower, but no,
Sunstein has been named by President Obama as the Administrator of the White House Office of Information and Regulatory Affairs--or, as it's more popularly known, the Regulation Czar. Although it's difficult to figure out what exactly this position's powers are, it seems clear that Sunstein will enjoy considerable authority to begin writing his preferred "nudges" into regulatory mandate.
People like Sunstein are, I'm sure, good people with good intentions and they are very smart, so Can't we then entrust to them this extraordinary level of power and authority over our lives? What Sunstein, and other experts, however smart, cannot know are all the really important things. Otteson notes that while such experts are very smart they cannot know are all the most important things to you.
They don't know your goals, your ambitions or your priorities. They don't know what your values are; they don't know what opportunities are available to you (and what aren't); they don't know your likes and dislikes. Even if they know a lot about human behavior or human welfare in general, they don't know anything about you. They don't know anything about me either, or about anyone else besides themselves and their closest family and friends.

That means that the best they could do is make guesses. But even that overstates their competence. Think of all the information--explicit and implicit--you marshal all day long every day to make the routine decisions you do. What are you going to do for breakfast today? Will you call your friend this afternoon? Will you finally buy your daughter the cellphone she's been asking for? Or larger questions: Should you buy a new house? Look for a new job? Buy or lease a car--and which one?

The amount of information each of us processes to make these decisions is legion, far more than any of us probably realizes. Yet to get these decisions right, one must draw on all of it--and even then we still often get it wrong. What possible chance can a government bureaucrat have of making the right decisions for you, when he has none of this information about you, when you are only one statistically insignificant data point among hundreds of millions within his purview?
It was, in part, the fact that government bureaucrats can not have information like this, information dependent on time and place and people, that made economists like von Mises and Hayek argue socialism could not work, that markets are needed to process this type and quantity of information, that people must be free to make their own decisions, interacting with others via the market process.

Otteson goes on to remind us that,
In 1776, Adam Smith argued in his Wealth of Nations that the best person to make decisions like these is the person who possesses more of this information than anyone else. In your life, that would be you; in my life, that would be me. Unfortunately, no distant legislator can have a hope of getting these things right for us.

Smith went on to say that the legislator who fancied himself able to guide others' daily lives was not only bound to fail but was dangerous to boot--because the fantastic overestimation of his abilities probably means a megalomaniacal ego too. And we all know where megalomaniacs with expansive government power tend to end up.

Smith also identified a Great Mind Fallacy: the belief, or hope, that there is someone out there smart enough and benevolent enough to make these decisions for us, leaving us peacefully secure in the knowledge that somebody somewhere is protecting and taking care of us.
It's true that it would be nice if there was such a great mind out there, but there isn't. No imperfect, fallible human being - not even some "government expert" - will ever be so smart and so benevolent.

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