A Stitch in Haste

To review: There was a flash in the blogospheric pan a few months ago over a controversial book called Nudge, the authors of which (a law professor and an economics professor, both of some renown) insisted that “libertarian paternalism” is not an axiomatic oxymoron. I, along with almost every other libertarian commentator, was skeptical.

Through sheer coincidence, two entirely unrelated stories hit my aggregator on the same day, neither of which will be good news for fans of Nudge or of the notion of “libertarian paternalism.”

ITEM: The flagship anecdote in Nudge is automatic enrollment of employees in an employer’s 401(k) plan (i.e., requiring a reluctant employee to actively opt out of enrollment rather than requiring her to actively opt in). This proposal is of course not really “libertarian paternalism” in that it is not truly a “libertarian” issue one way or the other — an employer should be able to structure its compensation arrangements as it sees fit, and employees should be free to accept them or seek work elsewhere. Only government-imposed automatic enrollment would raise libertarian concerns, “paternalistic” or otherwise.

In any case, how’s opt-in working out?

People who previously did not pay much attention to those automatic 401(k) investments may now take notice when they see the losses. … According to the Wall Street Journal, target funds for people expected to retire in 2010 varied from a loss of 32% to a loss of 14% through Oct. 30th.
…
Worse, people who did pay attention and made deliberate choices to tailor their 401(k) to their liking did not necessarily succeed in that goal. Employers can move all participants’ savings into the default fund, on the ground that the investments were not appropriately diversified. Again, employees can opt out, but they don’t always notice and take action.

The whole “libertarian paternalism” house of cards is built on the foundational premise that the paternalist actually knows what he’s doing. How realistic is that premise turning out to be?

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ITEM: Another key anecdote in Nudge is the concept of “presumed consent” in organ donation: the notion that most people are in fact perfectly willing to donate their organs, but for whatever reason don’t bother to opt-in to such programs. So, libertarian paternalism apparently tells us, why not require people to opt out instead of opt in?

Maybe because people don’t like the idea of their bodies being “presumed” to belong to the government?

Gordon Brown favours a change in the existing law which would see everyone in the UK considered a donor unless they ask to be removed from the donor register.

But the UK Organ Donation Taskforce, set up by the Government, opposes the move because it says there is no evidence the change would significantly increase the number of organs available.

Actually, the Taskforce says much more than that (PDF - 40 pages):

Running as a leitmotif throughout the Taskforce’s discussions has been the issue of trust: in government, in the NHS and, to a lesser extent, in doctors and other clinical staff. The public have become less trusting and more questioning of authority over recent years. … Trust, however, is key to the success of the organ donation system in the UK. If public trust is shaken, organ donor numbers are likely to fall rapidly and could take many years to recover. The need to maintain the confidence of the public has been a key consideration in the Taskforce’s deliberations.

Both these anecdotes reflect the same problem with “libertarian paternalism.” Whatever flaws and foibles one ascribes to the public generally must also be applied to the paternalists: Are they really better at managing our retirement decisions or at ensuring that our wishes after death are actually respected? What does history tell us? (Previous post on the U.K. presumed consent proposal here.)

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As a sidebar regarding organ donation: True libertarians (as opposed to “libertarian paternalists) recognize that the best way to eliminate organ shortages is to end the absurd, and lethal, proscription on open markets for organs. On that front, a major development has arisen, in the form of Singapore crafting a pilot program allowing for the payment of compensation (but apparently not profit) to donors of kidneys and eggs. This is huge and welcome news that will, hopefully, spread to other jurisdictions. Stay tuned. (Via Marginal Revolution.) One of several previous posts on organ markets here.

Mitt Romney, January 14, 2008:

Michigan is enduring a one-state recession, and the problem has only been exacerbated by poor choices made by some of the leaders in Lansing to raise taxes and take that course instead of cutting spending.
…
A lot of Washington politicians are aware of the pain, but they haven’t done anything about it. And of course, I hear people from time to time say, “Well, that’s Michigan’s problem.” Or, they say something like, “Well, it’s the car companies. They just brought it on themselves.”

“But that’s where they’re wrong. What Michigan is feeling will be felt by the entire nation unless we win the economic battle here. Michigan is a bit like the canary in the mine shaft. What’s hurting Michigan, if it’s left unchecked, will ultimately imperil the entire nation.
…
If I’m President of this country, I will roll up my sleeves in the first 100 days I’m in office, and I will personally bring together industry, labor, Congressional and state leaders and together we will develop a plan to rebuild America’s automotive leadership. It will be a plan that works for Michigan and that works for the American taxpayer.

Mitt Romney, November 19, 2008:

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
…
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others.
…
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

Technically it is true that Romney has not “flip-flopped.” His proposals have admittedly not changed: No direct bailout for the Big Three (which, recall, are not “the U.S. auto industry”), but lots of “industrial policy” central planning and boondoggles dressed up in never-ending, and never-fulfilled, promises of economic “revitalization,” environmental friendliness and energy independence.

But note, and note well, the changing tenor from Romney’s first speech to his second. When standing before a Detroit audience (pleading for their votes), his proposals are part of a broad, wide and deep (and government-controlled) rescue package — for them.

But when his audience changes into all of America except Detroit, those very same policy proposals are repackaged as “Romney to City: Drop Dead.”

This is of course nothing new where Romney is concerned. His entire primary campaign was little more than him running against his own past: abortion, gay rights, socialized medicine, etc. It takes an amazing deftness and alacrity — which Romney possesses in great abundance — to be able to repackage your message so disingenuously to suit whatever audience you happen to be addressing.

The question becomes, however: Is this talent, which is so vital to moral defective politicians, particularly desirable from the perspective of citizens trying to choose effective and ethical leaders?

I think not.

More thoughts at Below the Beltway.

Previous Auto Bailout Post:
–On the Calls for an Auto Industry Bailout

Previous Mitt Romney Posts:
–From the Archives: Mitt Romney is No Jack Kennedy
–Romney Goes From “Kennedy’s Speech” to “Patton’s Speech”
–Romney’s Woes Jump from “Null Set” to “TV Set”
–Romney: No Muslims in (Quota-Based) Cabinet?

Bob Herbert is confused:

The famous Daily News headline, “Ford to City: Drop Dead,” ran on Oct. 30, 1975.

New York was on the verge of bankruptcy, and President Ford (who never actually said “drop dead”) had made it clear, after listening to conservative hard-liners both inside and outside of his administration, that he planned to veto any federal rescue plan.

It was yet another case of the worshippers of abstract economic notions (let the markets run their infallible courses) ignoring the potential consequences of their smug certainties.

Did you catch that sly bait-and-switch? Now we are literally being told that even the 1970s New York fiscal crisis — simple out-of-control spending by an out-of-control city government — was, somehow, a “market failure.”

This is apparently the new Leftist Economic Mythology™: Absolutely everything bad that ever happens in an economy is always and exclusively a “market failure.” Politicians, bureaucrats and their interventions are never contributing factors and are always part of the solution.

As if liberals, meanwhile, never “worship abstract economic notions” (such as progressive income taxation) and never entertain “smug certainties” (such as those regarding the minimum wage, socialized medicine or especially Social Security).

More:

The city’s fiscal crisis of the 1970s was in no way comparable in scale to the myriad crises facing the country right now. But it’s still instructive. The ideological hard-liners have now cast their collectively jaundiced eye on Detroit’s automakers. Their response to the very real danger that General Motors might crumble into bankruptcy is: C’est la vie.

Note again how it’s only the non-liberals who represent “ideological hard-liners.” Of course, to Herbert the “instructive” lesson of the New York fiscal crisis is not, “Never give politicians and bureaucrats too much economic power before the fact…” but rather, “Always give politicians and bureaucrats as much economic power as possible after the fact.” Go figure. As for Detroit’s automakers (and labor unions — not that Herbert could be expected to mention them), see my recent post.

Just as the new Leftist Economic Mythology™ has completely rewritten the history of the housing and mortgage decline — pretending that over 60 years of direct and indirect government interventions in the economy in a relentless campaign to coerce Americans into owning homes had nothing to do with it, and that “Wall Street greed” is alone to blame — so too is the history of Detroit’s decline, over twenty years in the making, to be written exclusively in terms of “capitalism’s failure.” Not politicians — they are only ever the solution. Not bureaucrats — they are only ever the solution. Not Big Labor — they are only ever the solution.

Make no mistake about it: Like the economy itself, it is going to get worse for libertarians and capitalists before it gets better. Possibly much worse.

Previously:
–Two Thoughts on Gerald Ford

Anyone still pretending that China’s authoritarians are committed to free-market principles?

Companies in two Chinese provinces, Shandong and Hubei, have been told they must seek official consent if they want to lay off more than 40 people. The order highlights the Chinese authorities’ concern over mounting job losses.
…
The Chinese authorities are keen to avoid social instability, seen as a source of labour and political unrest. The human resources controls imposed in Shandong and Hubei are an attempt to put bureaucratic obstacles in the way of mass layoffs.

While it is somewhat difficult, in the wake of TARP, to insist that we ourselves are any less socialist (see also, “Directive 10-289“), at least we haven’t quite gotten to the point where employers are enslaved to their employees (wasn’t the concern the other way around under original theories of socialism?). But give it time: if Paulson or his successor suddenly decide that forbidding layoffs is the next idea to try, they’ll try it. Just you wait…

–Who said the following, and why?

We’re moving to, perhaps, our first anti-Christian president; it’s beyond post-Christian.

–Which Western European nation may soon forbid female Muslim judges from wearing headscarves? (Via Religion Clause.)

–Meanwhile, which Islamic nation has sentenced a physician to 15 years in prison and 1,500 lashes (which might kill him and has been described as “unprecedented in the history of Islam”) for committing “malpractice,” in the form of an inappropriate (but non-lethal) prescription?

–Who said the following?

The truth is that most black ministers don’t have a real relationship with God and they are leading their congregations to hell.

–Which group, besides gays, were huge losers in ballot initiatives across the country in this election?

First, the video:

Two observations:

1. If these soulless cretins went into an insular Hasidic community in Brooklyn and tried to tell the residents — who had been minding their own business — that they were sinners, that Jesus is the only way to Heaven and that God abhors their “lifestyle choices,” the response would have been quite uglier than this.

2. When the peaceable gay Christians of the Soulforce Equality Ride visit Evangelical colleges, seeking only to have a respectful dialog with students, the colleges’ theocratic Christianist administrators’ response is almost always the same: Set one foot on our campus and you will be arrested.

The obligatory preliminaries of “violence is never the answer” aside, let’s not confuse ourselves, or allow others to be confused, about who’s being “tolerant” and who isn’t.

Simultaneously via JMG and Towleroad.

Some hasty stitches regarding calls to use TARP money to bail out the Big Three automakers:

1. General Motors is not “the U.S. auto industry.” The Big Three are not “the U.S. auto industry.” There are many different metrics (vehicle production, revenue, employment, etc.) but a good benchmark is that the Big Three represent only about one-half of “the U.S. auto industry.” The other half is doing just fine, thank you very much.
2. If the Big Three are “responsible” (defined how?) for 1 in 10 American jobs, then doesn’t simple arithmetic tell us that 9 out of 10 jobs are not dependent on the Big Three? So why should those jobs be put at risk, via higher taxes and deficits, for the 1 in 10 that are?
3. “Bankruptcy” is not the same as “liquidation.” No one is seriously suggesting that General Motors be liquidated, all its plants shuttered, all its equipment left to rust and all its employees let go. Any obfuscation on this point is disingenuous fear-mongering.
4. Speaking of disingenuous fear-mongering, First Prize goes, unsurprisingly, to UAW chief Ron Gettelfinger:
   

   If a major domestic auto company were to fail, a significant number of supplier companies would also be in jeopardy. This would quickly affect all the companies that produce autos in the United States — including Toyota, Honda and Nissan — because many of them buy parts and services from the same group of suppliers.

   Of course, it is just as likely to predict that whatever decline in Big Three supply might occur from a bankruptcy (but see Point #3 on “bankruptcy versus liquidation”) could be picked up by the other half of the “U.S. auto industry” (i.e., Toyota, Honda, Nissan, etc.). Disruptive? Sure? Slow? Absolutely? Catastrophic? No. Unacceptable? Hardly.

5. Another great line from Gettelfinger:
   

   The reality of today’s auto industry is that union-made vehicles are winning quality awards and that union-represented factory workers are winning productivity awards.

   The cars win awards, alright. They just don’t sell. Which should matter more to the taxpayers who are now being asked to fund a bailout?

6. Back to the topic of bankruptcy: The simple truth is that taxpayers will bail out the Big Three one way or the other. If General Motors, Ford or Chrysler declare bankruptcy, then the primary result will be the ability to pawn off their pension obligations to the PBGC — which, despite its propagandistic insistence that it is self-funding, cannot possibly absorb those new liabilities and will have to be bailed out out by taxpayers anyway (cf., this post). So why not at least get a corporate restructuring out of the process anyway — as happened with the airlines?
7. Wesley Clark is an ass — see Point #1. Does anyone seriously think the U.S. would ever face a debilitating tank shortage? How many tanks are currently deployed in Iraq and Afghanistan? Thank goodness Hillary Clinton never had a chance to make this loon the Democratic version of Dick Cheney.
8. Speaking of asses, why is it that the New York Times editorial board sees fit to demand that a Big Three bailout (not an “auto industry bailout” — See Point #1) include compulsory firing of top management and elimination of stock dividends, but not compulsory freezes on all wage, benefit and pension increases — or, for that matter, the ability to strike? All that the Times asks of Big Labor is that they “reopen agreements on pay and benefits.” Given that lavish compensation has been and continues to be at least part of the problem, why the double-standard?

When I was an undergraduate, twenty years ago, the hottest topic in economics classrooms was — care to guess? — “the decline and fall of the U.S. auto industry.” A tattered paperback copy of David Halberstam’s The Reckoning, published in 1986, still sits on my bookshelf. To butcher a famous line: They have been dying from the same heart attack for twenty years. The Big Three (one last time: not “the U.S. auto industry”) and their UAW co-conspirators have been getting it wrong for a generation or more.

Enough is enough.

A slow week, outside of the gay rights rallies —

ITEM: The couple who were blocked from attending a 2005 speech by President Bush on Social Security — announced as “open to the public” — for no other reason than because their car had an anti-war bumper sticker, have lost their lawsuit claiming infringement of the First Amendment rights. The couple, represented by the ACLU, are reported likely to appeal. Previous post here.

ITEM: Chief Judge Judith Kaye, leader of New York’s highest court, will retire at the end of this year, as is required by the state constitution when a judge reaches 70. Chief Judge Kaye was the author of the widely praised (and widely cited) dissent in Hernandez v. Robles, in which the court declined to find a right to full and equal access to civil marriage for gays and lesbians. Gay-friendly New York governor David Paterson will appoint her replacement. One of several posts on the New York decision here.

These folks do:

Meanwhile, five civil rights groups asked California’s highest court Friday to annul the ban on the grounds that Proposition 8 threatens the legal standing of all minority groups, not just gays.

The NAACP Legal Defense and Educational Fund, the Mexican-American Legal Defense Fund, the Asian Pacific American Legal Center and two other groups petitioned the state Supreme Court to prevent the change from taking effect. [PDF - 28 pages; links to all Proposition 8 documents here.]

The petition is the fourth seeking to have the measure invalidated. But it’s the first to argue that the court should step in because the gay marriage ban, which overturned the Supreme Court ruling that legalized gay unions, sets a precedent that could be used to undermine the rights of racial minorities.

As I blogged previously: The ability to note the differences between the fight against anti-gay discrimination and the fight against racial discrimination suggests the concurrent ability to note the similarities between the two. And that is why any African-American or other ethnic minority who voted for Proposition 8, or any other bigot amendment, should be ashamed of themselves.

Previously:
–On Blacks and Proposition 8

One of the topics at the gay law symposium yesterday (not to mention some of the signs at the various railles around the country) was why gays should have to settle for a “separate but equal” regime of civil unions.

To give an idea of how that debate has evolved, try to guess when this commentary was recorded:

The answer is that stylenxs recorded this video barely one year ago. And in the time since, we not only have pretty much abandoned the term “domestic partnership,” but have also abandoned the idea of civil unions as a viable alternative to marriage, even as a stepping stone. Most gay rights activists now demand full marriage equality; any compromise is a compromise with injustice, hatred and bigotry.

The goal posts have moved, in a good way. Yesterday was proof positive of that.

Previously:
–A Gay Old Day
–NYC Rally For Marriage and Against Proposition 8 (YouTube)

Sunday CuteTuber™ FAQ