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Saturday, July 22, 2006

Nannies, Church Ladies, and Scolds

Milton Friedman advocates ending the welfare state in this recent post. Here's an argument in the other direction:

Long Live the Nanny State, by Daniel Akst, NY Times: First the House of Representatives passes a bill restricting Internet gambling. Then the chief executive of a leading offshore Internet gambling company is arrested during a layover in Texas.

It’s comforting to know that, despite the spread of legal gambling from coast to coast, Uncle Sam is defending the virtue of innocent Americans against evil games of chance in cyberspace. But far more important ... is a question it raises: In a modern free-market economy, how much should the government try to protect us from ourselves?

I am a believer in markets, but I suspect that the right answer is “a good deal more than it does now.” As a matter of fact, this is as good a time ... for a ... defense of that widely derided institution, the nanny state.

The issue is so timely because many traditional external restraints on individual behavior have fallen away. Human beings have always had to be self-regulating, of course, but capitalism, technology and social change are making us ever more reliant on self-control while temptation abounds as never before.

Social structures like close extended families that once constrained behavior have weakened even as widespread affluence has democratized overindulgence. A result is that Americans eat too much, save too little and absolutely guzzle planet-warming fossil fuel, all to our collective detriment. Forget about the national debt. What we have here is a ballooning self-control deficit. ...

It’s tempting to suggest that government shouldn’t even be in the business of influencing noncriminal behavior, except that it already is and always will be. States advertise their lotteries constantly, for example, although they rarely mention the infinitesimal odds of winning. Internet casinos are usually a better deal.

The tax code, meanwhile, discourages some things (like saving) and encourages others (like McMansions). In his recent book, “The Conservative Nanny State,” the economist Dean Baker argues that government nannyism, broadly defined, benefits the rich. So there is no point in pretending that government doesn’t influence behavior. ...

The question is, what would an effective nanny state look like? Long national experience with drugs and alcohol suggests that banning things many people want is a sure road to failure. But indulgence can be made costly and inconvenient by hefty taxes, age limits and other rules.

Social stigma is always helpful, as in the case of tobacco, and government bans on smoking in restaurants and the like have probably helped condemn cigarettes to broad disrepute. But the potential for positive nannyism is much greater. Imagine the economic and environmental wonders that might be wrought by a broad energy tax, for example.

The rise of Internet gambling ... illustrates the difficulty of conducting effective government nannyism as well as a need to supplement individual self-restraint. Federal authorities stepped up a fight against offshore Internet gambling last Monday, charging David Carruthers, the chief executive of BetOnSports, a company that is publicly traded in Britain, with racketeering conspiracy related to an illegal gambling enterprise.

Because proximity to casinos and problem gambling appear correlated, nanny theory suggests that it may be sensible to suppress Internet gambling, but it probably would not work.

While the government can make it harder for Americans to conduct financial transactions with sites like BetOnSports, people who want to gamble always find a way. Perhaps it would make more sense to bring these operations to our shores and regulate the daylights out of them.

A good nanny could also help by giving gamblers a forum to commit themselves to abstention before succumbing to the lure of the gambling tables. In Missouri, individuals who are doubtful of their own disciplinary stamina can bar themselves from casinos for life — and be arrested if they show up in one.

Nannies can easily turn into, quoting John Tierney's description of Republicans, "...the Church Lady, the scold who makes even fellow congregants roll their eyes." Even when scolds get their way and ban activity, as explained in "Schools are trying to ban candy. Good luck!," markets find ways to work despite our best efforts to get in the way and stop activity deemed undesirable.

I believe there is role for the government to play, not by interfering in markets, but instead by making markets work efficiently (and outside of economics to address equity issues), market failure in health care and social insurance are prime examples. But I have never been an advocate of the government telling me or anyone else what to do. The argument in the essay is that "It’s tempting to suggest that government shouldn’t even be in the business of influencing noncriminal behavior, except that it already is and always will be," but I find the argument that something should exist just because it does exist unpersuasive. Though I'm not ready to concede that there's no way to avoid having the government tell me what makes me happy, if it's true that goverment "always will be" anyway, I would still argue that such interventions should be minimized.

    Posted by on Saturday, July 22, 2006 at 01:46 PM in Economics, Market Failure, Policy, Regulation | Permalink  TrackBack (0)  Comments (5)


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