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  1. Politics
3 April 2012

Libertarianism for the rich, paternalism for the rest

The rich are trusted to make "intelligent" decisions, the rest have to be regulated.

By Patricia Kaszynska

Many will think that the spectre of a “surveillance state” conjured up by the government’s proposal for the real-time monitoring of email and social media will come to haunt the Conservatives.  At first sight, it is nothing but a brutal assault on civil liberties totally at odds with the conservative tradition; indeed, something worthy of the heavy-handed centralism of Gordon Brown. Still, this judgment merits further reflection – for rather than a total anomaly, such a paternalistic approach has already been applied to a subsection of British society. While the rich have enjoyed the light-touch of libertarian incentivising, the poor have been “regulated” by the current government.      

The coalition’s chosen approach to dealing with the causes of the recession, as well as the economic slump that came in its aftermath, was to “incentivise” – at least as far as the rich are concerned. The government did set out to reform the finance sector; it did so, however, through gentle nudging rather than an effective shove. The proposed “penalties” on the “greedy bankers” were set in terms of “mutual co-operation” and were largely undertaken on a voluntary basis.  Likewise, the attempt to revive the anaemic economy has been by way of incentives, most notably those proposed in the Budget. Cutting both corporation tax and the income tax of top earners was presented as a panacea expected to revive the economy, with business investment predicted to increase by 40 per cent. Similar aspirations, but very different methods, compared to the New Deal of FDR… only history will tell which approach is more effective.   

The government’s approach to incentivising employment on the supply side has been markedly different. The Welfare Reform Act replaced some perverse incentives not to work that were embedded in the old system with rather decisive regulations. For instance, neither the requirement for couples with children to increase their weekly work load to 24 hours in order to claim the working tax credit nor the household benefit cap – i.e., the limit of the total amount of benefit that working-age people can receive – can be readily interpreted as “gentle nudges”. In a similar vein, the Mandatory Work Activity – the scheme mandating six to eight weeks unpaid work for up to 30 hours a week to those who “have little or no understanding of what behaviours are required to obtain and keep work” – is not in any way voluntary, as indeed is suggested in the name. In these cases, the government might be seen to be taking a rather paternalistic, or “nannying” approach. Of course, one could argue that there is nothing wrong with nannies, nor for that matter with father figures who know what is good for the kids. Still, with the government regulation in question, this approach should be applied consistently.   

When the government opened the Behavioural Insight Unit, its mission was presented as “finding intelligent ways to encourage people to make better choices for themselves”. Some complained at the time that the idea of “nudge”, central to its operations, was premised on the oxymoron of libertarian paternalism. Perhaps a bigger problem is that the libertarian element of choice and the paternalistic prescription were applied to two different social groups – the rich, with a bit of nudging, are to trusted to make “intelligent” decisions, the rest have to be regulated.

Patricia Kaszynska is a Senior Researcher at ResPublica

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