Tuesday, March 19, 2013

Democracy, Paternalism, and the Swedish Welfare State

-- Posted by Neil H. Buchanan

I am now back from a too-short trip to Sweden.  As I described in my post this past Friday, I was there to attend a conference on "The Fiscal State and Social Citizenship," which brought together scholars from various areas of the social sciences, as well as legal scholars, to discuss a broad range of issues relating to the tax system's effects on society.  Again today, I will use one of the papers as a jumping-off point to make a broader observation about taxes and political ideology in the U.S. (and elsewhere).

Professor Dino Viscovi, from the Department of Media and Journalism at Linnaeus University (located about 250 miles south of Stockholm), presented a paper called "From 'Maid' to 'RUT' - The Debate on Deductible Domestic Services in Sweden," which described the deep social discomfort in Sweden caused by the idea of offering a tax deduction for hiring homemaking services.  Swedes' concerns about elitism, exploitation, economic opportunity, and similar subjects mirrored the debates that I have heard among scholars in the U.S.  I found it especially interesting that these debates sharply divide feminists in Sweden, it appears, as much as they do in this country.  When Professor Viscovi's paper is published, I will try to provide a link for readers of Dorf on Law.

Here, however, I want to focus on something slightly different.  Professor Viscovi's paper was based on an analysis of the Swedish media's coverage of "the maid debate."  He noted that a prominent, conservative Swedish economist has openly complained about the supposed liberal bias of the Swedish media.  (Sound familiar?)  In particular, this economist's complaint is that the media's coverage of government affairs has artificially increased Swedes' willingness to pay taxes, and falsely inflated their trust in government.  If only his countrymen were not so easily duped, this economist apparently believes, they would see the wisdom of laissez-faire economics.

This claim struck me as particularly odd, coming from a right-leaning economist, and it illustrates the uncomfortable role that the phrase de gustibus non est disputandum plays in orthodox economics.  Usually, that pretentious Latinism is used to try to shut up liberals who are supposedly being paternalistic, who want the government or some other powerful institution to do what is good for the people, not what the people really want.  The loud debate about New York City's ban on large sugary drinks, which Professor Dorf revisited last week, is dominated by self-styled libertarians who claim that the government has no right to tell people what to drink (or, in the case of Mayor Bloomberg's proposed regulations, how much of a sugary drink a person can purchase in one container).

In a Verdict column last summer, I pointed out that the libertarian objection to such soda regulation is based on a false belief that people's preferences exist logically prior to their decisions to enter into market transactions.  That is, saying that "no one can tell me what to drink, or how much of it," only makes sense if one thinks that one's preferences in that regard are not already being influenced in a million ways by both governmental and non-governmental actions (both deliberate and accidental).  No one is born with a taste for, say, bacon double-cheeseburgers, any more than they are born with a taste for seaweed or insects, or a taste for haggis (which is, by the way, now available in vegan form in Edinburgh, Scotland -- and because it is vegan, it is not disgusting).

That Latin phrase above, which translates roughly as "there's no accounting for taste," is the core of the standard economic theory that purports to back up objections to soda regulations (and nearly all other regulations).  Orthodox economic theory (and its ubiquitous supply and demand curves), in fact, is based on the assumption that preferences (and technology) are determined outside of the theory.  That is, the internal logic of the standard economic model really does require that there be no accounting for tastes.  Tastes exist, and the free market would (if only left to do its magic) maximize happiness based on those tastes.

In its mild form, de gustibus-based logic leads to conclusions like: "I wish people didn't like idiotic shows like 'Survivor' or 'The Biggest Loser,' but the market has spoken."  In its strong form, however, it leads to the idea that "meddling" in the market is damaging to human well-being.  Why?  Because, once one assumes that human well-being is measured by how well the economy satisfies the pre-existing tastes of as many people as possible, then a system that is presumed to be able to maximize satisfaction of those tastes is the best system, and anything else makes society worse off.  (Note that I say that it is presumed to maximize satisfaction, because even that narrower claim is highly contestable.)

This critique of orthodox economics -- the observation that tastes are not independent and pre-existing -- goes back decades, and is usually associated with John Kenneth Galbraith.  Even so, the power of the assumption that tastes exist prior to market interactions, and are unaffected by it, remains at the core of claims that we must leave the market to its own devices.  If, after all, the form of human happiness that an unregulated market would (even if it works perfectly, just like the textbooks say it will) bring to the world is not based on something that is core to our being, then all a market system is doing is privileging one set of preferences over another, merely because those preferences happened to be the ones that we decided to privilege.

To be less abstract, the point is that we have not achieved something important by refraining from trying to change people's preferences, if those preferences themselves are ephemeral.  There are, of course, better and worse ways to take account of existing preferences, and to try to change those preferences.  Decisions about which approaches are better and worse, however, must be based on something other than standard economic bromides.  For example, I believe that there is a true freedom-based advantage to using public education campaigns rather than, say, Maoist re-education camps, to change how people feel about various issues.  (I know, I'm really going out on a limb here!)

Which brings us back to that Swedish economist's complaint about the Swedish media.  If he is really saying that we should not honor the Swedish people's preferences regarding their government's activities, size, and level of taxes, what could he be thinking?  We are not, according to his economic theory, supposed to allow the government to set a minimum wage or otherwise interfere in the genius of the market.  Yet in his country, private media sell newspapers in which opinions are expressed that either reflect people's already-existing preference for welfare-state capitalism, or that create that preference in people who might not otherwise think that way.

In either case, a democratic system of government now reflects those preferences.  (So far as I am aware, there are no claims that the Swedish political system is fundamentally anti-democratic -- by for instance, systematically disenfranchising certain categories of voters, or gerrymandering districts such that a minority party controls one house of the national legislature, or giving small-state voters much stronger voting power in the other house of the legislature.  Those are our specialties.)  The objection -- that people would not really like the Swedish welfare state, if only they understood it better -- is, therefore, rank paternalism.

The interesting thing is that this paternalism from the right is not merely a mirror image of paternalism from the left.  Conservative economists (and those who rely on similar logic to determine their views about economic policies) claim not to be paternalistic, and they proudly hold that up as a reason to support their views.  The thing is, it turns out that they are not just paternalistic, they are hypocrites.  On the left, because there is no core claim that people's preferences are sacrosanct, it is openly understood that everything is up for grabs, in terms of what we should leave alone and what should be the subject of policy.  That is unavoidably more complicated, but it is also more realistic.

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