libertarian paternalism – the _

[2147] Of actual, libertarian and ideal constraints

The controversy on the use of the term Allah has helped me to clarify the difference between the act of supporting, not supporting, opposing and not opposing. I generally had considered it as merely a binary fork in the style of if one does not support, then one must oppose and vice versa.

I do not oppose and I do not support the use of the term Allah by The Herald.

By both not supporting and not opposing, it by no mean I am indifferent.

By not opposing, I am simply acknowledging the right of the Catholic Church to use the term Allah in its publication The Herald. At the same time, I do not support the use because of all the trouble it brings. This is not contradictory. What I oppose is effort to rob The Herald of its right to use the term Allah, or any term really. The distinction has to be made clear. Like what I have written previously, “the Christian insistence does not violate liberty but hey, a lot of things a lot of people say and do do not violate liberty either. Whether all those things are the smart things to do or say is another matter altogether, even within libertarian constraint.”

The realization of those cases — of supporting and opposing and everything in between — is a byproduct of cognizance of the difference between ideal and libertarian constraints.

I consider this as revolutionary in terms of my own thinking. I had some grasp on the matter before but not as clearly as I see it now.

This really turns my worldview over its head because previously, I considered the libertarian constraint as the ideal case while whatever happening on the ground is the — pardon me for my failure of imagination — actual constraint. It might be inappropriate to call it actual constraint because it might not be a constraint per se. It is the world as it is. But no matter. I will worry about the semantic later.

In the spirit of gap analysis, the job then was to work from the actual constraint towards the ideal constraint, which is the libertarian constraint. The libertarian constraint is simply the typical limit imposed on individuals with negative individual right in mind.

My new realization introduces libertarian constraint not as the ideal constraint but as the actual limit of individual and society with the ideal case becoming more restrictive within libertarian constraint. The work now is to set from actual and libertarian constraints to the ideal one. Perhaps I have been a libertarian for so long that I am simply internalizing libertarian belief system and taking it as the actual limit that society must observe at minimum.

I have yet to define the ideal constraint properly and I think that will prove to be much harder than defining libertarian constraint. I doubt I will ever comprehensively define that ideal constraint. The reason is, unlike libertarian constraint that is general in nature, the ideal constraint is far more specific in nature and has to be to assess on case by case basis, notwithstanding the demand on consistency.

There is one thing that I can be certain. Because the ideal constraint is located within libertarian constraint, the ideal constraint does not contradict libertarian constraint. This is where I am able to hold the position of not oppose and not support the use of the term Allah by The Herald without contradiction. Libertarian constraint demands me to not oppose the use because it is The Herald’s negative right, i.e. right from interference in exercise. Ideal constraint, within libertarian limit, allows me to not support it because my ideal constraint here is conscious of the adverse effect of the use of the term on peace and goodwill within Malaysia society.

Another example is warranted. Consider a racist speech.

Libertarian constraint says that no one can prevent the speech from being made. It is part of right to free speech. My ideal constraint prefers that the speech not being made at all because how the speech may encourage bad blood among individuals.

Libertarian constraint discounts the use of force to reach the ideal constraint. While the ideal constraint agrees with the libertarian constraint on the use of force and preservation of liberty, it seeks to discourage the racist speech.

This brings in an uncomfortable possibility. Does this approach to what is called as libertarian paternalism, or paternal libertarianism (as if there is a difference between the two)?

[1829] Of libertarian paternalism in EPF?

One aspect of the stimulus package announced by the Finance Minister earlier was smart enough in its execution that it needs a mention. While the 3% return of money to workers is optional, the return is done automatically unless the workers request not to.^[1]

This is similar to the thinking of libertarian paternalism. Despite the term libertarian in it, do not be fooled by it because libertarian paternalism is not libertarian at all. In it the idea of the state knows best, “nudging” — as they call it; there is a controversial book called Nudge which had the libertarian world went on frenzy mode — individual to the option which the state thinks is the best or more often than not, prefers, with no coercion.

The idea of this particular implementation is to spend existing savings. With a high saving rate of over 30%, resources for spending to give the economy a little jolt is there. It is never a question whether the Malaysian government has any resources to stimulate the economy — that is, if it needs stimulation — but rather how does the government ensure that there is spending rather than a simple cash transfer which only ends up as savings again and therefore blunting the stimulus package.

Researches cited by libertarian paternalism indicate that individuals to large extent suffer from status quo bias. It means individuals are comfortable with current settings even if new settings are more efficient than the existing ones. The automatic EPF return takes note of this pattern.

If there was no automatic return, it is likely that the money would not be spent or distributed more widely in the economy, due to status quo bias. Many people would probably leave it in the EPF.

By having automatic return, individuals suddenly hold more disposable income with all else being constant. Thus, greater capacity for spending.

Opposition against the automatic return has been expressed^[2], seemingly opposing libertarian paternalism. How many is unclear but there are those with low discount rate who would like to keep those 3% in EPF and the execution plan by the EPF only forces them to do more work than necessary. Groups, including those with the capability to fight instant gratification have demanded for the process to be reversed: return needs to be requested. That, indeed, the way it must be done.

In any case, in the end of the day, I am just glad that I will get some of my money back. In fact, to hell with paternalism as a whole. I want all of my money back and I want to decide how I want to spend or save the money.

Mohd Hafiz Noor Shams. Some rights reserved

^[1] — Following up on the announcement, the EPF had instructed that those employees who did not wish to reduce their statutory contribution from 11 per cent to eight per cent a month would have to state that in writing by filling up a form. [EPF procedure to carry out 3pc cut ‘not practical’. New Straits Times. November 8 2008]

^[2] — Various parties have voiced concern about the procedure for workers to reduce their contribution to the Employees Provident Fund (EPF) by three per cent for two years, which the government has proposed. [EPF procedure to carry out 3pc cut ‘not practical’. New Straits Times. November 8 2008]