Tuesday, August 5, 2008

The "Nanny State"

Enlightened Self-Interest?

About a decade ago, I went shopping for a pickup truck. My old one had been T-boned by a speeding car and was totaled. The insurance payoff wasn’t enough to buy a new truck, but it did give me the wherewithal to buy a good used one.

I spent several days scouring the lots on 82nd and McGloughlin and yet couldn’t find the exact truck I wanted—a strong and sturdy half-ton with a fuel-efficient six cylinder engine and a manual transmission. So after enduring the sales vultures at several lots, I’m at one on McGloughlin and the sales guy is so laid back that I had to start talking to him. He showed me a couple of trucks and neither of them impressed me, but as I was walking away from the lot, a silver Mazda RX-7 sports car caught my eye.

Wouldn’t hurt to take it for a test drive, I figured. Not gonna buy it, but I might as well have some fun. So the sales guy gets the keys and we get in. It had dark maroon leather seats, a sun roof and it really drove well. I zipped it up and down a series of Milwaukie’s back roads. By the time I pulled it into the lot, I had sold it to myself. I dickered with the sales guy and his boss for awhile and got a couple hundred bucks off the sticker price, which means I left a lot more on the table. Then I drove it away.

It might have had something to do with having just gone through a divorce. My ex-wife had just bought a BMW. Whatever the rationalization behind buying the sports car, it was a totally irrational decision.

I’m recalling this misadventure now because so-called conservatives are nattering again about the “nanny state,” particularly here in Portland. `In Sunday’s Oregon, David Reinhard wrote: “Folks who think that individuals cannot be trusted to protect their own interests or make the best decision for themselves and their world will always find plausible, if attenuated, excuses to turn a traditionally private matter into a public cause celebre.”

Their mantra goes like this: “You don’t need the government telling you what to do. And you know how to spend your money better than the government does.”

Except, actually, you don’t.

Predictably Irrational

At least not all the time. Virtually every psychological study of human nature over the past decade—and there have been plenty of studies—demonstrates that people rarely make decisions by doing careful research and weighing the evidence. All kinds of emotions, biases and behavioral conditioning come into play.

A recent best-seller, Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Duke University economics professor Daniel Ariely points out a number of human foibles. Such as this one on the fallacy of supply and demand.

The book covers a number of relevant topics as to how humans make decisions. We overweigh negative consequences, we make foolish decisions based on whether or not something is labeled as "free," social norms will often trump cost-benefit calculations, anchoring of choices skews our decision-making, and so on. Ariely concludes ". . .we are pawns in a game whose forces we largely fail to comprehend."

Given this information, one could take public policy in two different directions. You could argue that if we act irrationally as individuals, then that irrationality is magnified in groups, such as legislative bodies. You could also observe perversely that people will irrationally ignore warnings and other information put out by the government. To a certain extent, these points are true. Almost all laws are the results of compromises that frequently fail to solve the problem at hand.

Warnings Heeded

People continue to smoke cigarettes, despite the Surgeon Generals' warning on the side of each pack for the past 44 years. The percentage of people who smoke, however, has declined dramatically since 1964—from 42 percent to 20 percent. Thus the package warning, along with other forms of government propaganda, seems to have had a positive effect (unless you happen to work for a tobacco company).

In his Sunday column, Reinhard takes on recent local issues, from the new county law requiring chain restaurants to supply calorie information on their meals to the proposed city law to tax plastic and paper bags by as much as 20 cents per bag.

Reinhard totally ignores reality when ranting about the law proposed by state Sen. Floyd Prozanski, which would require all adult bicyclists to wear a helmet. “Now, there's every good reason for bicyclists to wear helmets, but that's just the point: Adult bicyclists can recognize their own self-interest without the state's help.” Really? If he ever got out of his office and mingled with the bike crowds in town, he'd notice at least a quarter of all adult bikers are helmetless.

State governments had to enact laws to get people to wear seatbelts in cars, even though rational adults know seat belts save lives. Those legislative battles were fought 20 years ago. Nowadays, you don't think twice about instantly putting on your seat belt when getting in a car. The law has modified people's behavior.

Sometimes people do act rationally, given information. In cities which have enacted laws requiring restaurants to post calorie counts, customers are averaging 50 fewer calories per order.

As for the grocery bag law, both paper and plastic pose environmental problems and some of these problems cost the government and/or the public money in dealing with bags that are thrown away. (Or worse, plastic bags that people throw in the recycling bin that gum up the sorting machines.) It makes sense, then to provide consumers with an incentive to bring their own bags. I have one I bought from Fred Meyer several months ago and most of the time, I leave it in my house. And usually, it's still in the house the next time a do some grocery shopping. Being a cheapskate, you can bet I'll remember that bag if I'm going to be charged 20 cents for one of the store's flimsy bags.

A Game With No Refs

Government regulation, on the whole, is a good thing. Commerce without regulation is like playing basketball without a referee. That works okay in pickup games in the park, but can you imagine how nasty it would get in the NBA finals if there were no refs? There's be a lot of cheating, a lot of arguing and undoubtedly several fights. Eventually the game would be so degraded that only thugs and fools would play it—sort of like today's stock market.

If you look at the kinds of cars owned by liberals and conservatives. an ironic picture emerges. The car of choice for ardent liberals is the Volvo 240 station wagon, which may be the best car for the money ever made. This car is sturdy, reliable, extremely safe, wonderfully comfortable and pretty fuel efficient if you get the five speed, four cylinder model—yet boring. It's the ultimate nanny state car, although there are others, such as most Toyotas, Hondas and Subarus.

Meanwhile, the archtypical archconservative drives a Hummer or other macho behemoth, for no good reason other than he or she has the money to own one. Or maybe because in a collision, the SUV will crush whatever it encounters (although it is more likely to just roll over).

So it's weird. The kind of people who think government should be involved in helping people make decisions act rationally when they buy cars. And the people who think its not the government's business to influence individual behavior make stupid decisions about cars.

Go figure.

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