The Austrian School of Economics, as explained by Ludwig von Mises, Frederic Hayek and supported by Milton Friedman of the Chicago School, assumes that people act on their preferences rationally, based on full information. The necessary prerequisite of full information depends on the existence of free markets that quickly clear. The further assumption is that free markets are the source of the information needed for individuals to make rational choices.
The theory of Sunstein and Thaler, which I’ll call the Nudgian School and hope it catches on, assumes that even with full information provided by a free market some individuals will make bad choices for themselves. Sunstein and Thaler want to “nudge” them in a different direction “for their own good.” One immediately sees in this the assumption by Sunstein and Thaler that some people are simply not smart enough to make rational choices for themselves. People such as Sunstein and Thaler are smarter and will make better decisions for the dummies who don’t know what’s good for them.
Neither the Austrian economists nor Milton Friedman’s Chicago school claims that free markets can prevent people from making decisions for themselves that may prove to have been wrong. The information gathered and deciminated by a free market merely gives people a framework with which they can interpret the world. It doesn’t mean that everyone will interpret the data in the same way. Freedom to choose implies the freedom to fail as well as the opportunity to succeed. It can’t be any other way, and the Nudgian School is completely wrong to think a free market can work better by making it less free.
Certain words have come to indicate that a certain ideology is likely held by the speaker or writer of a column or essay. If I see the words “greater good” I assume that what lies ahead will be some vacuous bromide of Left-Wing politics. When a Lefty speaks of the greater good he does not mean the common good. He is talking about what is good for the advancement of his Leftist agenda. I will now add the term “nudge” as a red flag that warns of a new tactic of the Left to skin us alive by imposing their will on us. We have to give the Left their due; they are much better than we are at coming up with comfort words to make us easier to manage so they can lead us down the road to ruin.
The image on the cover of Sunstein’s and Thaler’s book is of a mother elephant nudging her baby elephant forward. It reveals their mindset; they see themselves as the wise parent of we ignorant children.
The final word on the desire of our betters to impose their will on us “for our own good” comes from C.S. Lewis:
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be “cured” against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.”― C.S. Lewis, God in the Dock: Essays on Theology