M. Todd Henderson (University of Chicago - Law School) has posted The Nanny Corporation and the Market for Paternalism on SSRN. Here is the abstract:
Individuals in common pools-employees in firms, shareholders in firms, individuals in insurance plans, and citizens in a jurisdiction-want the managers of those common pools to act paternalistically toward other individuals, because this lowers the costs of being in the pool. The nanny state, which bans smoking in public places and imposes innumerable sin taxes, and the nanny corporation, which is starting to force employees to be more healthy, are simply responding to this demand. These two can thought of as competing in the "market for paternalism" to deliver paternalism to individuals that demand it.
Where nannyism is inevitable, as it is in a world in which others pay, the question then becomes which of the two sources of nanny rules - the state or the firm - is the most efficient supplier of paternalism. This essay describes numerous reasons why corporate nannies are superior to their state analogs in some cases. For instance, corporate policies are subjected to more instantaneous feedback from labor markets, which reduces overreaching but also helps solve information problems in ways likely to reduce the sum of decision and error costs.
There is, however, no theory under which the state or firm will always be superior at imposing nanny limitations on behavior. Because of this, we might expect firms to supply nanny rules when it is efficient for them to do so, say because of better monitoring, lower agency costs, or the like, and not to do so when government rules could be supplied at lower cost for a given efficacy level. The problem, however, is that there are government rules, regulations, statutes, constitutional provisions, and case law that may distort the market from efficiency. This essay makes the case for corporate nannyism and shows how government regulation may be biased without justification in favor of the nanny state.
And from the paper:
A final potential objection is the question of whether the potentially corrosive impacts of nannyism on individual and social wellbeing that have been documented are worse in the corporate or political context. Immanuel Kant described the potential dark side of nannyism in his 1784 essay, “An Answer to the Question: ‘What is Enlightment?’”132 Kant argued that the objects of nannyism were living in a perpetual state of “immaturity,” which in turn created a caste of “guardians” who would act opportunistically and to the detriment of the governed. The end result was a society of “docile creatures” and “autocratic despotism and profiteering or power-grabbing oppression.”133 Kant’s critique is in accord with latter criticisms of collectivism by F.A. Hayek and others.134 But it applies not only in cases of mass nannyism, but also in microcases, like at the firm level.
And a bit further on:
There is reason to believe, however, that the nanny state will be worse at creating docile bodies than the nanny corporation. For one, the state has a monopoly on physical violence, and therefore individuals that violate state nanny rules can have their liberty infringed. Although if calibrated correctly, this increased punishment might simply provide additional deterrence at lower cost than firms can provide, this result is highly dependent on getting the nanny rules right. There are, for example, many examples of individuals being jailed for violating state nanny regulations that seem to represent the influence of those with political power more than efficient cost internalization methods.137 In choosing the lesser of two evils—worker sheep or citizen sheep—another reason to favor corporate nannyism is that there are participation benefits in public life that might be corroded by excessive nannyism by governments. In other words, a democratic government may rely more heavily on having informed constituents who are used to educating themselves and making reasoned decisions than firms. This is because the fear of overextension that Kant worried about is less likely to come to pass in the corporate context. In addition, the barriers to adoption are much lower in the case of firms, while the market check is lower in the case of the government. So if we want lots of nanny rules with discipline, we should, ceteris paribis, choose corporations as the favored deliverer of paternalism in the market.
Fascinating & creative paper. Highly recommended.
Henderson's paper is focused on a positive account, although he does have some very interesting things to say about the normative questions. His discussion of Kant (quoted) above points to an interesting convergence of aretaic and deontological normative theory. On the surface, one might think that a virtue-centered (aretaic) theory of legislation would approve of "Nannyism" (certainly not the most neutral descriptor!). And there is a sense in which this is correct: virtue jurisprudence (in its NeoAristotelian) variant holds that the central end of law is human flourishing understood as lives of social and rational activity in accord with the human excellences (or virtues). This means that one of the central purposes of the system of social organization (including both government and the economic system) should be to create conditions under which citizens will acquire the virtues--and for children, this includes "parentalism" in both its literal and figurative senses. But for adults, it is not clear that pervasive parentalism reinforces (rather than undermines) the virtues. As Kant argues, parentalism may undermine various intellectual and moral capacities. To put it more colloquially, forbidding vice may undermine virtue.
Another interesting aspect of the issue is the light it sheds on the adequacy of various normative frameworks. Aretaic normative theory focuses explicitly on preference formation--it puts the question, "What preferences are conducive to human flourishing?," on the table as a central focus of inquiry. Kantian deontology accomplishes this in a slightly different way, via its focus on autonomy. Some forms of consequentialism, however, make analysis of this problem exceedingly difficult. Any form of preference-satisfaction consequentialism (e.g., Kaplow-Shavell Welfarism) is severely constrained in its ability to provide robust and illuminating evaluation of preferences themselves--although the obvious Benthamite move of differentiating between preferences that support or undermine other preferences is available. The consequentialisms that fare best on this score or those with an objective (and therefore nonpreference-based) conception of the good (or utility): thus, Eudaimonistic consequentialism can incorporate a conception of human excellence in the conception of the good.
Read Henderson!
