I read the Sunstein and Thaler paper on libertarian paternalism for Mario Rizzo’s ethics and economics class this past semester. I hated it. They describe libertarian peternalism where someone has the potential to make changes that (presumably) improve social welfare without inhibiting anyone’s liberty. The example they use is a cafeteria where people buy dessert rather than fruit or vice versa depending on the layout of the food. When dessert is put first in the line no one buys fruit. To curb the problems of over eating or eating unhealthy food, the owner of the cafeteria manipulates the food layout to get preferable food eating habits.
I admit that there doesn’t seem to be anything incompatible with liberty going on here. But that doesn’t make the cafeteria owner any less of a pompous jerk. Instead of libertarian paternalism where individuals are constantly on the lookout for individual’s making supposedly “bad choices,” I prefer Ostrom’s description of social entrepreneurship.
Kirzner’s description of general entrepreneurship is simple. Individuals seek profit opportunities of wealth and better ways to achieve ends. A restaurant owner who wants to perfect the way a recipe tastes is an entrepreneur but so is the restaurant owner who doesn’t give a hoot about flavor and only cares about making money. Ostrom’s social entrepreneur is seeking a systemic improvement at the social level, like less hunger, but acts and participates in markets in much the same way as the Kirznerian.
Where the libertarian paternalist looks at free choosing actors and says, ” you dummie you choose poorly.” The social entrepreneur says, despite your best choices, you still face problems in the world that need solutions. In other words, the libertarian paternalist might not violate anyone’s rights or liberty, but they’re still arrogant pricks compared to social entrepreneurs.