Nudging away from the Drift to Collectivism

Tyler Cowen has pointed out a wonderful Milton Friedman video. (I don’t know when it’s from: some beatnik in a black turtle neck must have written the intro music. Twenty years later that same man would visit your elementary school to tell you about the virtues of Lincoln Center for the Performing Arts.) Anyhow, late in the video, Friedman reminds us of perhaps the most important point concerning human history–namely, that the free and prosperous society is the exception and a drift to collectivism is the norm. But why is this so? 

Friedman: The argument for collectivism, for the government doing something, is simple. Anybody can understand it. If there’s something wrong, pass a law. If somebody’s in trouble, get Mr. X to help him out. But the argument for voluntary cooperation, for a free market, is not nearly so simple. It says, “You know, if you allow people to cooperate voluntarily and don’t interfere with them, indirectly, through the operation of the market, they will improve matters more than you can improve it directly by appointing somebody.” That’s a subtle argument and it’s hard for people to understand. [Transcribed starting at 21 minutes.] 

I am convinced that many of our troubles stem from failing to overcome our neolithic inclinations. Among those inclinations, I count the susceptibility to the arguments Friedman cites for the drift to collectivism. To the neolithic mind, these arguments are simple and therefore attractive. Their conclusions are hard-wired into our gut. And since our reliance on them was originally helpful in our ancestral environments, among our ancestor’s tribes on the savannah, these collectivist conclusions are the default settings for our gut reaction to any crisis. But unfortunately for modern man, the consequences of acting on these neolithic intuitions are catastrophic. Therefore, in the spirit of Sunstein and Thaler’s Libertarian Paternalism, I propose the following “nudge.” If ever a crises arises, and you think either there ought to be a law or you want to seize someone else’s money to solve the issue, stop your  thinking right there. Rewind and then reset your default settings. Remember, this is your neolithic mind at work. Instead think: how can voluntary cooperation to mutual advantage solve this better than an appointed bureaucratic god? With this “choice architecture” in place, we can rest assured that people will be better off–by their own lights–than they would be under our original default settings.

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