UC: I would submit that a systematic government effort to engineer society in one direction can be worse than random. Central planners are fallible like the rest of us; the only problem is that when they guess wrong the costs can be devastating. Suppose the 401k plan, for example, were to create such a strong incentive to invest that consumption dropped precipitously and started to hurt growth. I’m not saying that particular scenario is likely: the point is that unintended consequences are always possible.

There are two independent problems with paternalism, in my view. One is the danger of state coercion and eventually brutality. Sunstein and Thaler avoid that problem by making everything voluntary — and they thereby claim that they’re “libertarian.” But the other problem with paternalism is that the state really shouldn’t be trying to shape society extensively, because of the danger that it might succeed. Randomness — the spontaneous order of individuals choosing according to their own judgment — incorporates more information about the state of the world than any central planner could accumulate. This problem remains whether the state is communist, socialist, or libertarian-paternalist.

One other objection I have is psychological. If the average American begins to believe he is not free and capable of reason, won’t his behavior change accordingly? Thomas Paine would shudder.