Student Blogger - Summer WIP: Todd Henderson and the "Nanny Corporation"
Professor Todd Henderson kicked off Chicago's Summer Works in Progress events with a presentation of his latest project, "The Nanny Corporation and the Market for Paternalism." Henderson identifies corporate nannyism as the increasing trend amongst businesses to regulate the seemingly private conduct of their employees, on the grounds that it imposes negative externalities on other members of the pool. For example, where employees all pay into company health insurance programs, non-smoking employees cross-subsidize the increased health care costs of their smoking fellows. Non-smokers thus have an incentive to agitate in favor of policies which would reduce these costs, such as differential insurance rates for smokers versus non-smokers, or even an outright prohibition on smoking. The effect of this demand is to create a "market for paternalism", which both corporations and government can seek to meet.
Importantly, Henderson locates the incentive for this sort of "nannying" activity not in any particular moral or social ideal held by the regulator (governmental or corporate), but rather as an extension of self-interest. Nannying reduces overall costs and responds to demands by employees (or citizens) who don't want to bear the costs of cross-subsidization. This contrasts with many accounts of proto-corporate nanny entities (such as "company towns"), which often focused on a sort of moral zealotry as the primary motivation for their existence.
Henderson also argues that in many situations we should expect that corporate nannying to be more efficient and less likely to overreach than their governmental counterparts. There is more fluidity in labor markets than their is in citizen "markets", making it easier for unhappy pool members to opt out if the corporate nanny overreaches. Corporations are likewise better positioned to observe the actual economic impact of their policies and can respond with more agility to miscalculations than their government peers. The plurality of corporations also allows for greater experimentation to see what works and what doesn't: just as states often take on the role of "laboratories of democracy", so too can corporations become "laboratories of paternalism". Even on the enforcement side, it is frequently easier for corporations to police their regulations upon employees who have to show up for work each day and thus can be subjected to tests, measurements, and observation.
To be sure, Henderson is not claiming that corporate nannying is inevitably superior to its state counterpart. Particularly for regulations which govern activity not usually seen at the workplace (e.g., driving while talking on a cellphone), government police forces are generally superior enforcement mechanisms to corporate managers. Moreover, government agencies may be more likely to take into account difficult to quantify costs of nannying such as the liberty interest in allowing people to continue to pursue a given activity, irrespective of the costs it imposes on others. The point is more broadly to show how nannyism is inevitable in situations where large groups of people are sharing costs, and observing that in some, perhaps many, cases, corporate nannyism is more likely to effectively balance and apply the competing interests.
In the discussion, a question which occupied much of the allocated time was whether this sort of corporate behavior is best described as "paternalism" at all. Led by Martha Nussbaum and Eric Posner, many present argued that -- far from paternalism -- the behaviors Henderson observed were straight-forward applications of harm principle. Paternalism is where a regulator infringes on the liberty of a subject because the behavior she wishes to engage in is bad for her. But Prof. Henderson had taken great pains to show that the motivations behind corporate nannyism was not such enlightened benevolence towards the employees, but rather stemmed from the external costs the regulated behavior imposed on the corporate body. If self-interest is the true motivator here, can we really call it paternalism?
Henderson's response was to say that he was piggy-backing off the debate amongst libertarians which condemned such putatively excessive intrusions on individual liberty by calling it "paternalism". And it does seem like they have a point in applying the term here. If "paternalism" can't be used to describe any regulation which is said to check against negative externalities, the scope of cases where it can be applied becomes vanishingly small. After all, we'd expect even the most self-restricted harmful activity to be wounding (if only psychologically) to the actor's friends and loved ones. And in many situations, the fact that the benefits of regulation are highly diffuse compared to the blunt impact of a blanket prohibition makes the former seem trivial compared to the latter (even though in aggregate the costs and benefits might be nearly equal). The libertarian argument here presumably doesn't turn on there being absolutely no external costs being saved by the regulation, but rather that the costs themselves are either the sort which policymakers should not concern themselves (psychic externalities) or that the benefits of the regulation -- particularly when disaggregated -- are insufficient to justify the impingement on personal liberty.
Here, the libertarians might argue, the rhetoric of "paternalism" serves as an important social lubrication. Paternalistic justifications are what allow policymakers to push back against these libertarian concerns -- providing an additional argument which can tip the balance in favor of nannying policies. After all, as Henderson argues, even if the private motivation of nannying regulations is near-exclusively economic, the public rhetoric that surrounds these policies is decidedly mixed between efficiency concerns and claims that "it's for their own good". Lawmakers may want to require motorcycles helmets because doing so saves healthcare costs, but when trying to sell the idea to the public, they will make full use of paternalistic rationales. The paternalism argument is what allows "it will save the group money" to trump the relatively powerful norm of "what I do on my own time is my business" (or at the very least, it's what allows the beneficiaries of the policy to sleep better at night). Hence, it makes at least some sense that persons contributing to the debate adopt (or at least, discuss) the rhetoric used by many of its participants when debating the question in the public sphere -- though at the same time it is certainly important to raise and defend the distinction between "true" paternalism and the cost shifting activity that is mostly what is at issue here.