Paternalism is the use of coercion to force people to do or refrain from something against their will for their own good. Liberals of all stripes generally reject paternalism for reasons most lucidly laid out in J.S. Mill's masterpiece On Liberty. First, we assume the individual is the best judge of her own good. Second, whether or not the individual is the best judge of her own good, we rightly doubt that another individual (or assembly thereof) has the legitimate moral authority to substitute their judgment for the individual's by force -- especially in light of widespread disagreement about the nature of a good life. Third, truth is hard to come by, and none of us can be fully certain we've pinned it down. Allowing people to act on diverse opinions about morality (or rationality) broadens the search for truth about good lives by setting up a decentralized system of social laboratories where experiments in living succeed or fail in plain view. So, unless an action harms somebody else, people should be at liberty to satisfy their preferences, whether saintly or sinful, coolly rational or impulsively emotional.
The conceit of the new paternalism is that the state isn't going to be in the business of telling us which beliefs and desires we are allowed to act on, but will simply nudge people into doing what we wanted to do anyway, but couldn't manage by ourselves. The idea is that there are things we want to do, but, due to some foible of mind, we are unable to do it without a little outside help. . . .
Some of the new so-called "soft" paternalistic measures, such as employers helping workers to increase their rate of savings by requiring them to opt out of, rather than opt into, a retirement plan aren't paternalistic in any sense; that's a part of a fully voluntary labor contract. [ED: This is not true when government, through tax incentives, encourages the widespread adoption by employers of such practices.] And policies like increasing the taxes on cigarettes or fatty foods in order to discourage potentially harmful consumption choices, are straightforwardly paternalistic in the old sense, requiring a one-size-fits-all value judgment about how much and for what reason we should consume certain goods.
Those kinds of judgments aren't the proper work of government. In any case, if you really think people make systematic "mistakes" in judgment and choice, there is no reason to believe that democratic voters -- who have less at stake when casting their ballots than when choosing what to have for lunch -- will be especially good at populating the government with Spock-like rational legislators interested in tweaking cognition through expertly targeted policy rather than with well-coiffed primates interested in hoarding status and power.
The boundary we fight over today divides what is decided collectively for all of us from what is decided by each of us. You might think of it as a property line, dividing what is mine from what is ours. And all along that property line is a contested frontier in a war of ideas and rhetoric.
For political decisions, "good" simply means what most people think is good, and everyone has to accept the same thing. In markets, the good is decided by individuals, and we each get what we choose. This matters more than you might think. I don't just mean that in markets you need money and in politics you need good hair and an entourage. Rather, the very nature of choices, and who chooses, is different in the two settings. P.J. O'Rourke has a nice illustration of the way that democracies choose.
Imagine if all of life were determined by majority rule. Every meal would be a pizza. Every pair of pants, even those in a Brooks Brothers suit, would be stone-washed denim. Celebrity diets and exercise books would be the only thing on the shelves at the library. And—since women are a majority of the population, we'd all be married to Mel Gibson. (Parliament of Whores, 1991, p. 5).
O'Rourke was writing in 1991. Today, we might all be married to Ashton Kutcher, instead. But you get the idea: Politics makes the middle the master. The average person chooses not just for herself, but for everyone else, too. . . .
The thing to keep in mind is that market processes, working through diverse private choice and individual responsibility, are a social choice process at least as powerful as voting. And markets are often more accurate in delivering not just satisfaction, but safety. We simply don't recognize the power of the market's commands on our behalf. As Ludwig von Mises famously said, in Liberty and Property, "The market process is a daily repeated plebiscite, and it ejects inevitably from the ranks of profitable people those who do not employ their property according to the orders given by the public."
Paternalism -- when it is sponsored or enforced by government -- deprives us of the ability to think for ourselves, to benefit from our wise decisions, and to learn from our mistakes. It all adds up to regress, not progress.
The Rationality Fallacy
A Libertarian Paternalist's Dream World
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism
Another Voice Against the New Paternalism
A Further Note about "Libertarian" Paternalism