Saturday, 22 November 2008

Obama's Third Way?

Below is an article by John Cassidy in which he critically examines the new behavioral economics theory of 'nudge' as propounded by Richard H Thaler and Cass R Sunstein. It seems that Barack Obama, who was a fellow teacher with Sunstein at the University of Chicago Law School, is a keen believer in its potential as a 'Third Way' of policy-making. Such a weak centrist position, which aims to preserve/encourage 'freedom of choice', would employ little in the way of govt. regulation in tackling the inequities of the market, rather it would merely aim to encourage people to seek alternative action. Not surprisingly, this agency-oriented model, which Thaler and Sunstein describe as a form of 'libertarian paternalism', has also captured the imagination of the British Conservative Party. As Cassidy maintains, this structural deficient approach seems hardly sufficient in addressing some of the fundamental problems facing, for example, the American health care system and the financial crisis. More, he concludes, will be needed than simply attempting to "'nudge' the country in a different direction."

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