To nudge, kick or neither?

Should the Administration “nudge” policy, or impose heavy-handed regulation when confronting public policy challenges?

The WSJ has an interesting story on same today; noting:

A little more than a year into its ascendancy at the White House, behavioral economics as a key policy-making tool may be on the wane.

The opening weeks of the Obama administration were a coming-out party for economists who hold that incomplete information, subtle obstacles to participation and confusion tend to make people act in economically irrational ways. Economic policy can “nudge” people and institutions into more efficient, economically beneficial behavior without heavy-handed command-and-control measures in regulation and legislation, they argue.

http://online.wsj.com/article/SB20001424052748704869304575103980232739138.html

The idea of a “policy nudge” is not new.  If I had to choose between the heavy-hand or a pointer, I’d take the latter.  Ideally, however, I’d prefer that the morality of individual accountability and free markets do the “regulating” instead.

Sadly, this thinking runs contretemps to Washington’s present desires.  Federal agencies need to do stuff. And, we’ve got some big problems which need “solving” by bureaucrats.  In their view, regulation, and reams of it, is the key.

I’m not foolish enough to suggest that there’s no place for regulation in our world.  In many cases, it has made our lives safer and better.  But the fundamental idea that regulatory tinkering / social engineering must continually occur through bloated, behemoth agencies – that that’s acceptable and is primarily what Washington’s for – well, that sub-strata of unelected bureaucracies, and its resulting regulatory scat, sorely needs addressing.

When was the last time you saw a story on the Administrative Procedure Act (APA) in a national news outlet?  Probably never.  The Act guides how the agencies can, through congressional delegation, make law (which is reserved to Congress alone).

“Limited government” has become unlimited through these agencies (and abuse of “congressional intent”), which touch every aspect of our lives.  “There oughta’ be a law” – well there is, with more daily.

It has a significant cost.

If we cannot control this, and the associated spending, we’re going to be nudged out of something more important – individual liberty. That’s the real story.  Not whether to “nudge” or big-foot policy. But, rather, whether policy makers should reflexively default to regulation in the first place to “solve” problems.

There are other ways.  The gumption in today’s pro-regulatory environment to say “no” to regulation, and the agency beasts that create it, is one of them.

How ’bout that nudge for you?