Tracing consequences both seen and unseen.
Christine HarbinInefficaciousness: Hot New Trend?
Posted at 10:48 pm on March 30, 2010, by Christine Harbin

[NOTE: Since the original publication of this blog entry, the classification “libertarian paternalism” has been corrected to “liberal paternalism.”]

I recently had a conversation with my good friend Justin who lamented that he had received his third parking ticket this year from the city of Madison, Wisconsin for violating the alternate side parking rule. “Alternate side parking is a racket designed to part the citizens of Madison with their hard-earned cash,” he told me.

I think that Justin is onto something, and this raises an additional concern that I have about aggressive ticketing and selective taxes: liberal paternalistic policies frequently fail to accomplish their official purpose.

The parking tickets haven’t changed Justin’s behavior; he continues to park on the side of the road that is arbitrarily wrong. The city’s alternative-side parking rules are so confusing and difficult to appeal, even smart people like Justin get trapped. Of course, that’s OK with the city; they’ll receive a steady revenue stream from parking tickets.

Selective taxes on fatty food and soda are another example of liberal paternalism that doesn’t accomplish their official purpose, which is to trim waistlines in aggregate. In this example, there is not a scientific consensus on whether they will accomplish that which they allegedly intend. In a recent piece on the Huffington Post, Dr. Pamela Peeke explains how many studies that prove the contrary are being ignored.

Last September, the New England Journal of Medicine published a policy report by a group of distinguished experts that called for taxing sodas and other sugary drinks to fight obesity. The news media gave a lot of attention to the report. But last month, the press did not give much attention to a group of letters from prominent doctors published in NEJM noting that the report failed to cite any scientific evidence showing a tax would reduce the cumulative weight of Americans.

Furthermore, slapping selective taxes on soda will be inefficacious at reducing obesity because an individual’s risk of obesity is not a direct function of the amount of sugary beverages that she consumes. Dr. Peeke argues that it is the result of many factors instead — some relating to genetics, others to lifestyle choices.

Government actually has an incentive for these taxes to be inefficacious, because then it can continue to generate revenue from them. I consider this to be further evidence that the primary purpose of new taxes to raise more tax revenue to support the government’s spending habit. Just like the indoor tanning tax, selective taxes on sodas and fatty food would be a revenue generator first and a behavior deterrent second. These taxes would easily generate a considerable amount of income for state and local governments. In a previous post on Show Me Daily, I used a revenue calculator for soft drink taxes from the Rudd Center for Food Policy and Obesity at Yale University to determine that Missouri could generate $285 million in 2010 if it taxed sugar-sweetened beverages at $0.01 per ounce, or over $460 million if this tax were expanded to include diet-beverages.

[Cross-posted at Amateur Philosophy]

Filed under: Health Care, Nanny State, Taxes
Comments: 7 Comments


  1. The City of Seattle has electronic parking pay stations where you print out a sticker displaying the parking information and tape it to the inside of your windshield.

    They will ticket you for having an expired tag visible *even if* you have a *current* tag posted as well. It’s absurd.

    Comment by Lee Sharpe — 2010-03-30 @ 11:26 pm

  2. “… Selective taxes on fatty food and soda are another example of libertarian paternalism…”

    I can understand classifying selective taxes on foods paternalism (or, better yet, nannystatism), but why are you calling such taxes “libertarian” paternalism? I have yet to read anything written by a libertarian that supports such taxes.

    The misused phrase “libertarian paternalism” refers to actions such as a new employee getting default options for direct deposit of pay, automatic deductions for a 401k plan, selection of a high deductible catastrophic coverage health insurance plan, etc. The person still has a choice (which is why this process gets mislabeled as libertarian), but the default selections are based on what the experts (the “parents”) believe are best. Taxing all “snack” and “junk” foods removes all choices for all consumers and has no libertarian characteristics whatsoever.

    Comment by Dr. T — 2010-03-31 @ 5:04 pm

  3. Thank you for the clarification. I agree that nannystatism is a better-suited classification for selective sales taxes.

    Comment by Christine Harbin — 2010-03-31 @ 5:46 pm

  4. I think you mean “liberal paternalism” not “libertarian”. You should probably change it in the post if you can, otherwise you will have 10^23 Free Marketers in here from Cafe Hayek calling foul 🙂

    Great post otherwise. A lot of people miss the fact that government revenue schemes that proport to encourage people to stop a certain behavior rarely are truly meant to. Just as a proper businessman doesn’t want to kill his customers, neither does the government want people to park in non-troublesome places, or to drive the speed limit. Doing so would remove their profit stream, and so they pull over just enough speeders to keep a good flow of funds, and ensure that parking garages and similar places outside their ability to ticket are difficult to erect to solve parking issues.

    Comment by Eric Hammer — 2010-04-01 @ 9:54 am

  5. Thank you so much for the recommendation, Eric! Post updated.

    Comment by Christine Harbin — 2010-04-01 @ 10:14 am

  6. I’m not sure how I feel about the conclusions (at least in the sin tax case), but I don’t think the arguments work in either case. The basic difficulty of the analysis in my view is that it’s a teleological account rather than a cost-benefit analysis.

    Comment by Andrew Hanson — 2010-04-03 @ 12:47 pm

  7. “The basic difficulty of the analysis in my view is that it’s a teleological account rather than a cost-benefit analysis.”

    There is no mechanism by which such costs and benefits can be gauged accurately.

    Comment by Eric D. Dixon — 2010-04-03 @ 6:45 pm

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Henry Hazlitt"[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
Henry Hazlitt, Economics in One Lesson






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