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The tension between individual liberty and externalities

Getting the balance right between liberty and restrictions to manage social issues has never been trickier, or more important

Let me preface this post by saying I am not writing about total liberty vs total control. I am exploring the mix.

The main title above is just a fancy way of saying there are consequences from our actions for those around this. However, economists like to talk about externalities to describe the broader benefits and costs of our actions on society. The main problem with externalities is that the cost is incurred by someone other than the person performing the activity. Therefore they have less incentive to cease or change their actions. In this post, I'll explore the tension between individual liberty and externalities and offer some thoughts on getting the balance right.

Individual liberty is challenged by the needs of society, particularly in the face of large-scale issues that require coordination

Massive issues like COVID-19 or climate change require people to band together and follow certain rules to overcome the challenge. However, this can come at the cost of freedom. Should we have to stay at home? If we don't stay home we run the risk of spreading COVID-19 to others, but being forced to stay home feels like an attack on freedom. Restrictions of this nature are a limit on freedom though they seem sensible.

It is easy to understand the tension. Do we not have inalienable rights to freedom of expression, opinion and movement? Observing articles or videos on the backlash against social distancing restrictions, "no platforming" or climate restrictions illustrates how tightly held certain freedoms are. However, it feels like freedom can only extend so far when we might face death from our neighbour's actions.

Tug of war between those who want to go outside and those who want to stay home during coronavirus

This tension between what we feel are our rights and the need to follow rules for broader societal benefit lies at the center of significant social upheaval in recent times. Defining where to draw the line is always going to be fraught with difficulty. People value freedom in different ways so coming up with a consistent set of rules that will make everyone happy is impossible. Societies that prioritise the individual appear to have greater trouble implementing restrictions for broader social benefit reflecting the relative importance of freedom. Accepting that not everyone will be happy, and forgetting about what will win votes for a moment, is important to give decision-makers license to rely on the evidence do what is right.

It is tempting to think some restrictions on freedom, such as social distancing during a pandemic, are just common sense. But that is being lazy and unempathetic regardless of whether or not it is right. If we are going to compromise people's freedom for a crisis we need to explain why and have good reasons.

Exercising freedom can harm others freedom too

Exercising our freedom will sometimes restrict the freedom of others. That's what it means to live with other people. The three scenarios below, where I suggest that restrictions can make sense, are all variants on this theme.

  • Imposing restrictions makes sense when there is a significant risk to specific groups from doing nothing. A risk-based approach to restrictions protects those who are most at risk eg the elderly or those with pre-existing conditions. Letting people roam freely around rest homes during COVID-19 is a good example of something that should be restricted. The elderly are more vulnerable with a higher death rate and an individual's right to freedom of movement doesn't give them the right to put an elderly person's life at risk.

  • Restrictions are important where there is a high cost of exercising our freedom on others. A classic example is smoking in a car. Smoking in a car imposes huge health costs on others in the car due to the risk of cancer through second-hand smoke. The temporary enjoyment experienced by a cigarette isn't more important than an individual's health. This is fairly intuitive. Cancer could shave years off someone's life and waiting to exit the car before having a cigarette isn't unreasonable.

  • Restrictions also make sense when the basic functionality a person requires is not being taken away and the personal cost of the restriction is low. I feel like having to wear a mask in public during COVID-19 fits in here. Of course, it isn't necessarily comfortable but people can still go about their daily activities largely unimpeded. Making a stand against masks on principled grounds of freedom seems odd when we balance the reduced risk of spreading disease against the minor cost of wearing a mask.

You will notice that I haven't got an example up there relating to social distancing for healthy people during COVID-19. That is because I don't think the level of social distancing required is clear cut. It sits in a grey area reflecting that the risk for healthy people from coronavirus is low and the cost of not being able to live their lives is high. Does everyone stay at home or do we encourage masks and a two-meter rule? If there are few restrictions for healthy people that could also affect those at risk. The level of social distancing implemented depends on government decisions, risk aversion and societal values.

How governments frame restrictions is important. You don't have to look much further than referring to staying at home as "staying in your bubble". The term bubble sounds comforting and of course, popping your bubble is a bad thing. Emphasising that we are staying home for the greater good is also important to help people understand that we are doing this for each other. Appropriate communication of restrictions is critical to aid understanding and encourage compliance.

Where to draw the line is subjective

There are of course freedoms that should never be breached. The right to criticise the government comes to mind. If we can't speak truth to power we don't live in a free society. I feel like some freedoms are intuitive but it quickly gets murky.

Truthfully I am not in favour of restrictions on individual freedom. It isn't a comfortable stance to say that people should act a certain way and does feel "big brother". My preference would be that people adjust their behaviour of their own freewill to more fully recognise the cost of their actions on others. But we don't live in that world, and there is subjectivity in everything.

"Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety." I'm guessing you knew this quote was coming. You can spin this Benjamin Franklin saying many ways depending on your political leanings but let's be clear - it is not dogma and is open to interpretation. Keywords like "essential" suggest that some elements of liberty are more important than others. The challenge is in drawing the line. Getting the right balance on restrictions and freedom is important now more than ever given the scale of the issues we are trying to tackle and the level of political polarisation.


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