Tyler Cowen at Marginal Revolution today.
The libertarian vice is to assume that the quality of government is fixed. … If the quality of government is fixed, the battle is then “government vs. market.” Not everyone will agree with libertarian views, but libertarians are comfortable on this terrain. … But sometimes governments do a pretty good job, even if you like me are generally skeptical of government. The Finnish government has supported superb architecture. The Swedes have made a good go at a welfare state. The Interstate Highway System in the U.S. was a high-return investment. … The libertarian approach treats government vs. market as the central question. Another approach, promoted by many liberals, tries to improve the quality of government. This endeavor does not seem more utopian than most libertarian proposals. The libertarian cannot reject it on the grounds of excess utopianism, even though much government will remain wasteful, stupid, and venal. More parts of government could in fact be much better, and to significant human benefit and yes that includes more human liberty in the libertarian sense of the word. Libertarians will admit this. But it does not play a significant role in their emotional framing of the world or in their allocation of emotional energies. They will insist, correctly, that we do not always wish to make government more efficient. Then they retreat to a mental model where the quality of government is fixed and we compare government to market.
When reading this post, it’s hard not to think of Albert Hirschman’s brilliant little book, Exit, Voice and Loyalty. Hirschman’s theoretical innovation is precisely to assume that quality (of organizations, of products etc) isn’t fixed, and that there are different mechanisms through which we might imagine that quality would be improved. “Exit” – the threat of switching to a competing organization – is one such mechanism, and it’s one that libertarians will be very comfortable with, as it’s greatly enhanced by free markets or market-like competition under many circumstances. The other is voice – which refers to more directly political actions, of argument, protest, criticism etc, and which doesn’t seem to me nearly as congenial to libertarians, because it suggests that faulty organizations and governments can be made better without recourse to market mechanisms. Indeed, under some circumstances, increased opportunities for exit may reduce the ability of voice to bring through change. Authoritarian regimes frequently allow some critics to go into exile, for fear that they’d become rabble-rousers at home.
Which makes me curious. What do libertarians think about Hirschman’s arguments? Do they read him? Do they have a sophisticated response?
Update: Alex Tabarrok points me to an old post of his, which rightly points out that under some circumstances exit and voice can be complements.