Quality arguments

If the argument is reduced to “government vs. market” and pro-marketers are in control of government, is corruption of government an inevitable result?

Hirschman discussed some of these issues in “Exit, Voice, and the State” World Politics 31:1 (Oct. 1978). Here he argues that Exit, Voice, and Loyalty focused more on economists’ neglect of voice compared to political scientists’ neglect of exit. Contra the idea that exit via exile removes voice via dissent and therefore strengthens authoritarian regimes, on p.103, he conjectures that 19th centuy emigration from Europe (exit) enabled democratization there by removing many anarchists, socialists, and revolutionaries and therefore reducing the fear of radicalism that would otherwise have accompanied the expansion of suffrage. He acknowledges that this is conjecture, not history.

While libertarians indeed stress exit from government over voice within government, this should be seen in the context of how many others use voice versus remain loyal. State authority, even in democracies, will not be responsive to voice if most of the citizenry remains loyal. The opportunity for exit if voices are ignored may be necessary to make voice effective.

The greater problem is that it is hard to exit the state in the truest sense. When Hirschman discusses exit above, he means emigration or secesssion — not merely reduced regulatory scope or exemption from regulation.

“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.”

If that is all you mean by voice–the permission to criticize, I’m not impressed. The ability to complain doesn’t really cause an incentive to improve the efficiency of an organization at most realistic levels of complaint. One of the problems with government without competition is that complaints can be safely ignored until people get to the point where they are willing to vote you out of office over it. This is a fairly high bar, so even obvious improvements can languish unaddressed until the problem becomes very bad. (See for example HUD in the 1970s).

“Voice, even without a realistic threat of removing someone from office, works quite well in my experience.”

What experience is that? (I’m not being snarky, it just would be helpful to find out where it works). In my experience such ‘voice’ is looked at with smiles and then ignored.

Works at what? Having the concern raised or having it dealt with?

The presence of Voice does not distinguish non-market from market interactions. Many market interactions are characterized by Voice (defined as an attempt to improve the relationship through communication).

So I think it’s a false step to say that libertarians are suspicious of Voice because it is uncharacteristic of market transactions. Perhaps instead libertarians appreciate how, in market interactions, the possibility of Exit usually enhances Voice. E.g., a laborer has much more influence on work conditions if his threat of exit is plausible. The classic libertarian concern, I would think, is the sustainability and strength of Voice absent the ability to Exit.

I’m skeptical about this idea of improvement by ‘exit’, I think the result will probably be the opposite of what’s suggested here.

I’m also skeptical about the ‘voice’ mechanism, for the reasons Sebastian described above.

Guillotine is a good mechanism; they have to be afraid to to fail, to screw up, to be caught – as opposed to looking forward to a million dollar a year lobbying career in the worst case scenario.

> I’m skeptical about this idea of improvement
> by ‘exit’, I think the result will probably
> be the opposite of what’s suggested here.

The problem with depending on exit to control social entities is that they tend to follow you whether you like it or not. That is, many have argued that on a certain [very controversial topic] we should adopt a pure libertarian solution. California permits [vct]; Utah prohibits it. So everyone who doesn’t like the outcome where they are should just move to one or the other.

The problem, as we have seen in relation to [vct], is that the extremists on one side or the other will gain the upper hand and then force their preferred solution on everyone regardless of location. So if you don’t have political voice you stand a good chance of losing your choice later, and no amount of exit will help you.

Cranky

“I’m skeptical about this idea of improvement by ‘exit’, I think the result will probably be the opposite of what’s suggested here.”

The opposite for what? If the exited organization does not improve it will tend to have problems surviving or doing well. True. But the people are going and getting their needs served somewhere else. The place they are exiting to is improving their lives in some way.

The goal isn’t to have some particular program or some particular agency survive. The goal is to have the needs met. Sometimes the agency is not as effective as other solutions at getting a particular need met. If that is true for a long period of time, and exit it available, it is true that the agency in question will have problems. But that isn’t proof that things are getting worse for the people’s needs.

I was thinking more in terms of places rather than agencies.

It’s like with excessive liquidity of capital, when investors suddenly rush into some lucky third world country building factories, infrastructure, creating economic boom there. And then something happens – some marxist guerrillas found in the jungle, el presidente catches cold, whatever – and immediately the capital flees, leaving nothing but ruins – to the next eldorado. No one wins except for a few speculators.

No, you probably should stick around and try to make the place (or agency for that matter) better. Unless it’s completely outta whack, of course.

Do libertarians read Hirschman? Do they have a sophisticated response? And have they finally stopped beating their wives?

Because you don’t say what you mean by libertarian you run the risk of straying into straw man territory. If by libertarian you mean a gun-loving crank who drives themselves into fits of apolexy over zoning laws, I doubt that sort person is going to have a sophisticated response to much of anything. (Certainly not my stereotypical idea of that sort of person anyway…) But my sense for the U.S. at least is that a “libertarian” has come to mean a John Stuart Mill fan with a distrust of powerful hirearchical institutions (primarily but not exclusively governments) and a strong inclination towards the “market” end of the market vs. publicly-managed spectrum of economic philosphies. Basically what the word “liberal” has meant at other times and in other countries. Some of this is just fancy nomenclatural footwork–since “liberal” has strong new left connotations in the U.S. these days, which people either for strategic or heartfelt reasons may wish to disavow. Some of it is more substantive. Whatever you want to call it, this political attitude doesn’t automatically entail a blind love of Enron or unqualified hostility towards the U.S. Postal Service, which, all told, does a pretty good job.

Even though they frequently contradict each other, you can read both the The Nation and Reason without your head exploding. And you’re not automatically a corporate lackey if you’re pleased when the Cato Institute gets something right.

I haven’t read Hirshmann before, but my impression is that “voice” (changing the government via elections and protest) seems to have four major limitations compared to “exit” (denying the government powers or making participation voluntary) that for me make it an inadequete check on bad governance on its own, with the context of a representative democracy.

First, the cost of voicing objections is typically higher that the cost of exiting. “Voice” is always an active process, and often requires extensive effort, while exiting is often passive, and even when not, it is fairly simple and straightforward. “Voice” also often requires sustained and coordinated efforts by a large group of individuals and may need to be continued even after the improvement is made to maintain it, while “exit” is typically a one-time action that can be taken by each individual at their leasure and may provide some immediate improvement if the situation being exited made the individual worse off in absolute terms even if a substitute isn’t immediately available.

Second, “voice”, because of the cost element, does not necessarily correspond to the “true” preferences of a population. A small group that stands to heavily benefit from a policy will be willing to put forth much more effort that the rest of the population that it only costs slightly. The “voice” also constrained by social norms – for example, the voicing of criticism of military leaders during wartime is curbed by patriotic social norms, even though such criticism could lead to a more effective war effort.

Finally, “voice” lends itself to action around a single modality – this isn’t intrinsic so much as a consequence of representative democracy. Take the case of a universal health insurance proposal where the redistributive factor is separated out (everybody presumably would recieve a uniform cash grant in its absence). Say that 20% of the population doesn’t want to buy health insurance, but would prefer high deductible to low, 35% wants high-deductible, low-premium insurance, and split evenly with regards to whether they’d prefer none or low-deductible insurance, and 45% wants low-deductible, high-premium insurnace and would prefer high-deductible insurance to none and everybody is equally interested in voicing their preference. The most likely outcome of the political solution in this case would be a single government plan which 55% of people wouldn’t prefer, but would be the plan with the most “voice” behind it. The market outcome, on the other hand, would be that each person would find a plan of their liking. Even if the market and the government were equally efficient at delivering health care, the market would deliver a more satisfactory outcome for 55% of the population.

To exit via emmigration means giving up the entire bundle of benefits provided by that government, whereas the granularity of benefits purchased on the market tends to be much smaller (you can change your health insurance without changing your ISP, but you can’t change your police dept without changing your school district). This means that there are more individual opt-out decisions to make when the services are unbundled, thus the quantity of information available to decision makers is better. Since both governments and the private sector solicit “voice”-style feedback, the government will typically have less information to work from and thus will be less effective at moving towards the optimal policy, independent of the efficiency of the policy’s implementation. This assumes that the different under regimes where the government is ran for the benefit of a small group rather than its citizens in general.

As for exile as a form of “exit”, I’m guessing that in the majority of cases the government isn’t giving the dissident the option of leaving or continuing to agitate as they please, but instead is making an implied threat of harassment, imprisonment, or death if they stay.

To “assume that the quality of government is fixed” seems like an awfully esoteric vice compared to, for example, attributing to organizations like corporations the same rights as individuals or assuming that markets are inherently moral. I’ve seen libertarians make both of those assumptions over and over again, and they seem pretty pernicious to me.

If a “libertarian” reads Hirschman, he might read “The Rhetoric of Reaction”. (To me, “libertarian” should mean “anarchist”, and an anarchist is a kind of socialist.) And then he will find that all of his arguments can be categorized into three buckets. Either he typically argues that the unintended and bad consequences of government action will overwhelm the good. Or that social roots are so deep that government actions are just so much wasted effort. Or, finally, that government actions, even when they work, jeopardize something good that we rely on. As Hirschman recognizes, classifying reactionary arguments into these buckets – which seems to work – doesn’t demonstrate any argument is wrong in any particular case. But recognizing how stylized the arguments are cannot but help encourage a certain amount of skepticism.

The more I think about it the less impressed I am. It doesn’t seem a revelation to libertarian thought that the quality of organizations isn’t fixed. Their whole method is based on the idea that the most efficient way to improve the quality of organizations is to subject them to serious competition. Monopolies aren’t as attentive they could be because they don’t have to be.

David Marquand once pointed out that discussions of Hirschman’s “exit voice and loyalty” rarely talked about loyalty as an independent variable. I’d be curious to see what libertarians–and liberals, while we’re on the subject–make of loyalty. It’s surely interesting too in light of the apparent dilemma in Britain of native-born bombers.

ben a: E.g., a laborer has much more influence on work conditions if his threat of exit is plausible.

Wait: does this mean libertarians are in favor of unions? Or only of there being plenty of other plausible work opportunities?

‘Their whole method is based on the idea that the most efficient way to improve the quality of organizations is to subject them to serious competition’.

I may regret this (I’ve always thought that libertarians differed only from doctrinaire Marxists in the degree of their self-delusion) but what do you actually mean by ‘serious competition’. And please an answer I can understand: preferably with examples. (What I am getting at here is the use of hte word ‘serious’: there is at least a realisation that not all competition is good; so how do we decide between the good and the bad?).

Thus we talk about “exit” because no person (or group thereof, include corporations and the state) has the right to impose a relationship on any other.

But I thought the libertarians do enthusiastically accept the idea of contractual obligations. And any time you enter (implicitly or explicitly) into a contract with a state or any social institution within the state, the terms may or may not include the right to exit or you may have the right but it’s difficult to exercise.

And the state may have a good reason to make exit difficult or impossible, because of the natural inclination of self-sufficient individuals to bail out – which destroys the system.

So, if you’re young, healthy and with a well-paying job (which is what ‘white male geek’ probably means), you just need to take it easy, graciously accept the limitations on your freedom and be glad that you are not old, sick and unemployed.

Nell,

I’m not a libertarian myself, but I don’t really see the basis for am a priori libertarian critique of collective bargaining or of unions. No doubt a particular union could act badly, but that’s par for the course (a particular person or corporation can act badly too). The point is, it does seem like there are many, many cases where Exit enhances Voice, and that market relationships often display this dynamic. I just picked up the Hirschman today, so I’ll see what he says soon.