Arnold Kling  

Exit, Voice, and Real Freedom, Again

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I Agree With... Exit, Voice, and Freedom: An ...

My impassioned post draws a response from Will Wilkinson that is self-refuting. He writes,


I've noticed that Arnold complains a lot about Montgomery Country, MD, but as far as I know hasn't moved.

In other words, he would argue that I have a revealed preference for my local government. However, earlier in his post, he writes,

A world in which I am bullied and coerced by lots of different people may be a world without monopoly, but that's not a world of freedom...

People need each other. The main instrument of human survival and flourishing is social cooperation. Cooperation requires negotiation, the exchange of reasons, voice.

I do not like being bullied and coerced by the politicians of Montgomery County, but I will be bullied and coerced by similar politicians if I move nearby. If I move to a distant land, I could be bullied and coerced by worse politicians, or by criminal enterprises. If I try to pick a place with the least unattractive coercion, it might mean moving far from friends and colleagues. Swiss federalism sounds good, but who would my friends be if I went there? When would I see my children? Instead, because "People need each other," I sit still and pay the tax of living in a jurisdiction where I am unhappy with the government.

Democracy does not eliminate the evils of monopoly. What Montgomery County illustrates is that American democracy does not even preclude a one-party state.

Our media and culture are permeated with romanticism about politics and voting. I wish to disenchant people for whom democratic government is a sort of religion, so that they will consider alternatives.

My forthcoming book, Unchecked and Unbalanced, offers a number of reforms that would make it easier for people to opt out. For example, allow individuals to allocate their own tax dollars to government programs or charities, rather than have them allocated by representatives. Another example would be to allow neighborhoods to secede from counties--this would make it possible for me to escape Montgomery County government without having to move away.

The question is whether these actual proposals for substituting exit for voice are worthwhile. I can understand why politicians who are in power or who aspire to power would oppose them. However, I think that if we break the spell of democratic enchantment, many ordinary people would support them.


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CATEGORIES: Political Economy



COMMENTS (24 to date)
TomB writes:

Although your point about being bullied by other politicians is true in the general case, it is not true in your case. Arlington and Fairfax County are just across the river from you. Both counties have governments that are much less intrusive than Montgomery County. If you lived in Baltimore county, the story might be different as the adjacent counties are not much different from each other. However, Virginia is a much different place than Maryland, despite being 15 minutes away.

Additionally, in Virginia localities can effectively secede from counties. A neighborhood can petition to become an independent city if it has 5000 people and if 2/3 of them vote for independence (I think it's 2/3). The city becomes self-governing and independent from the county. So you could also choose to live in Alexandria, Falls Church, or Fairfax City, which each have a government independent from the county in which it sits. Choices.

BL writes:

Arnold, come on over to the good side of the Potomac River.

Shayne Coook writes:

Arnold:

I'm looking forward to reading your new book. The concepts of "voice" (democracy) and "exit" (physically leaving the constraints of a jurisdiction) are interesting. I would also note that one's capital is as significant (perhaps more so) as is one's physical presence - note the trend towards foreign (outside of the U.S.) investment flows versus domestic in recent years. (There was a post not long ago about Jim Rogers - a major commodities investor - who physically fled the U.S. to Singapore. His capital had fled long before he physically did so, perhaps with greater detrimental effect on U.S. economic activity.)

The lesson seems clear - if your local jurisdiction seems disinclined to benefit from your capital, another jurisdiction will benefit from it. In your case, I would say that a substantial amount of your "capital" is your knowledge of economics. If Montgomery County, MD is too short-sighted to avail themselves of your "capital" to their benefit, fear not, the rest of us outside of Montgomery County, MD will, to our benefit.

Isegoria writes:

Arnold,

Have you done any research into what it takes to create a new local government in various parts of the US?

Certainly escaping the federal government is a larger issue -- a much larger issue -- but even a shift to smaller, more diverse municipalities could help.

Bill Mill writes:

Arnold,

I've read you espouse many libertarian ideas before, but I've never read you espouse alternatives to democratic government.

Do you support any alternatives to democratic government? If so, which? Do you really hope that people "will consider alternatives" to democracy, or that they will consider alternative forms of democracy?

Thomas DeMeo writes:

Shayne Cook made a critical point about capital vs. physical escape.

One would think there would be demand for a low cost sovereign state where capital transactions could safely take place without the overhead of a large nation-state. Party A and B could agree to some kind of transaction here, but exchange capital there, cutting the US out of the transaction.

Kurbla writes:

Arnold made two valid arguments, but these are arguments against property, not arguments against democracy or state. Just replace "Montgomery County" with "Sultanate of Brunei", and arguments are still the same, (no matter if Sultan acquired his property on legitimate way.)

Arnold's second argument, "I have family and friends here" is actually argument that exit is not enough. Arnold has the rights in Rothbard's theatre, because he made friends there. And he is right.

forager writes:

Arnold, I just wanted to thank you for linking to your previous post on "Real Freedom". I missed it the first time around, but it is one of the best posts I've ever read on a blog.

Will Wilkinson writes:

Arnold, I don't find your response very convincing. My argument is "self-refuting" only if you try very hard to not to understand what I said. The last two passages you quote establish (1)That absence of monopoly is a lousy definition of freedom. Do you concede this? (2) That exercising voice is an "ultimate" expression of freedom. Do you concede this, too? You continue to beg the question about the possibility of legitimate democratic government--about the desirability of certain forms of monopoly. If you simply assume getting taxed by Montgomery County is the same as getting mugged, you're home free, but you don't get to assume that. Also, you seem to be pretending not to grasp the immense variability in local governance here in the U.S. There are probably thousands of places in the U.S. where you would be substantially more free of government than you are in MoCo. The differences are large. Right here in the comments we've got people beckoning you to Virginia -- just a few miles away! If your argument is that the personal cost of being in Virginia or New Hampshire is too high as long as your family is where it is, then your reason for refusing to exercise exit is not that there are no better alternatives in terms of freedom. It's that you value proximity to family more than freedom. That's fine, but you should be clear about your reasons. There are people in Virginia and New Hampshire, by the way, with whom to cooperate. They even have the Internet there! In other countries, too!

I like all your ideas for making exit easier. But you'll be a lot more persuasive if you acknowledge how easy exit already is for well-off Americans.

Travis writes:

Arnold,

I don't think Will is arguing that you secretly prefer your local government at all, he's arguing that your right of exit isn't sufficient to grant you the freedoms or even local government you prefer.

Colin k writes:

"One would think there would be demand for a low cost sovereign state where capital transactions could safely take place without the overhead of a large nation-state. Party A and B could agree to some kind of transaction here, but exchange capital there, cutting the US out of the transaction."

there is demand, they're called "tax havens," and the EU and US Treasury are doing their best to shut them down and even criminalize usage thereof.

Thomas DeMeo writes:

Colin k- "there is demand, they're called "tax havens," and the EU and US Treasury are doing their best to shut them down and even criminalize usage thereof."

Maybe I didn't qualify my question enough. Obviously, there are tax havens, but a very tiny percentage of Americans use them.

I'm wondering why strategies for capital to escape haven't found more popular traction. With the internet, it seems difficult to see how the US Treasury could stop it, and the reward for escape is quite large. I'm wondering when a plumber is going to ask me to pay him in some virtual system somewhere.

Shayne Cook writes:

To Colin k:

"Tax havens" were not at all what I had in mind. What I did have in mind were jurisdictions that encourage, rather than penalize, deployment of capital (in all forms) within the jurisdiction. That encouragement only partly takes the form of lower tax rates on returns to capital (or labor) from investment. More significant encouragement takes the forms of lesser regulatory restrictions on direction of initial deployment of capital and less severe regulatory "guidelines" on the split between the returns to capital and returns to labor once a return to investment is realized.

To Thomas DeMeo:

Thank you for spelling my name correctly - especially since I didn't (sheesh).

lordzorgon writes:

I do find it odd that Arnold doesn't explain why he doesn't want to move over to Virginia.

A lot of us have moved a lot further than that to live in what we think is a better place (e.g. CA to TX in my case).

lordzorgon writes:

Obviously, there are tax havens, but a very tiny percentage of Americans use them.

That's easy to explain... US citizens owe US tax on their worldwide income.

As a US citizen, the only way out of US taxes is to renounce your citizenship, and even then you have to pay some pretty nasty expatriation taxes. I have no idea how they enforce the expat taxes; then again this is the US government we're talking about here, so I'm sure they have ways.

Found a link:

http://www.nytimes.com/2006/12/18/world/18expat.html?pagewanted=print

But after Congress sharply raised taxes this year for many Americans living abroad, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States, the only developed country that taxes it citizens while they live overseas. Americans abroad are also taxed in the countries where they live.

James writes:

Kurbla,

The problem isn't with property. The problem is that one player, the state, can get away with asserting ownership of other people's property while everyone else has to rely on consensual transfers.

E.g. It's rare to see the owner of a grocery store assert that everyone currently in the store owed him an income tax of 30% on all earnings that took place outside of that store. Yet governments do this kind of thing all the time.

Kurbla writes:

James,

Imagine the world full of sultanates like Sultanate of Brunei. Imagine that these sultans are righteous owners of the land, whatever your criteria. That it is valid anarchocapitalist world.

Yet, both Arnold's arguments can be still applied: (1) one cannot exit his favourite sultanate without leaving his friends and family, and (2) he can only chose between various sultans, but he cannot chose to be without sultans.

Jayson Virissimo writes:

"Imagine the world full of sultanates like Sultanate of Brunei. Imagine that these sultans are righteous owners of the land, whatever your criteria. That it is valid anarchocapitalist world." -Kurbla

Imagine a world where everyone voted to kill themselves. The votes were accurately tabulated and there was no foul play involved. This is a valid democratic world.

Does this refute "democracy" or simply show that my possible world scenario is foolish game to score rhetorical points?

Joe Calhoun writes:

Arnold,

Thanks for mentioning the idea of allocating tax dollars to charities or government programs. This is something I've been advocating for years. I think we should be able to allocate tax dollars to specific government programs or offset tax liability dollar for dollar with charitable donations. I hope the idea catches on and I look forward to reading your book.

Patri Friedman writes:

Thomas - unfortunately, hiding transactions so as to avoid US taxes is one of the activities on the short list of things that the US will not allow small countries to do. Hence the US' recent successful pressuring of Swiss banks and other offshore banks, to get them to reveal information about American depositors who are suspected of evading taxes.

There are a lot of local freedoms the US will permit around the world without interference, but anonymous banking is not one of them. Pick your battles.

Thomas DeMeo writes:

I fully understand that the US has aggressively (and mostly successfully) prevented the spread of offshore transactions. The question is why have they been so successful? It seems that this will be the lever that will crack things open eventually, and I don't see how open society nation states will be able to stop it.

James writes:

Kurbla,

Jason beat me to it, but if you want to do analysis by worst cases, that's perfectly valid, so long as you compare with the worst case of any proposed alternatives.

Otherwise, you are just pointing out that "X could turn out badly" which is just as true for any set of institutions.


Kurbla writes:

Sultanates are not important. They were just illustration.

How do you imagine anarchocapitalist world? Divided on smaller and larger private properties, right? There will be some landlord with property of the size of Montgomery county, and he'll have tenants, right? Every one of them will repeat exactly the same thing as Arnold did. Just he'll criticize property, and not government.

Groucho Engels writes:

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