Arnold Kling

Exit, Voice, and Freedom: An Example

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Exit, Voice, and Real Freedom,... One Ply Look-Ahead...

Following up on this post and this one, let me try to offer a hypothetical example of freedom without democracy. Maybe Will Wilkinson can comment on the example in a way that sheds light on what he is thinking, because I am not following him.

Here's the deal: Suppose that a new non-territorial state is created. Call it Liberista! To become a citizen of Liberista!, you just pay an annual fee. You pay no taxes to the state. As a citizen of Liberista!, you can live anywhere that Liberista! has an embassy compound. Liberista! leases compounds in countries all over the world. Liberista! embassy compounds are as ubiquitous as Hiltons, but many of them have space for large sections of single-family homes, office parks, and so on.

Living in an embassy compound as a citizen of Liberista!, your status with respect to the host country is comparable to that of a diplomat. You can travel freely within the host country, but you are exempt from income and property taxes. However, the government of Liberista will expect you to pay your traffic tickets and to otherwise not abuse your diplomatic status. Services like utilities, water, and trash collection must be purchased from providers in the host country. Perhaps you contract for these as an individual citizen, or perhaps you allow Liberista! to contract on your behalf and collect a fee from you.

Liberista! is managed like a hotel chain. As a citizen, you have no more right to vote than does somebody who patronizes a Holiday Inn. You can, of course, make suggestions and register complaints.

Of course, there may be competing transnational enterprises, each with franchises--er, embassies--all over. Such a world is described in Snow Crash, and I make no claim to originality.

If there were a Liberista! franchise close to where I live, I would move there. But moving to Virginia would be a loser for me, because my wife spends a lot of time taking care of her mother in Baltimore, and the last thing we need to do is lengthen that commute.

I am not saying that one could not shoot all sorts of holes in this model of citizenship in competing transnational entities. But I think we ought to think outside the box of territorial monopoly government. In my view, once we get outside that box, then exit becomes a plausible alternative to voice.

If you value freedom, then I think that exit comes out way ahead of voice as a mechanism by which people can express their preferences. Of course there may be other values, apart from freedom, that you think have a sufficiently high priority that you want to force people to live under governments that have large territorial monopolies. But that is a different argument.


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CATEGORIES: Political Economy



TRACKBACKS (1 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/2173
The author at Samizdata.net in a related article titled On the power of exit writes:
    Arnold Kling has been debating - in a friendly way - with fellow US blogger Will Wilkinson on the relative power of exit, the ability to take oneself and one's business away from place A to B, for example, with "voice", such as voting. There is a good ... [Tracked on August 17, 2009 11:44 AM]
COMMENTS (26 to date)
Tom Tobin writes:

Such a world is described in Snow Crash, and I make no claim to originality.

Before you said this, I was already thinking of The Diamond Age's claves — but that's all Stephenson anyway. But yes, I don't get the hangup people have over wanting democracy and a vote (which, from the individual perspective, is statistically insignificant and thus a waste of time) — I'd much rather be able to simply walk away.

Alex J. writes:

Regarding people's hangup, I think there's something in the intersection of the People's Romance, Stockholm Syndrome and the status quo bias. Often, democracies are much nicer places to live, but the causality probably runs from "democratic" (liberal) values to both democratic institutions and successful societies rather than from democratic institutions to successful societies.

Adrian writes:

To become a citizen of Liberista!, you just pay an annual fee. You pay no taxes to the state.

Is it just me or are these two sentences contradictory? Are taxes really anything different than an annual fee that we pay for the right to reside in a country/state/city?

Joe Marier writes:

Taxes are much more complicated.

RL writes:

Yes, Adrian, the two statements are VERY different and not contradictory.

If you don't pay your annual fee, you simply end your citizenship with Liberista! If you don't pay your taxes, you go to jail, though you retain your citizenship in the USA.

See the difference?

Tom West writes:

Doesn't this model rather quickly devolve down to an apartheid based on wealth rather than race?

Dan Weber writes:

This system would be the wrecking ball that broke the camel's back of how diplomats are treated by host countries. And that's probably a good thing by itself, although it leaves you no closer to Liberista! freedom.

Patrick writes:

Tom, in some sense, I think you're right, but I think apartheid is using a pretty loaded term. We have gated communities, rich suburbs, and some aspects of "apartheid" today. I think the real difference is a very poor person is stuck in one terrible city today. Under Arnold's plan, there would at least be competition, and history has shown that competition is the best path to a better outcome. Even if all the cities are awful, certainly one would be better than the others. Over time, this is bound to increase their quality. Besides, I would argue that separation based on wealth (i.e. productivity) is at least better than something so trivial as skin color.

Steven Jens writes:

This sounds like how investors in publicly-traded equities operate; you can vote for or against members of the board of directors, but, in practice, dissatisfied shareholders don't generally vote against management, they sell their shares and buy shares in companies with better management.

Jeremy, Alabama writes:

Tom West says:
"Doesn't this model rather quickly devolve down to an apartheid based on wealth rather than race?"

We already have apartheid for the super-wealthy, who domicile wherever they want. An Exit option lowers the cost of leaving.

Since an economic-political vote can ONLY (compared to Bastiat-style The Law) be used to plunder wealth, I would much rather have an Exit than a Voice. I imagine lefties are violently against this idea, as it leaves them nobody to take from.

I also believe the poor would be better off in Libertista. Would you rather be poor in a poor country, or poor in a rich country?

RL writes:

Tom West: It only becomes an apartheid system if you believe wealth is static...if you believe the fact you're poor now means you'll never be rich. If the poor can become rich, Liberista is potentially open to all, just as Lexus cars are potentially open to all (you wouldn't say we have an apartheid system in Lexuses, would you?). And the market is the best system for allowing the poor to become rich.

Tom West writes:

Agreed, apartheid *is* a loaded term. It just seemed the one closest to how this might turn out. (Actually, now that I think of it, 'racially pure' enclaves might end up being created as well.)

I was trying to express that today, unlike apartheid-era South Africa, no matter how gated your life is in the USA today, you are in a position where laws can take that away from you, which leaves you with some interest in the wider community.

While Arnold's thought experiment gives you the 'freedom to exit', without 'freedom to enter' the whole concept becomes 'freedom for the wealthy' (and with 'freedom to enter', the whole idea falls apart - sorry, I don't have a solution either).

Of course, I suppose if you have *lots* of money, Arnold's solution does sort of exist. There are a number of locations around the world that with enough money, you can buy your own enclave and the government to go with it. It's simply that Nova Liberista is too pricey for any of us to afford :-).

Nathan Smith writes:

The world today is an apartheid system based on nationality. There are a few exceptions, a few opportunities to migrate or change your nationality, but most of the world's population has no chance of, say, moving to the United States.

I think the most urgent need is to create an "exit" option not for prosperous Americans like Arnold, but for poor people trapped under tyrannies. Imagine if the world were able to effectively guarantee that anyone living under a regime with human and economic rights below a certain level could emigrate to somewhere that offered such rights. It might be possible. What I envision is setting up a foreign aid program tied to open borders: if Madagascar, say, Mongolia, or some other willing country, agrees to accept migrants from politically proscribed countries, they get an annual flat fee and a certain annual sum per head, financed by rich countries. International inspections would make sure treatment of the migrants was up to standard. Paths to citizenship for migrants might be required, but they could be long, and in the meantime, the governments of these countries could use the fees to raise living standards. They could also tax more prosperous migrants, although that might make them go to other haven countries.

What do you think? It seems like a way to challenge the territorial monopoly of governments that left-liberals would be sympathetic to.

Koz writes:

I'm sure most of this is well known by you and your audience, but IRL the reason this doesn't happen is because the nation-states won't allow it, and one of the worst offenders is the US.

The taxes in Western European countries are worse than here, but because of small distances and substantial inter-nation labor movement, they are forced to relinquish tax claims on their citizen's income earned in foreign countries. If they didn't, those expat workers would vigorously protest, evade payment, and/or relinquish home-country citizenship.

The US can and does exercise stronger control over the financial affairs of Americans.

E.D. Kain writes:

What about defense? If defense is contracted out to the host country wouldn't any franchise be at the mercy of that country? And if it were a private military - similar to Marines at an embassy - I wonder how they would be viewed: as an established military or as a mercenary force?

Nevertheless, fascinating idea.

Steve Sailer writes:

I'm always amused by how libertarians see "Snow Crash" as a utopian novel, rather than a dystopian one.

Elvin writes:

The right of exit from a city, state, or nation is a very important, perhaps the most important, human right.

I've argued that the right-wing dictatorships of Latin America, Spain, and Southeast Asia were far preferable than the left-wing dictatorships of Cuba, China, North Korea, and Eastern Europe because of the right of exit from the former. (They also had more religious and economic freedoms as well.) If you didn't like the Chilean dictator, it was a lot easier to leave than the dictatorship in Cuba. Perhaps because of exit, governments had to provide more freedoms and some level of services to their populace, or else everybody would leave.


allan armstrong writes:

I like your idea and would ad that the "Friendly Societies" i.e. OddFellows,as a best example had this going a long time ago. At the beginning of the 20th century the "friendly societies' included over half of the population of the U.S.
Also the Catholic church does some very similar things. The "Knights of St. John" get away with being a sovereign nation that actually is only a house in Rome. Knights of Malta....and several organizations inside the Roman catholic church actually have houses all over the world. The late Pope John Paul used to be greeted at different countries all over the world by a woman with a basket of flowers....The number of flowers designated the number of "residences" available in that country to members only.
The "Oddfellows" have almost died away because for whatever reasons they didn't get BAby boomers to join even though it was a wonderful life. The "mansion" Colorado state headquarters is here in my little town. It had a mansion for members, took care of the orphans and elderly....had a seven acre organic farm....Owns lots of property, apts, Senior citizen facilities, had their own lawyers and doctors....it is now down to 7 members...The local oddfellows also has its own orphanage in burma....which members used to fly over their and visit....Check out the Oddfellows as a precedent for your idea.
allan armstrong
also check my www.scholarisland.org...open and go to utopia

Ben writes:

From Ayn Rand's “The Nature of Government,” in The Virtue of Selfishness, on page 112:

A recent variant of anarchistic theory, which is befuddling some of the younger advocates of freedom, is a weird absurdity called “competing governments.” Accepting the basic premise of the modern statists—who see no difference between the functions of government and the functions of industry, between force and production, and who advocate government ownership of business—the proponents of “competing governments” take the other side of the same coin and declare that since competition is so beneficial to business, it should also be applied to government. Instead of a single, monopolistic government, they declare, there should be a number of different governments in the same geographical area, competing for the allegiance of individual citizens, with every citizen free to “shop” and to patronize whatever government he chooses.

Remember that forcible restraint of men is the only service a government has to offer. Ask yourself what a competition in forcible restraint would have to mean.

One cannot call this theory a contradiction in terms, since it is obviously devoid of any understanding of the terms “competition” and “government.” Nor can one call it a floating abstraction, since it is devoid of any contact with or reference to reality and cannot be concretized at all, not even roughly or approximately. One illustration will be sufficient: suppose Mr. Smith, a customer of Government A, suspects that his next-door neighbor, Mr. Jones, a customer of Government B, has robbed him; a squad of Police A proceeds to Mr. Jones’ house and is met at the door by a squad of Police B, who declare that they do not accept the validity of Mr. Smith’s complaint and do not recognize the authority of Government A. What happens then? You take it from there.

Dwight Johnson writes:

Extraterritorial government is known generally as panarchy. There are several excellent sites that go into this concept in some depth. It originated in the writings of a Belgian biologist back in 1860, so this is not really a new idea. To get an example of how one person (myself) is proposing to make this a reality in my own home town, see the Panarchy section at Panarchy South Jersey. There are several links to other panarchy sites on the links page.

The fundamental thing to remember is that the right to choose one's government is a human right. Everything else amounts to a form of slavery.

Dwight Johnson writes:

Third times the charm? Very sorry.
Panarchy South Jersey http://www.panarchy-sj.com

[Link fixed, multiple comments removed or edited. In the future, please proofread your comments, including checking when you preview before you post your comments that your links work. Frustrating our readers is not a good strategy if you want to acquire readership for your own site.--Econlib Ed.]

Dwight Johnson writes:

I do apologize (again) for my earlier carelessness. I was rushing to get a comment up because I could see no one had come across the idea of panarchy before. Now that I have had more time to read the article and comments, I want to say how impressed I am with the thoughtful quality of it all. I also like very much the concept expressed as "exit" versus "voice". I had expressed the same thing as "voting with your taxes" versus "voting with your ballot". In my example of a panarchy in my hometown, I do not see the separate governments completely divorced from one another, but cooperating on those things that they agree on (perhaps a single police force and court system) while going their own way on other things such as the schools.

Dwight Johnson writes:

I have to respond to Ayn Rand's rather silly objection. Let's frame the same thing with a slight twist. Mr Jones lives on the border of Cherry Hill, next to the town of Haddonfield. Mr Smith lives on the border of Haddonfield, next to Cherry Hill. Mr Jones and Mr Smith are next door neighbors. Mr Smith suspects Mr Jones of stealing his TV from his living room, and calls the Haddonfield police. What happens next? I'm not sure, but I do know that it will not end in a gun battle between police of neighboring towns. They will work out an arrangement between them. Ms Rand's objection is one of a type I often see, resulting from what seems a mixture of lack of imagination, hubris, and yes, perhaps even a bit of Stockholm Syndrome (as another commenter mentioned.

Aviezer Tucker writes:

I published an article a decade ago examining non-territorial states from the perspective of political philosophy. It is available now on the net in a website that specializes in examining this idea (Panarchy):

http://www.panarchy.org/aviezer/territorialfallacy.html

Ben writes:

Dwight,
We're not talking about two governments side by side. We're talking about governments competing for jurisdiction over a single spot. Big difference

Elvin writes:

Following up on my comment last week, I'd like to add this story.

http://news.yahoo.com/s/ap/20090819/ap_on_re_eu/eu_hungary_picnic_to_freedom_11

Exit caused the collapse of the Soviet Bloc.

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