Arnold Kling  

What is Real Freedom?

My Economic Forecast... Not Your Father's Real Busines...

Will Wilkinson writes,

What the example of Hong Kong communicates is that authoritarian, illiberal, undemocratic regimes need not feel threatened by semi-independent city states with working "liberal" market institutions. It says to rulers that their countries can get rich without granting their subjects real freedom.

Which leads me to wonder: what is this "real freedom" of which you speak?

Consider the following definition of freedom: the absence of monopoly.

The absence of monopoly means that you can exercise exit, even if you cannot exercise voice. The presence of monopoly means that, at most, you can exercise voice.

Neither my local supermarket nor any of its suppliers has a way for me to exercise voice. They don't hold elections. They don't have town-hall meetings where they explain their plans for what will be in the store. By democratic standards, I am powerless in the supermarket.

And yet, I feel much freer in the supermarket than I do with respect to my county, state, or federal government. For each item in the supermarket, I can choose whether to put it into my cart and pay for it or leave it on the shelf. I can walk out of the supermarket at any time and go to a competing grocery.

The exercise of voice, including the right to vote, is not the ultimate expression of freedom. Rather, it is the last refuge of those who suffer under a monopoly. If we take it as given that the political jurisdiction where I reside is a monopoly, then perhaps I will have more influence over that monopoly if I have a right to vote and a right to organize opposition than if I do not. However, as my forthcoming Unchecked and Unbalanced argues, the reality is that the amount of influence I have is shrinking while the scope of the monopolist is growing.

The idea of charter cities (or seasteading) will be a success to the extent that it creates a viable exit option vis-a-vis government. Suppose that the Chinese government loses its monopoly power, because it becomes easy for people residing in China to choose to live under alternative governments. In that hypothetical case, I would argue that those residents are free, even if those who choose the Chinese government are not allowed to vote in contested elections or to freely criticize their government. If you lived in North Korea, which would you rather have--the right to vote or the right to leave?

In fact, if we had real competitive government, then we would be no more interested in elections and speaking out to government officials than we are in holding elections and town-hall meetings at the supermarket. I repeat: real freedom is the absence of monopoly.

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CATEGORIES: Political Economy

TRACKBACKS (3 to date)
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The author at Repeal the 17th Amendment in a related article titled Freedom Is Choice writes:
    Arnold Kling defines real freedom as "the absence of monopoly"... [Tracked on August 11, 2009 12:16 PM]
The author at The Freedom Thinker in a related article titled A Particularly Good Definition of Freedom writes:
    “Consider the following definition of freedom: the absence of monopoly.” – Arnold Kling This explains why those perhaps in Hong Kong (i.e. China) may have more freedom than Americans.  There is no viable exit opportunity from the Amer... [Tracked on August 11, 2009 4:11 PM]
The author at Brad Taylor's Blog in a related article titled Exit, Voice, and Liberty writes:
    There’s been some interesting, and heated, debate in the libertarian blogosphere about the importance of democracy to freedom. Will Wilkinson suggests that since charter cities (and presumably seasteads) are undemocratic, they might allow rulers of aut... [Tracked on August 13, 2009 5:10 AM]
COMMENTS (35 to date)
kebko writes:

Wow. Very well put. Thank you.

Matt writes:

Thank you very much for this post. A very short and succinct definition of freedom that I will definitely reuse.

david writes:

The freedom to leave isn't sufficient; you must also have options that don't suck. Hence the vote.

Matt writes:

Excellent post. I would also like to add that excercising your freedom to exit encourages cunning in the competition. Not only does this improve quality but also increases choices.
Supermarket example: If I see you leave a grocery store without any oranges because you say they weren't fresh enough, I might open a grocery store that guaruntees fresh produce. If that doesn't work or somebody else is already doing it, I might start selling tangerines.

Relyt writes:

'Freedom' may depend on the ability to opt out, but 'Progress' depends on coercive and collective control to make you stay in. Oh, and progress requires that you not ask too many questions, either, it upsets the technocrats.

John Alcorn writes:

Brilliant post, Arnold. You're on a roll!

Jayson Virissimo writes:

"The freedom to leave isn't sufficient; you must also have options that don't suck. Hence the vote."

This seems to be a non-sequitur. How does the ability to vote give me a choice that doesn't suck?

Eric writes:

I totally agree. Every year I receive something in the mail from my retirement plan provider giving me the right to vote for its board of directors and every year I ignore it. My right to exit and choose a different provider is a significantly larger check on the plan than my right to vote is. If they don't do what their customers want, they'll lose their assets and their income. In addition, if they don't do what I want (at least relative to the next best provider) they'll lose my business and I'll never have to deal with them again, even if their other customers are totally happen with them.

Ned writes:

Arnold, excellent post - perhaps your best on this blog ever (and I have been following it for a couple of years). Can't wait for the book.

Mike Gibson writes:

Very good points Arnold. Recently, Matt Yglesias took up Cowen's offer to define libertarianism charitably. (After your attempt at progressivism.) Yglesias called the little L an "esoteric" philosophy, meaning if we tell everyone to close their eyes and believe they're working hard or productively (even tho they're not), then we'll see positive gains in economic growth.

Anyway, this isn't so much a description of libertarianism--and by extension, freedom--than it is a description of Wilkinson's Rawls inspired vision of justice.

Wilkinson has a soft spot in his heart for democratic politics, but he never provides a fully detailed description of his ideal democracy: majority rule? town council? randomized be-president-for-day-contests? greater checks and balances than the USG currently has? On all this, he is silent.

lordzorgon writes:

I like it! I would happily give up my vote for better policies. Seeing as I only have one vote, and given that it's overwhelmingly implausible that casting my vote differently would change anything, my vote doesn't matter anyway.

On a more practical note, I voted with my feet when I left California and moved to Texas. I've saved a *lot* of money on taxes (and other expenses!) since then, and I see no evidence that California's higher taxes or higher cost of living results in a higher quality of life. If anything, the opposite seems true to me (e.g. the roads are better maintained here, and the Bay Area was severely culturally dysfunctional).

My leaving California had a lot more impact on California's policies than any votes I ever cast in California.

I really like the fact that I have a choice of states to live in. I dislike that I have few practical choices of what country to live in.

david writes:

@ Jayson Virissimo

All that the ability to leave gives you is the opportunity to enter another state, right now. It grants nothing on the condition or future of said state. Hence mechanisms like a vote. Some people have to building a state for you to go to.

For instance, a PRC citizen can generally move around around the assorted counties within the PRC; there are too many people for Beijing to reasonably track even if it wanted to. But all their options still suck (can you guess why?).

To phrase this in terms of Kling's supermarket. You can leave. But that's not freedom; freedom here is having another supermarket offer you what you want instead. If there are no other supermarkets, being able to leave the monopolising supermarket means jack, sadly. And the supply of states is very much a seller's market.

Tim Worstall writes:

"The absence of monopoly means that you can exercise exit,"

One thing that is worth remembering, amongst democracies the US is unique (or nearly so if not entirely). You cannot get out of the US tax regime by simply leaving the country. You can only do that by relinquishing your citizenship and if you do that then you'll be charged an exit fee of the tax which you would have owed if you didn't leave (it's more complex than just that but that's the basic effect).

For just about everyone else the tax regime is country of residence, not nationality (again, some complexity but roughly so). So if you don't like the UK option, live in France and live under the French one. Or Sweden, or Portugal, Costa Rica, wherever.

In short, it is vastly easier for alomst everyone other than Americans to excerise the option of exit.

Granite26 writes:

Nice... just nice...

Plus, it puts a point to my belief that America is an outlier in a certain direction and should be kept so, because the people pulling it towards everybody else have the option of just moving to where everybody else is.

fundamentalist writes:

Very nice!

Adam writes:

Yes, very interesting, the right of exit. Competition seems to be what the Founders had in mind with the US Constitution--a weak central government with strong State governments, each with a right to secede. Would a reassertion of the right of secession for States lead to more competition and liberty?

Dan Hill writes:

Or to put it another way, "the ability to vote with your feet is infinitely preferarable to the ability to vote with your hands."

Dan Weber writes:
The freedom to leave isn't sufficient; you must also have options that don't suck. Hence the vote.
Do you think you would have better supermarket options if one of them had everyone get together and vote on what they would sell and charge? Maybe this would be better for you, if you got political control and lobbied for the brands and items you want to be subsidized to the detriment of other people's choices. But there's no evidence that consumers, as a class, would prefer such a thing.
JohnJ writes:

I can't get over the fact that so many people believe that freedom requires forcing other people to offer it. It's a good thing you guys weren't around two hundred years ago to demand the freedom to own a car. The free market would never have gotten anywhere with you "entitlement" thinkers in charge.

AJ writes:

Arnold, this is one of your best posts ever. It's brilliant, original (there is nothing in Hirshcman's "Exit, Voice, and Loyalty" which is quite this clear).


8 writes:

Excellent. This is a great explanation of why Americans can say they feel more freedom in China than in the U.S.

E.D. Kain writes:

Really fascinating piece, Arnold. Probably one of the best I've read anywhere in a while.

frankania writes:

Excellent Arnold, What if libertarians started their own "country" as they tried to do in the 70's in Bahamas. That experiment failed for various (mostly political) reasons. But think of it; you only go to live there if you don't want govt. control, beyond the minimum, of course, and if you don't expect govt. help.

On that line, does anyone know of a "libertarian country index" or a ranking of the countries in the world with the least govt.?

I live in Veracruz, Mexico and it is pretty laid back, let me tell you.

like i'm going to put my name here. writes:

[Comment removed for supplying false email address. Email the to request restoring this comment. A valid email address is required to post comments on EconLog. Like if you want to comment here you have to conform to some rules.--Econlib Ed.]

Billy B writes:

I like this concept of exit vs voice. It may not be as simple as shopping at a different grocery store but definitely an impact-ful effect on how governments think, also an accelerated progression pattern would emerge as governments begin competing, innovating, and improving with the individual able to choose which government to "shop at". I would clarify the definition of a monopoly as that being forced vs monopolies that freely exist in an open market (i.e. a company or entity that does something so well and so cheaply that there is no reason for competition). This, however, is an idealized concept as someone always falls asleep at the wheel at some point, especially if they've been at the top for a while, allowing for competition to improve upon the concept. Mine would say "government enforced monopolies" or something to that liking.

Bob Montgomery writes:

Assuming you live in your hypothetical country where there are no elections but exit is a choice.

What prevents the govt from taking away the freedom to exit?

Bob Montgomery writes:

To continue...

Seems like, in human history, there have been many non-democratic regimes where exit was severely restricted but few (any?) democratic regimes where exit wasn't allowed.

Can you preserve exit without democracy? I kind of doubt it.

sourcreamus writes:

I wonder if Caplan would rethink his position that the 4th of July is nothing to celebrate after reading this post.

Doc Merlin writes:

Its a problem of revealed versus stated preferences. Changing location is a revealed preference, voting is a stated preference.

With voting you get the same people who made bad choices in their previous failed areas coming to areas that are doing well and forcing their choices on everyone else. This is the big problem I see with democracy. I expect within the next 20 years texas will become much more leftist, due to the influx of leftist californians.

Doc Merlin writes:

Hrmm, I forgot to mention. The US achieved its power in the world, predominantly by being the place that people flocked to due to good opportunity and free market capitalism. They voted with their feet that our system was better than theirs and made us fabulously wealthy.

This leads to two things.
1) Right of Immigration and Emigration is absolutely essential for freedom.
2) We should stop restricting immigration so much, as people will go to the "second best" places that are easier to immigrate to.

A = A writes:

Kling's observation is not original -- Milton Friedman made the same argument 29 years ago in "Free to Choose" that "We have been forgetting the basic truth that the greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else.".

But Kling's is interesting because it is an elegant and economistic re-casting Friedman's political statement.

david's comment "The freedom to leave isn't sufficient; you must also have options that don't suck. Hence the vote." is, unfortunately, noteworthy.

I disagree with the necessity of the vote for the reasoning given by Jayson Virissimo. But david's point remains valid: if all the choices in the choice set fail to fully-satisfy the demand (for freedom), then absence of monopoly does not guarantee the level of freedom demanded. (Examples: [1])

The best we can say is that - much like the behaviorist notion of bounded rationality, we always and everywhere live lives of bounded freedom... But, as the bounds of rationality improves with computational intelligence (expanded capacity for calculated, rational thought), so too do the bounds of freedom improve with choices.

* Demand for high-quality healthcare remains unmet for ~46m Americans (or perhaps only 43m or 41.4m, if you want to assume, say, 10% of them choose not to purchase insurance. I know firsthand such people do exist).

* Demand for salaried jobs that only require 40 hours/week of work for the 40 hours/week for which salaried individuals are paid tends (particularly in IT, I-banking, and consulting) to go unmet, and with nearly all businesses behaving in homogenous ways (my job gives me the ability to say this from experience), will remain unmet as a result.

Most people perform the free labor of working for for-profit institutions for longer than the period of time for which they are paid (50h/wk for 40h/wk of pay, for example), and is essentially a form of privatized communism. "Work for free for the good of the corporation, comrade!" Governments do not hold a monopoly on collectivist thought when it's in the organization's self-interest.

* Very arguably, demand for movies worth seeing this year remains unmet (with exceptions perhaps for District 9 and Star Trek, depending on tastes).

* Demand for sub-orbital space flight remains unmet; the effective choice set is null for all but the wealthiest individuals at this point in time.

* To take a political example, rather than an economic one: the choice set for someone wishing to escape from the nation of Chad, where they are generally very poor, include no bordering nations worth living-in either.

* To take a relevant political example, demand for libertarian government in the U.S. remains unmet for the ostensible 5-15% of Americans holding substantially-libertarian political views. Nations, like U.S. states, that supply significantly libertarian politics are in short supply, and so the choice set suffers (hence e.g. Seasteading efforts, as well as this very post from Kling and other such libertarian reflections on the value of democracy).

* The "Saw" movies (none of which I've seen, but I understand some of the premises) are based on the notion of abominable choice sets: do the helpless victims cut-out one of their eyes to retrieve a key to unlock the nail-traps that will impale their skulls within 60 seconds - or instead accept their gory death? (Either way, to the sick amusement of audiences.)

Similarly, do Gitmo detainees accept their fate of torture by U.S. military personnel to save their reputation and their cause, or do they give-in and tell the U.S. the information we're seeking (assuming they possess it to begin-with and are not instead making-up information so as to stop the torture)?

Economists, of all people, should be the most acutely-aware that choices are always constrained and therefore incur trade-offs, and they are not always pretty.

david's point is essentially that the trade-offs between choices result in a choice set in which no set of trade-offs should be considered an "acceptable" state of the system of choices... These occur in markets, as well as in political options.

But, increasing heterogeneity in the choice set is likely to help increase the probability that preferences and choices map in an "acceptable" way...

And that is where markets shine (generally, but not universally), and is the strength of Kling's argument. As Kling has said before (paraphrasing): "markets fail; the solution is to use markets".

camille harris writes:

So,David, to where would you exit? Many have considered voting with their feet, but cannot find a place with more freedom than we currently enjoy...though most of us agree, it is disappearing.

Ross Parker writes:

@David -

"The freedom to leave isn't sufficient; you must also have options that don't suck. Hence the vote."

The freedom to leave states creates competition between them. This competition leads to options that don't suck.

A = A writes:

@Ross Parker:

"The freedom to leave states creates competition between them. This competition leads to options that don't suck."

Nice theory. But see my examples of the theory's occasional failure in practice. (There are counter-examples though: U.S. vs. Japan auto industry since 1975; the computer industry since its inception; etc.)

frankania writes:

Yes Camile, I wonder where to go, also. See my comment here of August 12 where I ask about an INDEX OF LIBERTARIAN COUNTRIES showing the amount of govt. intrusion into business and personal affairs.
Mexico is in reality pretty libertarian, in that the govt. has lots of laws, but ignores many of them; thus people can live their lives without undue regulation.

AGAIN: Does such a list exist? Help us somebody.

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