The Right of Exit
By Arnold Kling
Is a right of exit compatible with our obligations either to community or to a territorial system of governance?
This is an excellent question, because it gets to the heart of whether competitive government is a practical libertarian approach or an oxymoron.
I argue that a right of exit is important in order to limit government power. I sometimes think that what kept the U.S. government small in the early 19th century was not so much the Constitution as the fact that people kept leaving the then-current United States for adjacent territories. The option to exit would have made it quite difficult for government to grow large and intrusive.
But is there such a thing as too much right to exit? For example, suppose that I live on a street where we all share the same snow removal service. When I see what we are going to be charged for a big storm, I opt out, so that I do not have to pay for snow removal. The street in front of my house goes unplowed, so that everyone else on the street is either blocked or has to pay more to get my part of the street plowed. Is that a good system?
I do not think that this is an insoluble problem. In the private sector, there are situations where one consumer’s exit can raise average costs. The solution is some form of lock-in. For example, condominium associations lock consumers into paying dues. Cell phone companies lock you into paying for a year or more of service.
We allow private firms to implement lock-in policies, as long as they are reasonable. Similarly, I think we should allow physical or virtual communities that perform what we now think of as government functions to implement lock-in policies as long as they are reasonable. I think we would need courts and an accumulation of common law precedents to serve as the ultimate arbiter of when lock-in policies are reasonable and when they infringe on the right of exit.
Imagine that we had such a system in place today. My services for local police, fire, garbage collection, and snow removal have a lock-in arrangement that consists of me paying local property and sales taxes or going to jail. Perhaps the lock-in arrangement does not have to be that strong. Perhaps I could choose different service providers, either as an individual household or in conjunction with other households.
Call the incumbent service provider MoCo, and suppose that there are competing service providers that are specialists. I might want to keep MoCo’s fire, police, and snow removal service, but instead get garbage collection from a separate trash hauler. What lock-in policies for MoCo are fair? It might be fair for them to offer discounts on garbage collection to people who already are consumers are other services. But it is not fair for them to deny a business license to the competing trash hauler.
I think that finding the balance between the right of exit and the legitimate use of lock-in policies should be done on a trial-and-error, case-by-case basis. I do not think that Mike Gibson’s question has an absolute answer. However, once you start imagining competitive government, you can see that the right to exit is not as much of a threat as might appear to be the case at first.