Saturday, September 17, 2016

Exit, Voice, and Loyalty in the 2016 Election

Donald Trump is a very unusual candidate for president, and as of today, he has a 30 percent chance of winning the White House, according to PredictWise. Why has he garnered so much support?

A lot of ink has been spilled on this question, and I won’t revisit other arguments that are very valid. Instead, I want to focus on one hypothesis: The U.S. is experiencing some signs of institutional decline, at least relative to the severity of its problems. And since voice and loyalty have not proven to be powerful enough to fix institutional decay, exit has become much more appealing. So our political system needs to empower voice and loyalty again in order to address its problems and prevent exit.

I’m referring to Exit, Voice, and Loyalty because of a brilliant 1970 book by the same name by the late Harvard economist Albert Hirschman. He presents exit, voice, and loyalty as the three options available to people in the face of institutional decline.

Empowering Voice and Loyalty

In the context of the election, fully supporting Hillary Clinton (who I support!) represents loyalty for the current political system. Loyalty could even involve developing new policy ideas or organizing for your favorite causes on the local and state level, to show what else is possible. But in general it involves loyal support. Supporting Hillary Clinton (or a right-leaning third-party candidate, since that's still a vote against Trump) but also criticizing her and national policies would represent the exercise of voice, to try to improve the system. And supporting Donald Trump—an unusual candidate promising to upend the status quo—represents exit.

It’s not an exaggeration to say that electing Donald Trump would represent a radical departure from politics as usual. And as forces for change, voice and loyalty are not as strong in America as they need to be.

If you’re just one ordinary person who has a lot of concerns about policy, can you get the government to change course? What if you organize or convince a lot of people—can you still make change happen? A lot of people would say, often not, since the government is too powerful and indifferent to the concerns of the people. This isn’t necessarily a bad thing—the government needs to represent the broad interests of the people rather than just the interests of activists. But it still needs to be responsive to people’s concerns, and instead it arguably pays a lot more attention to special interests, and is prone to inertia and complacency. Government is the ultimate monopoly. So to a large extent, it doesn’t really need to listen.

And so many people have chosen exit instead, since at least broad exit can create the possibility of new policies and institutions. The credible threat of exit can also force institutions to make voice and loyalty more powerful again. In fact, voice and loyalty don’t have nearly as much weight without the possibility of exit. Without the option of exit, loyalty is ultimately by force and not by choice. But when someone is willing to stick with a system and try to change it for the better—even when they can leave, and have very good reason for leaving—that shows a true commitment to making things better.

So I hope that the government can do a lot more to try to give people more of a say in what the government does. We need to empower voice and loyalty to keep the current system going and improve it. People need to feel like they're really being heard. The status quo has a lot of positives we often forget about, and it has mechanisms for internal reform that I hope can be strengthened—especially given that exit is a very real option.

On Exit

Peter Thiel, one of Trump’s most prominent supporters, seems to be a good example of someone who understands the power of exit. As an entrepreneur and investor, he’s rejected the status quo in favor of putting his own ideas, and other people's relatively new ideas, into practice. As a supporter of seasteading, he wants to make it feasible for people to exit government as it’s currently practiced. By creating the Thiel Fellowship for young people who want to start businesses instead of going to college, he wants to create the possibility of exit from higher education. And by supporting Trump, he’s exiting politics as usual.

I’m not weighing in here on these initiatives—I’m only observing that they’re examples of exit. And as controversial as these initiatives are, asserting the right to exit can empower new ideas and projects that are outside the box, and it can help make voice and loyalty more powerful for others. You need to have the freedom to exit in order for voice and loyalty to represent an authentic choice, instead of just something that’s taken for granted and then ignored. In America, we’re so used to using loyalty and voice (hi, Twitter and Facebook) that we can forget how important it is to have exit as an option.

[Update (9/18/16): A reader has sent me a video of this excellent talk by the entrepreneur and investor Balaji Srinivasan, where he delves into the importance of exit, as it's described in Exit, Voice, and Loyalty. He argues that "exit amplifies voice," that exit is going to become more important in the years to come, and that both the U.S. and Silicon Valley are "shaped by exit."]

In Exit, Voice, and Loyalty, Hirschman wrote that exit by “alert” consumers can force companies to change by giving them enough of a heads up that there’s a threat, while they take the time to improve quality while continuing to sell to “inert” customers. However, he wrote that too much exit at once can prove to be devastating, and not give companies enough time to fix their problems. “It is important that other customers remain unaware of, or unperturbed by, quality decline,” he wrote, so that companies still have enough time and money to reform themselves.

Hirschman also wrote that there aren’t enough exit options for government. In particular, he wrote: “The decision to exit from the government of the most powerful country is particularly and deplorably infrequent” (that is, emigrating from the U.S.), since “exit has an essential role to play in restoring quality performance of government.” He similarly criticized how public officials were no longer willing to resign out of principle, because of the lack of a meaningful exit option.

He's right. That said, I think exit from government is different from exit from a consumer-facing business, since laws need to apply to everyone in order to have full force. Laws are the common rules that enable countries to function. And countries are now having trouble asserting their sovereignty in a number of ways, including as big companies choose exit when it comes to paying their taxes. So even as we seek better policies and institutions, we need to be cautious when it comes to competition in government. People should be free to immigrate or emigrate as they'd like, and businesses deserve that freedom too -- the freedom to exit is important. You just want to make sure that the privileges of citizenship go hand in hand with its responsibilities.

Hirschman also noted that America is what it is today because millions of immigrants chose to exit their home countries for something new. “The United States owes its very existence and growth to millions of decisions favoring exit over voice,” he wrote. Exit is part of the American dream. Exit within the U.S. (for instance, through entrepreneurship) has helped drive American innovation, and the freedom to exit is a crucial component of liberty.

However, our ancestors’ choice to exit meant that they could not exit again—they had made so many sacrifices to come to America that they couldn’t leave again. So then they were forced to use voice to the best of their ability, and that’s a big reason why America thrived, according to Hirschman.

But that also means that when you choose to exit, what you’re choosing in favor of what you’re leaving behind better be pretty good, because you may never be able to go back.

As Hirschman wrote in Exit, Voice, and Loyalty:

“Yet, as love may suddenly turn into hate, so can the national infatuation with exit give way in certain crucial areas to its utter proscription. To some extent, exit is itself responsible for the emergence of its opposite. In leaving his country the emigrant makes a difficult decision and usually pays a high price in severing many strong affective ties. Additional payment is extracted as he is being initiated into a new environment and adjusting to it. The result is a strong psychological compulsion to like that for which so large a payment has been made. In retrospect, the ‘old country’ will appear more abominable than ever while the new country will be declared to be the greatest, ‘the last best hope of mankind,’ and all manner of other superlatives. And one must be happy.”

So whenever you choose to exit, make sure it’s to a place where you think you can be truly happy, or at least happier than before. Also make sure it's somewhere where voice and loyalty will still count. Because you may not be able to exit again.

[If you have other thoughts on Exit, Voice, and Loyalty, feel free to send them my way, and I may incorporate them into this post.]

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