Exit and Voice

With the paucity of reaction to my question about trying to bring about a change in the dietary options available on McDonald's menu, I can conclude either that the question was not understood by most people, or that most people found the answers so obvious that they did not bother to answer. I am hoping it is the latter.

I submit that if you did indeed find the answers blatantly obvious, and that if carry out the same reasoning to its logical conclusions, most of you will be surprised or even shocked where it leads you.

In response to question #1, I hope that everyone concluded that it would be much less costly to Exit (choice B) to a competing business than using Voice (choice A) to try and change the existing business by buying voting influence. And by extension, in questions #2 and #3, I hope everyone concluded that a large percentage of McDonald's Corporation's shares would have to be acquired, resulting in a cost of billions of dollars to change management decisions.

It is obvious that the ability of the average person to find Atkins-friendly food is much more easily obtained through leaving for a competitor. It would be difficult for him to outbid a 'rich' person for control of a corporation.

In contrast to the views of most of the commenters at this original Crooked Timber post, Voice is much more costly than Exit. The less well off in society greatly benefit from the ability to choose between competitors. Exit gives the poor the opportunity to outbid the rich on goods. Voice favors the rich.

Government can be thought of a business that won't allow any competitors. It generates business by effectively preventing Exit and extracting revenues through coercion, although it does allows Voice if it is a democracy. You cannot escape your government's laws although you can try to change things by voting. In fact, that is one of the most common objections to libertarian arguments - "Why don't you vote to change things the way you like them?" The problem is that a single individual's vote has never affected any significant election.

Instead, democratic governments are influenced largely by political contributions. And again, the less well-off in society could never hope to compete with those able to afford larger donations. There is no way to Exit to a competitor.

Imagine you are the middle-class parents of a child in a public school. Your "fees" are already taken from you to pay for the costs associated with the school. Yet, if you are dissatisfied, you cannot Exit to a competitor because those "fees" have already been taken from, and you are not going to get them back. The ones who can Exit are the more affluent parents who have enough money to afford alternatives on top of the "fees" already taken from them. The middle-class family is left with the option of trying to change the local government by partaking in school board elections, going to PTA meetings, etc. The middle class family is trapped without the meaningful and effective option of Exit. Voice is no option at all.

By extension, all laws can be thought of in the same way.

Share this