The paper is heavy on “what Coase really meant” (lots of smart people get this wrong), on non-property institutions and norms à la Ostrom, and on the often-ignored inframarginal externality as discussed by Buchanan and Stubblebine. By applying these ideas to cybersecurity policy, I try to show that it is not at all as obvious as many analysts think that there is significant scope for welfare-enhancing regulatory intervention. The point is not that there is literally zero market failure, but that proponents of cybersecurity regulation have not done the work they need to to show that market failure exists, if it exists. Indeed, many policy analysts may not even realize they are missing something. I hope that this paper will correct that and lead to a more humble and cautious approach to market failure among its readers.

I have plans for more work on tech policy in the future. Internet security and governance is a great research topic for young, tech-savvy economists interested in polycentric governance and institutions. If you’re interested in doing research in this area, let me know, I may be able to help.

There are a positive number of murders each year. If we put more resources into investigating and prosecuting murders, there would be fewer murders. Nevertheless, it is not at all clear that we are spending too little on murder. The optimal number of murders is positive, not zero. The best policy with respect to murder is to try to maximize the net benefits of the policy, not to minimize murders.

Suppose a new technology were introduced that made it easy to get away with murder (e.g., David Friedman’s plan for Murder Incorporated). This technology makes it extremely costly, though, say, not impossible, to stop murders from occurring. What happens to the optimal amount of murder enforcement? The amount that must be spent to deter each murder has gone up, so the price of deterrence has gone up. Consequently, society should aim to deter fewer murders. Under some extreme circumstances, we might even be better off if murder were legalized (and if people were advised to just be more polite to each other).

Similarly, whatever your prior belief about copyright enforcement, the Internet has made it easier to get away with copyright infringement. The amount that must be spent to deter each instance of copyright infringement has increased. Consequently, society should aim to deter fewer instances of copyright infringement, not more instances as SOPA supporters advocate.

In fact, the cost of deterrence has increased so much that we should begin to rethink copyright law. We could increase the benefits of deterrence if we targeted only high-value infringements. This means that we should shorten the term of copyright, since high-value IP tends to be newer IP (in fact, copyright terms have increased in recent decades, a move in the wrong direction). We might consider expanding “fair use” copyright exemptions to include more non-commercial uses, since commercial infringements are more likely to diminish the value of a copyright. Most importantly, we should withdraw public resources from the enforcement of IP violations. Private enforcement through the tort system has a built-in safety valve: when the cost of enforcement rises, people will do less of it. But the criminal system is essentially a public subsidy for enforcement; no wonder that pro-copyright factions are attempting to criminalize copyright infringement through SOPA and other legislation.

The bottom line is that recent expansions of copyright terms and enforcement powers get the comparative statics exactly backwards. In an age of costly enforcement, it’s time to give up, at least at the margin, on copyright. And at the margin, content creators should just be more polite to content consumers.

Seriousness is always related to roles, or abstractions. We are likely to be more serious with police officers when we find them uniformed and performing their mandated roles than when we find them in the process of changing into their uniforms. Seriousness always has to do with an established script, an ordering of affairs completed somewhere outside the range of our influence. We are playful when we engage others at the level of choice, when there is no telling in advance where our relationship with them will come out—when, in fact, no one has an outcome to be imposed on the relationship, apart from the decision to continue it.

To be playful is not to be trivial or frivolous, or to act as though nothing of consequence will happen. On the contrary, when we are playful with each other we relate as free persons, and the relationship is open to surprise; everything that happens is of consequence. It is, in fact, seriousness that closes itself to consequence, for seriousness is a dread of the unpredictable outcome of open possibility. To be serious is to press for a specified conclusion. To be playful is to allow for possibility whatever the cost to oneself.

The book is obviously not about game theory, and it lives up to its subtitle, “A Vision of Life as Play and Possibility.”

It is a book that I wish were more widely read, not merely because I enjoyed it, but because it would enable for me a new mode of discourse. In the short time since I read the book, I have found myself on numerous occasions wanting to say, “So-and-so is playing a finite game,” and be understood. When Tyler invites Krugman to come out and play, and Paul responds with “This is not a game,” Paul is playing a finite game. When Mike Elk trashes bloggers in general and Matt Yglesias in particular, Elk is playing a finite game.

I read the book as pro-blogging, even though it was written before the invention of blogging, and pro-anarchism (of a certain kind), even though I doubt Carse has read the anarchism literature. More broadly, it promotes bottom-up processes not on Hayekian or consequentialist grounds, but on the grounds of meaning and personal satisfaction.

I recommend the book to people who are highly Open (and to a lesser extent non-Conscientious) on the Big Five personality model.

It’s tempting to think that the bond market is powerful because of corruption, but that is at most a proximate source of power. The real source of power is elasticity. The supply of financial capital is highly elastic; it moves around the globe in milliseconds. Try to tax it and the incidence of the tax will go elsewhere; burden it with regulations and it will flea to a more hospitable climate.

Imagine a world in which all factors of production were as mobile and elastic as financial capital. If labor and physical capital could flea instantaneously and at low cost from bad policies, there would be little danger from either the predatory or incompetent state. In short, it would be a libertarian utopia.

This utopia seems hard to realize. It’s hard to believe that labor and physical capital could ever be as elastic as financial capital is today. Nevertheless, I think this framework provides a way forward for libertarians who have given up on political reform (and maybe even those who haven’t yet). Even if we can’t make the supply of most factors of production infinitely elastic, maybe we can make their supply more elastic. To the extent we succeed, we reduce the power of governments around the world.

Here are a few ideas for building a more libertarian world through higher elasticity:

1. Labor would be more internationally mobile if there were no language barriers. Consequently, libertarians should (without coercion) support the removal of barriers to language standardization. In practice, this means subsidizing English, which is already the globally dominant language of business and science. As a libertarian, I obviously do not support forcing anyone who does not wish to use English to learn it, but Rosetta Stone’s market capitalization is only around $150 million as of this writing. It should take only a fraction of that amount to induce it to release the English version of its language learning software for free. Alternatively, other methods of learning English could be developed on an open-source basis. Because language has network externalities, this endeavor would not only improve the wellbeing of those who would learn English, it would help those who already know English by giving them more exit options.
2. We need better and more secure options for telecommuting and for being paid for work. In particular, it would be very good if people could telecommute across legal jurisdictions without the government in the jurisdiction in which they reside being aware of it. It’s hard to imagine how the modern state could be as redistributive as it is without income tax withholding. If people who live in the US, say, could work in a jurisdiction that does not have income tax withholding and be paid covertly, the power of the US government to tax would be greatly diminished. And if workers could shop around between jurisdictions in which to work, the governments in which the firms were located would be forced to adopt efficient policies to attract economic activity. Consequently, libertarians should support an Internet infrastructure that is decentralized, encrypted, and hard to tap, and a payments system that is hard to track, such as Bitcoin or some successor that operates along similar principles.
3. Almost all factors of production would be more elastic if we could open up new frontiers. Libertarians are excited about seasteading and space colonization. I am not so sure that they will be feasible in the medium term, but I do hope they succeed.
4. As I argued in a previous post, there are more mobile forms of physical capital in development, and these would serve to limit the amount of control the state can exercise. 3D printers are more mobile and elastic than assembly lines, and solar power is more mobile than the electricity grid. Science fiction has even better examples; witness the (Seed-driven) matter compiler in The Diamond Age or Mr. Fusion from Back to the Future.

I’m not sure what other options there are. Maybe commenters or other bloggers will weigh in. But if I were Peter Thiel or a Koch brother, something like this framework would guide my philanthropy. Libertarian ideas will never be popular; this is how we can create a better society anyway. No, we’ll never get to the utopia of infinite elasticity, but the land of pretty high elasticity is not such a bad place to live.

There is such a thing as property rights that are too strong. When nobody has veto power, it results in a tragedy of the commons; when too many people have veto power, there is a tragedy of the anticommons, to use Michael Heller’s phrase. We have property rights to deal with the former, and limits to property rights to deal with the latter. It would be nice to avoid both tragedies, and there is some level of property rights that strikes the efficient balance between them.

Contrary to what some natural rights libertarians argue, the efficient level of property rights is not deducible from first principles. It will depend on the kind of property, the uses to which the property is put, the technologies available, and so on. In the Nordic countries, for instance, everyone has the right to roam across uncultivated land in the countryside, regardless of who owns it. Is this a bad policy? I haven’t seen a thorough analysis, but it strikes me as at least plausibly efficient. If the freedom to roam is more valued than the right to exclude, then this rule simply economizes on the transaction costs associated with getting permission from landowners to use their land for hiking and cross-country skiing.

With the idea of efficient property rights in mind, how do we deal with the holdout problem that plagues real estate development, utilities, and other projects? We want projects to succeed if their value is greater than the true value of property to the sellers, but sellers have the individual incentive to act strategically and overstate the true value of their property. This strategic behavior could derail the whole project, even if the project is efficiency-enhancing. One way to cut through this strategic behavior is to use eminent domain.

If we could be certain that eminent domain would only used when it was efficiency-enhancing, and that adequate compensation would be made to the expropriated, I would have no problem with it. I would regard it as just another limitation on property rights, like the freedom to roam in Nordic countries, that makes us all better off. But as I think most libertarians would agree, the real problem is public choice; due to corruption or incompetence or both, governments may often resort to eminent domain as a favor to special interests even when it is not efficiency-enhancing, and it may fail to adequately compensate the expropriated, reducing the incentive to own and invest in property. Consequently, I join other libertarians in favoring strong limits on eminent domain.

Tim bases his argument on the “public use” clause of the Fifth Amendment. I worry that he focuses on the rule at the expense of what we want the rule to accomplish. From my perspective, in a first-best sense, who cares whether the taking is for a public use? What matters is that the system of property rights helps us to flourish. It’s only in a second-best sense, with the realization that the government must be constrained, that we should endorse the public use clause.

The public use clause may improve outcomes, but it really only correlates with what we actually want. A taking for private use could be efficient, because private projects face the same holdout problems that public projects face; a taking for public use could be inefficient, as when the government seizes property to build a large facility for prosecuting the war on drugs. If we judge that there is more scope for abuse in private takings, then the public use clause makes sense as a rule. But there may be other rules that make even more sense. For instance, a “eminent domain for public use plus easements for regulated utilities” rule might be better. I think it is completely consistent with libertarian principles to search for the rule that helps us to flourish the most, even if that rule ends up being a little messy. Personally, I would prefer something like “no eminent domain, not even public use, but some easements for particular stated purposes.”

Even if Tim wants to avoid giving ground on the public use clause, he has a lot of options before he gives the state a monopoly on telecommunications infrastructure. For instance, he can say no to involuntary easements entirely. If this were the rule, I think community associations would gain the power to act as intermediaries between homeowners and utilities, negotiating a deal without all the strategic messiness that occurs when individual homeowners negotiate. In effect, the community association would act as a hyper-local government, albeit one subject to contract and property law.

Another idea that I’ve heard economists kick around is self-assessed property taxes. Every year, property owners would be required to file with the local government the amount at which they value their property. They pay a tax based on this amount. If anyone is willing to buy the property for more than this amount, the owners must sell or pay the difference between the offer and their self-assessment. Such a system would reduce the holdout problem and ensure fair compensation for property owners.

The bottom line is that we should search for rules that enable us to flourish. We need to be aware of the problems associated with property rights that are too strong as well as too weak, and we should be extremely skeptical of government power. Giving the state a monopoly over the telecom infrastructure results in the same property rights arrangements with more power in the hands of the state. I think we can do better than that.

Now, is that really a tiny disclaimer? Don’t we each get zero marginal utility from most goods? I made this point on Twitter yesterday and got this reply from Alex Tabarrok.

@elidourado I get zero marginal utility from most goods, e.g. Lambourghini, only because the price is too high.

02Dec11 10:49 am via webReplyRetweetFavorite

@ATabarrok

Alex Tabarrok

Now, it’s true that in a world of discrete goods, when price is high, that will result in a corner solution. But sometimes marginal utility is just really low, zero, or even negative due to storage and disposal costs. There are some things that even most billionaires do not buy.

@ATabarrok Admit it, there are a lot of goods you would not consume even if the money price were zero.

02Dec11 10:50 am via Twitter for MacReplyRetweetFavorite

@elidourado

Eli Dourado

I pointed Alex to a squirrel yard statue, which I found by searching “knick knacks” on Amazon.com (it was the fourth item). He yielded.

This resulted in a fun game of finding weird, zero-marginal-utility stuff online. Among other good items, Adam Ozimek found Vanna Speaks, Adam Gurri the Misty Mate Pet Misting System, and Jim Ulbright a life-size Anubis statue.

What can we learn from this exercise? I think there are a few things. First, while it’s fun to have a laugh at some of the weird products on the market, somebody is buying at least some of this stuff at least some of the time. I was memorably reminded of this because when Daniel Lin nominated gold lamé MC Hammer Parachute Pants as a ZMU good, Adam Ozimek vociferously disagreed. He ended up buying a pair for himself.

@elidourado @dlin71 you've left me little choice: http://t.co/lndSEBwX

02Dec11 12:16 pm via YfrogReplyRetweetFavorite

@ModeledBehavior

Modeled Behavior

It’s tempting to think of the economy as supplying goods we all want to everyone (in uneven proportions of course), but it’s important to remember that the economy also supplies goods that most of us would not want to the few people who want them, including ourselves. This is not a trivial problem and it may not be solved smoothly through time. Fischer Black built his theory of the business cycle around the idea that it is difficult to match today’s production to tomorrow’s tastes, but it is also difficult to find the right buyers for today’s products.

Second, there is a direct analogy from the goods market to the labor market. Once you concede that most goods provide zero marginal utility to most consumers, you almost must concede that most workers provide zero marginal product to most firms. The math is the same. The ZMP hypothesis, therefore, is not some extraordinary claim that defies common sense.

Just as matching weird goods to weird people is hard, matching some workers to the right firm is hard. Nominal shocks can make this harder even in the absence of sticky wages and prices. People who have nominal debt change their consumption patterns when a nominal shock hits, and both people and firms can misinterpret nominal shocks in the short run per the Lucas Islands model. In the face of changing consumption and production patterns, Black’s Noise plays a role, and when the consumer-product matching problem is hard, the firm-worker matching problem is that much harder. Again, this is true even if wages and prices are totally flexible, and even if you support NGDP targeting (I do).

Oddly since these ideas owe much to Hayek, some Hayekians are slow to accept the ZMP hypothesis. Don Boudreaux at Cafe Hayek tells a comparative advantage story to rebut ZMP that is completely devoid of firms and therefore employment, in which all parties have perfect information and do not need to discover patterns of production. But ZMP is on the march; Karl Smith, a diehard New Keynesian, is starting to make some pro-ZMP noises.

So when you start to think that ZMP is a weird claim, just remember ZMU goods. I myself am not expecting to have much difficulty remembering ZMU goods. One is on its way to me. Tweeter @fbaseggio has bought for me the squirrel yard statue.

@elidourado @ModeledBehavior #zmugoods = code for Eli's holiday wish list http://t.co/g1r8mBft

02Dec11 12:33 pm via Camera on iOSReplyRetweetFavorite

@fbaseggio

FMB

I’m looking forward to installing it in Alex’s office when he isn’t there.

Bryan’s Jock/Nerd theory of History has been so influential on my thinking about the ZMP hypothesis that I explicitly linked them in haiku form (bewildering CNBC correspondent Jane Wells, among others). The ultimate revenge of the nerds is developing tools that make jocks literally useless and, as I hypothesized in my last post, powerless.

Bryan has expressed skepticism of the discontinuities and nonconvexities necessary to push marginal product literally to zero in a recession. But nonconvexities abound in the labor market. Most importantly, there are fixed costs of employee management. If a jock is not producing much when demand is normal, is it really so unbelievable that a firm would cut him loose when demand falls, rather than keeping him at a lower wage and continuing to pay the costs of managing his unconscientious ass? The jock’s wage demands could be totally flexible, but we hit the zero wage lower bound and he is unemployable.

If you combine modest, introspectively plausible labor market nonconvexities with a secular trend of diminishing jock-labor value and a cyclical fall in aggregate demand, you would expect what we have now: a long trend of increasing income inequality and median wage stagnation and a recession that generates the most unemployment in the lower deciles. Why fight it, Bryan? In your heart, you know it’s true.

UPDATE: Bryan replies!

Brynjolfsson and McAfee are not wrong, but I think a better picture emerges if we attempt to reconcile their argument with Cowen’s rather than viewing them as contradictory. As Tyler argues, we have not had the kind of growth we might have expected 40 years ago if we had extrapolated based on the prior 40 years. See this chart on total factor productivity by David Beckworth. I think McJolfsson’s view and Cowen’s view are complementary if viewed from a sufficiently “big picture” perspective; the slowdown in TFP and the speedup in SBTC are, after all, decades-long trends.

Here’s my model. First we need to differentiate between two kinds of innovation and think about their effects. The first kind of innovation is geared toward brute maximization of production. It is typically centralized and makes use of economies of scale. Examples might include an assembly line factory or a big, coal-fired power plant. Because these innovations tend to be centralized, they introduce points of control. The capital is typically fixed and therefore easy to tax and regulate. It’s well known in the development literature that it’s really hard for governments to control rural peasants who live off the grid. Once they move to the cities and plug into centralized services, it is easier to require them to send their children to school, for instance. Because these innovations introduce points of control, I will call them technologies of control.

On the other hand, not all innovations are about brute maximization of production. Some are about producing things that we already know how to produce in ways that have ancillary benefits. An important ancillary benefit is evading control. Examples of these innovations include 3D printers and solar power. The evasion of control that is possible with 3D printers is the subject of Cory Doctorow’s short story Printcrime. And portable solar power cells can make people harder to control by supplying electricity without the need to register an address, have a bank account, stay put, and so on. These are obvious examples, but control can be evaded through more subtle innovations as well. I will call innovations that circumvent points of control that can be used by governments or monopolies to exploit, tax, or regulate technologies of resistance.

Now, postulate some background rate of innovation. How many resources will be devoted to technologies of control and how many to technologies or resistance? The answer is that it depends on how invasive the state (or other monopolies) are. When the state is invasive, at the margin the incentive is to find ways to circumvent the points of control; a greater proportion of resources will go into technologies of resistance. When the state is non-invasive, at the margin the incentive is a purer maximization of production; a greater proportion of resources will go into technologies of control, which results in higher growth.

What determines how invasive the state will be? Call me a cynic, but I think it correlates strongly with the availability of points of control. When factors of production are fixed, when demand for government supplied public goods is inelastic, when there are lots of points of control, the government will exercise more control. When the opposite is true, when there are few points of control, the government is unable to act invasively.

As you can see, there is a system of feedback. But the countervailing forces need not push outcomes to a stationary equilibrium. As we all know, time-to-build can result in cycles. Since technologies take time to change direction and develop, and since politics is slow to adapt, we should expect a non-stationary equilibrium. I think this is consistent with the broad facts. A hundred years ago, at least as it concerns white males living in the US, the government was relatively non-invasive. As a result, they developed centralized technologies that created a lot of growth, technologies of control. As new points of control were introduced, the government became more invasive. The modern state was born. At some point, innovation gradually increased toward technologies of resistance. The low-hanging fruit from the prior era eventually petered out, and sometime around 1974 we began to see lower TFP growth. As technologies of resistance improve relative to technologies of control, I can’t say exactly what will happen. A lot depends on whether government becomes gradually less invasive as points of control disappear or whether it continues to overreach; if the latter, we could observe some kind of interesting political turmoil.

So far, I’ve been pretty general about technologies of resistance, but I want to tie it back into McJolfsson’s story about rapid skill-biased technical change. The key point is that labor is extremely regulated; firms that use labor are subject to intense government control. In part this is because policies that give labor a “bigger piece of the pie” are popular with voters, and in part it is because labor can complain and enforce its rights in a way that machines cannot. If you own a business and you are subject to intense government control, you are going to invest resources in circumventing the points of control. In our economy, that means getting rid of lots of labor as cheaply as possible, which means skill-biased technical change. As Arnold Kling has said, “if a job can be defined, it can be automated or outsourced.” But it’s because there is so much control exercised in the labor market that the incentive to automate and outsource is so high.

On the other side of the labor market, I wonder if post-materialism is not also part of an attempt to evade control. A lot of talented people are scaling back their labor efforts, and while surely not all of this is due to taxes and regulations, some of it may be. And other innovations which seem truly new, such as the development of autonomous vehicles, are the result of control of which we may not even be aware; for instance, how profitable would it be to develop autonomous vehicles if Pareto-improving trade with immigrant drivers were not made impossible by immigration and labor restrictions?

The Internet has been somewhat insulated from the kind of political control that I am claiming leads to the cycle of control and resistance. As a consequence, I think we observe an epicycle there. Internet technologies can be centralized at the company level or standardized at the protocol level. Email is an example of a technology that is standardized at the protocol level, and it was developed in the early days of the Internet, when market power was a serious concern. Today, there are so many competitors in the online messaging field that market power is not a real problem. Consequently, we observe services like Facebook and Twitter, which are centralized and can provide “higher production” by reducing spam, for instance. If Facebook and Twitter ever abuse their market power too much, that is when distributed, protocol-based substitutes such as Diaspora and Status.net will take over. And when the government starts exerting more control over the Internet, we’ll observe the adoption of new technologies to circumvent that control, such as encryption and mesh networking.

In a strange way, this theory is a partial vindication of Ayn Rand; the only problem is that she was too literal. The productive people do not go on strike when they are over-controlled. Instead, they innovate around the points of control. They go on strike at the margin. And it doesn’t take a big, dramatic exit. A little bit cumulatively over decades is sufficient to both be noticeable in the data and to reduce the amount of control that can be exercised.

At the risk of being accused of now-more-than-everism, I’ll point out that the problems associated with a greater focus on technologies of resistance and with skill-biased technical change could be much ameliorated by a government that dramatically reduced its control over its citizens. Stick to supplying public goods and providing a small safety net. It won’t fix everything overnight—technology has momentum—but it will make things better than it otherwise would be. However, I think there is little chance of this happening. It requires out-of-equilibrium political play. Instead, if my theory is correct, we will find out what happens when large, invasive governments overextend and are forced to shrink.

Apple was principally the complete opposite of the decentralized local-knowledge driven catallaxy that Austrian’s trumpet. It was a highly centralized, tightly controlled integrated company that managed every step of the process from design to retailing.

…Apple seemed to operate on the basis of “Five Year Plans” in which the Politburo decided what the future was going to look like and did what was necessary to bring it into being.

This is exactly what is supposed to not work, yet it worked spectacularly.

I am not an Austrian, but I do have a certain fondness for Hayek. I also believe that Steve Jobs is about as close to a Randian hero as can be expected outside of a novel. But contra Karl, I don’t think there is any tension here. In fact, I think a Hayekian (and Alchianian) view of competition can help us better understand why Steve Jobs was so great, and Steve Jobs can show us why in politics central planning, democracy, and voice-based political reforms are doomed to mediocrity or failure.

As a preliminary, let’s get out of the way the fact that it is well understood by Austrians and their fellow-travelers that central planning will always exist in a market economy. Coase’s The Nature of the Firm makes exactly this point. Firms are islands of command and control in a sea of free exchange. The exact boundaries of the firm in a market economy depend on transaction costs and the costs associated with central direction of resources. Hayek also articulates this in his most popular article, The Use of Knowledge in Society. The question is not whether planning will be done, but who is to do the planning?

Readers may be less familiar with what I will call the Hayek-Alchian view of competition. In “The Meaning of Competition,” an essay in Individualism and Economic Order, Hayek argues that “competition is by its nature a dynamic process whose essential characteristics are assumed away by the assumptions underlying static analysis” (p. 94). Armen Alchian takes this further in his 1950 article, Uncertainty, Evolution, and Economic Theory. Alchian models the economy as an environment that selects practices for survival on the basis of positive or negative profits. It’s not firms’ motivation that matters; it is results. This evolution-based account is necessarily more dynamic than the profit-maximizing (motivation-driven) model that economists usually adopt.

Framed in this way, we can now ask the important question: Is Apple successful because it was big and centrally directed, or is it big and centrally directed because it was successful? From a Hayek-Alchian perspective, the answer is clearly the latter. Having a Randian hero centrally direct a lot of resources is not, in spite of Apple’s story, a recipe for success. Instead, following a recipe for success will result in a lot of resources to direct. Finding a recipe for success, not accumulating the resources to direct, is the hard part. That is why we need competition.

And that is why Steve Jobs was great. He had a recipe for success, a vision that worked, and he fought relentlessly for it. It could have been luck; an implication of Alchian’s view is that “[e]ven in a world of stupid men there would still be profits” (p. 213). But I don’t think it was pure luck. Here’s to the crazy ones.

The fact that Steve Jobs centrally directed billions of dollars of resources well does not mean that central planning has much hope in our political context. States do not face the market test, or if they do, it is on large time scales that make evolution toward relatively efficient forms of organization too slow to be useful.

However, if states did face the market test, I think I would be happy to live under the central planning of a Steve Jobs figure. Let a thousand nations bloom, let governance firms enter and exit, let customers migrate between jurisdictions easily. I think under these conditions, central planning would “work,” not in the sense that it would be 100 percent efficient, but that it would discover the recipes for the kinds of political products we all want to buy.

This is the biggest problem, in my view, with democratic political reform. Whether it’s the Tea Party or Occupy Wall Street, most reformers think things will get better if only their voices are heard more clearly. That is a pitiful, static, zero-sum conception of progress. What we really need are institutions that subject entire governments to Hayek-Alchian competition. When we have that, I think we’ll all be happy with centrally planned politics, but central planning won’t deserve the credit; the competitive process will.

Ironically, the basis for conscientious non-voting is well expressed in Jason Brennan’s essay The Ethics of Voting (and presumably in his book of the same title). Brennan argues (rightly) that there is no duty to vote, but (more controversially) that if you are going to vote, you have a duty to vote well, in a manner that you justifiedly believe will promote the common good.

What is controversial about that second claim? It starts with this: in voting, there is not the usual link between action and outcome. As Brennan writes,

In a large-scale election, such as a congressional election in the United States, the probability that an individual vote will decide the outcome of the election is vanishingly small. You are much more likely to win Powerball multiple times in a row than to cast a vote that changes the outcome of a presidential or congressional election.

Consequently, on a purely instrumental basis, it does not matter in the least how you vote. Voting accomplishes nothing, so it is not immediately obvious how voting well or voting badly could have much ethical force. Indeed, if you are an act consequentialist, this is the end of the line: go forth and vote (or not) well or badly, for it makes no difference.

Nevertheless, most of us are not act consequentialists. For us, Brennan articulates a principle that may still have some application to our impotent voting behavior. He calls it the Clean Hands Principle:

One should not participate in collectively harmful activities when the cost of refraining from such activities is low.

For Brennan, voting badly is a collectively harmful activity. Therefore, he concludes that if you vote, you should not vote badly; you have a duty to vote well.

Here I will part ways with Brennan. Voting at all, at least in a political context, is a collectively harmful activity (in other contexts, e.g., you and four friends vote to decide where to eat dinner, it is not collectively harmful). In what way is it collectively harmful? Maybe it’s best to quote Brennan again:

Bad choices at the polls can destroy economic opportunities, produce crises that lower everyone’s standards of living, lead to unjust and unnecessary wars (and thus to millions of deaths), lead to sexist, racist, and homophobic legislation, help reinforce poverty, produce overly punitive criminal legislation, and worse.

How do we know that bad choices at the polls can do those things? We have evidence from every single election. Those policies that destroy economic opportunities, that produce crises, the unjust and unnecessary wars themselves, and so on—they are popular. They are the ideas that win every time.

What Brennan misses (at least in the essay; I have not read the book) is that the cause of all these harms is not just that voters make bad choices. That is a narrow perspective. It is that so many domains are subject to collective choice in the first place. The correct response to the question, “Shall we pass a law that destroys the lives of people who use drugs, especially if they are black?” is not merely “No,” but “Take your democracy and shove it.” Merely responding “No” is collectively harmful, because it fails to challenge the implicit proposition that the domain is rightly subject to collective choice.

When you vote in an election on an issue (or for candidates who can decide an issue) that should not be subject to collective choice in the first place, your vote makes no instrumental difference. It is therefore costless not to participate. By the Clean Hands Principle, you should not vote in such an election.

I believe that Eric would more or less agree with all of the above, but if I understand him correctly, he adds a superfluous element to his argument. That element is contractarianism. If I vote on an issue that is not rightly in the collective domain, does my vote help make it rightly subject to collective choice? Does my vote, my “getting my hands dirty,” constitute consent in contractarian terms?

I think it clearly does not. The simplest example is one in which dissenters misunderstand how improbable decisive voting is. Suppose that the question I cited earlier, “Shall we pass a law that destroys the lives of people who use drugs, especially if they are black?” is in fact at issue in an election. A minority of 30% oppose this measure, and half of these correctly believe drug use should not even be subject to collective choice. Nevertheless, the 15% of people who oppose collective choice for drug use incorrectly believe that there is a significant chance that their vote will be decisive. Since the vote is happening no matter what, they show up at the polls to try to avert disaster. Does their voting on the question on the basis of mistaken beliefs about their probability of success constitute consent? I believe it does not.

Another example is the case of the Hail Mary pass; it involves no mistaken beliefs. Suppose you arrive at home to discover that some gunmen have broken into your house and are about to execute your daughter. The gunmen offer you a proposition. They happen to have 100 dice with them; if you roll 100 1s, they will spare your daughter’s life. Now, you know very well that the odds of rolling 100 1s with 100 d6 is 1 in 6^100, a very large number, but you say a Hail Mary and roll them anyway. Are you therefore consenting to your daughter’s execution, or at least to the proposition that rolling dice is a legitimate way of deciding whether your daughter should be executed? Again, I think not.

Like most people, I believe that consent can be a source of obligation, including political obligation. But only real consent counts; if your disgust at political discourse and need for self-expression overcomes your desire to keep your Hands Clean, then yes, your hands are dirty, but no, you haven’t consented. Consent has to be intended. The fact that contractarianism in practice relies so heavily on unintended forms of (fake) consent means that we don’t really have to take it seriously as a source of political obligation.