Liberating Ourselves by Starting Something New
On October 13, 2008, the heads of America's largest banks sat around a table with then–Treasury Secretary Hank Paulson. The bankers were there to accept what would become the largest financial bailout in history. Take it or else, Paulson said of the Troubled Asset Relief Program.
The bankers complied.
The bailouts prompted a handful of cypherpunks to speed up work on a great technological experiment. Innovators like Nick Szabo, Wei Dai, and Hal Finney had already been playing around with ideas to challenge the existing monetary system. But on October 31, 2008, the pseudonymous Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Electronic Cash System."
That white paper was like universal acid poured over the gears of a great machine. The advent of the distributed ledger jolted many of us from our dogmas: If something as apparently core to state sovereignty as a working monetary system might be provided through a decentralized technological means, the world suddenly looked like a different place.
Up to that point, advocates of human freedom had pursued change largely through persuasion and advocacy. If you wanted to liberate people, you had to cry your teardrop in the swirling ocean of public opinion every election cycle and pray the tide would turn. If you wanted to change the law, you had to get your brilliant white paper into the hands of a congressman (who had probably just used those same hands to take a dirty campaign contribution).
Politics. Policy. Punditry. That's more or less the sum of "voice" as a strategy.
Both progressives and conservative populists are currently engaged in political trench warfare, which risks becoming less metaphorical as the tribes become more hostile. Such hostility is an inevitable byproduct of the voice theory of political change, but something better is coming: the end of politics as we know it.
Economist Albert O. Hirschman in his 1970 treatise Voice, Exit, and Loyalty explained that there are three ways to respond to any human system, be it a product, an organization, or a political regime. Voice—express yourself to persuade others to change the system. Exit—leave the system, joining another system or starting something new. Loyalty—stick by the system, even if it's less than ideal.
The 19th century was in many respects the era of loyalty (God and country). The 20th century was the era of voice (ballots over bullets). But the 21st century will be the age of exit (governance by choice).
One of the basic tests of "good" law is whether people actually want to follow it. In fact, the better the laws, the more likely people are to try to migrate to that legal system. And vice versa—just ask Venezuelans. The easier exit becomes, the less it matters what any theorist thinks is justice, much less "social justice." We're entering an era of radical social experimentation carried out on far smaller scales than the revolutions of the past. And yet successes will be scalable to the level of humanity.
Right now a million software developers are creating new social operating systems using distributed ledgers, smart contracts, and cryptocurrencies. Users will either adopt these systems or not. And if they do, they're as good as law. Coders will thus generate whole new regimes, which users can simply opt out of if they aren't satisfied. Can you say that about politics?
When it comes to the voice strategy, most people still labor under a men-as-angels theory of government: If we could just get the right people in power…
But when it comes to exit, "Lawmakers could be saints, devils or monkeys on typewriters—doesn't matter," writes philosopher and venture capitalist Michael Gibson. "The opt out-opt in system lets only good laws survive. Bad laws are driven out of production. Bad laws can only inflict harm and destroy wealth up to the cost to opt out of them. We can underthrow the state one contract at a time."
The case for exit, then, is based not on a Pollyanna fantasy of how governors might behave, but on a recognition of the burgeoning technosphere we now inhabit. In my new book The Social Singularity (Social Evolution), I argue the age of exit isn't so much a choice but an inevitability given our current technological climate. The world is becoming too complex to be organized by hierarchies of power. Nimble nodes within flexible networks will replace more and more of humanity's outmoded top-down mediating -structures. Superior collective intelligence is on the way.
Cypherpunks have already created systems of monetary self-government. Digital nomads are quietly migrating to special economic zones (SEZs) that offer healthier legal institutions. Seasteaders are tokenizing the first floating platforms off the coast of French Polynesia. Innumerable options are appearing on the horizon that promise to drive the cost of exit down. Once enough of us adopt this innovation frame, there's no turning back.
The Belgian liberal Paul Emile de Puydt foresaw this coming way back in 1860. It would be simple enough, he wrote in Panarchy, "to move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr. Proudhon's anarchy—without even the necessity of removing one's dressing gown or slippers." Thanks to subversive innovation, de Puydt's system is upon us.
As technology grows in power, political theory is dying. The age of exit will be a post-ideological age, as people test their ideas in the petri dishes of programmable incentive systems and porous communities.
Voice cannot be dispensed with altogether. Some variant of it will be required to draw people into the newly created systems. But for those wanting a freer, richer, more varied world, there's still too much investment in voice as a strategy, and far too little investment in exit.
Voice Leads to Real Political Change in the Here and Now
Robert W. Poole Jr.
Long before I'd heard of Hirschman's famous essay, I was enthusiastic about "exit": creating freedom-respecting enclaves outside the United States. Like many young libertarians in the early 1970s, I subscribed to Mike Oliver's New Country Project newsletter. I also oversaw Reason's December 1972 special issue on the subject. From 1974 to 1976 I even served part-time as a consultant on two of Oliver's projects: Abaco in the Bahamas and Na-Griamel in the New Hebrides islands in the South Pacific.
Both were attempts to assist local movements attempting to secede from impending post-colonial regimes that seemed likely to go socialist. Unfortunately, both well-meaning efforts failed, and by the late 1970s I had become disenchanted with the idea of creating a freer country outside the United States.
What remained was an exit option within the United States: My 1980 book, Cutting Back City Hall, helped inspire many unincorporated suburbs to "secede" from county governments, incorporating as new cities with mostly privately contracted public services. And in 2000–01, Reason Foundation provided much of the policy ideas to support the proposed secession of the San Fernando Valley from the City of Los Angeles. (Valley voters supported the measure, but it failed to pass citywide.)
I continue to see great value in competition among the 50 states, in terms of taxation, regulation, and personal freedom, which is driving significant exoduses from high-tax/high-regulation states such as New York, New Jersey, Illinois, and California. My wife and I joined this trend in 2003, relocating from Los Angeles to South Florida, and never looked back. We've subsequently been joined by several Reason colleagues.
But despite all this, for decades now I have primarily been concerned with making good use of the "voice" option to advance liberty. Charles Murray's landmark 1984 book, Losing Ground, provided the intellectual underpinnings of federal welfare reform legislation during the Clinton administration. Decades of work by the Cato Institute and Reason Foundation, along with activist groups like the Marijuana Policy Project, laid a basis for the growing wave of decriminalization and legalization, first of medical and then of recreational marijuana.
During the 1990s, Reason Foundation's Privatization Center greatly expanded support for competitive contracting of state and local public services. We sought and found "customers" in the public sector—elected officials who embraced these ideas and were happy to have free hands-on advice and assistance from our expert staffers. These customers included political leaders from both major parties, such as Democratic mayors Rich Daley (Chicago) and Ed Rendell (Philadelphia) and Republican mayors Steve Goldsmith (Indianapolis) and Richard Riordan (Los Angeles). The Reason Foundation team also played a leading role in advising Orange County, California, on how to emerge from bankruptcy.
My own work in transportation policy over nearly three decades has resulted in real policy changes as well. Pioneering studies introduced the idea of airport privatization to the United States, following Margaret Thatcher's privatization of the British Airports Authority. Besides encouraging a number of cities to consider leasing or selling their airports in the 1990s, this work led to Congress enacting an Airport Privatization Pilot Program, under which the shabby San Juan Puerto Rico airport has been transformed, and other privatizations are in the works.
A 1988 Reason policy paper on privately financed solutions for congested freeways led directly to California legislation that authorized pilot projects, including the world's first express toll lanes, opened in Orange County in 1995. Today there are 41 such projects in operation around the country, and plans have been adopted for entire networks of priced express lanes in most of the largest and most congested metro areas. We often worked with state transportation departments, treating them as customers that needed some initial guidance as to what, why, and how.
Reason Foundation's voice-based approach operates on two levels, through journalism and research. The former's mission is to introduce new ideas and counter bad ideas. In the early days, there was just the print magazine, but even then we were challenging the status quo—the public school monopoly, second-class citizen status for gay people, the bankruptcy of the war on drugs, etc. Changing minds is not easy, but over the decades Reason has contributed meaningfully to pro-liberty changes in the way people think about many subjects.
The research division's goal is also to change the conventional wisdom about a wide variety of public policies. But unlike most other think tanks, our M.O. focuses considerable effort on getting policy changes implemented. Doing that requires more than just producing solid policy studies. It requires seeking out and working with customers, mostly in the public sector, as discussed above.
In attempting to shift America's troubled air traffic control system out of the hands of the federal government (as 60 other countries have already done), we helped former Michigan Gov. John Engler, then the CEO of the Business Roundtable, create an expert working group able to present a respectable reform proposal to key aviation stakeholder groups. That led to finding an enthusiastic government customer: the chairman of the House Transportation Committee, Rep. Bill Shuster (R–Pa.). Although we ended up with a large and credible coalition, we were defeated (this time) by the politicking of status-quo aviation groups.
Promising technologies might make certain aspects of modern government irrelevant or easily evadable, but in our world of enduringly powerful nation-states, voice is essential and has proven effective. Nobody ever said this would be easy. But the fact that Reason's work has led to meaningful changes in a host of areas at all levels of government convinces me that the voice approach is well worth pursuing.