Etceteras ...

• Author: HIGGS, ROBERT

Escaping Leviathan?

In the terminology made famous by Albert Hirschman, people who are fed up with government have two options: exit and voice. Political scientists and public choice analysts have concentrated heavily on the latter, especially on the use of electoral means of transmitting the citizens' "voice" to the government. Scholars have been slow to appreciate that elections are, and always have been, largely a sham--a mere ceremony intended to make people believe they have some control over their fate even as they are mercilessly bullied, bamboozled, and fleeced by their rulers. But whatever the efficacy of political voice as a means of avoiding oppression by government, scholars have traditionally paid much less attention to the alternative option, exit.

During the past decade, however, a growing number of analysts have begun to repair that neglect. Indeed, increasingly, the argument one hears is not that the voters will elect representatives who will "get government off their backs," but that the people will, as it were, just walk away from oppressive governments, thereby compelling the oppressors to lighten the burdens placed on their remaining subjects. As the information revolution has proceeded apace, especially as the scope and activity of the Internet have expanded, the argument has become not so much about people's physically leaving the jurisdiction as about their electronically withdrawing their (taxable) commercial transactions and financial holdings. The logic, many have assumed, applies equally to any sort of exit.

Montesquieu and Smith's Version

The gist of the argument goes back at least to the time of the Baron de Montesquieu, who, recognizing the ability of the merchants to move their financial capital away from jurisdictions with high confiscatory risks, wrote in De L'Espris des Lois (1748) that "only good government brings prosperity [to the prince]" (quoted in Stefan Sinn, "The Taming of Leviathan: Competition among Governments," Constitutional Political Economy 3 [Spring-Summer 1992]: 190).

Not long afterward, in The Wealth of Nations (New York: Modern Library, [1776] 1937), Adam Smith presented a characteristically clear statement:

The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country. He would be apt to abandon the country in which he was exposed to a vexatious inquisition, in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business, or enjoy his fortune more at his ease.... A tax which tended to drive away stock from any particular country, would so far tend to dry up every source of revenue, both to the sovereign and to the society. (800; emphasis added) Like Montesquieu, Smith seems to have believed that at least some rulers would have enough sense to realize that impoverishing their realms was not in their own...