Hirschman on party systems

Hirschman makes the point that the Median Voter Theorem (all parties compete for the median voter and hence wind up nearly indistinguishable) breaks down because parties are dominated by people who will stay and exercise their voice option rather than the exit option. And exit doesn't necessarily mean voting differently--it could just mean that you stop volunteering for party work. So the party can stay away from the median if the other party does likewise, because both serve internal constituencies that chose voice over exit.

Hirschman also makes the case that, in some sense, this serves the public good. Two indistinguishable parties mean that there's no choice and the policy outcomes are far from both the left and right flanks. That sounds bad on the surface, but moderates aren't the only people whose interests count. The wings deserve some consideration too. If, say, we line everyone up on a spectrum from 0 to 100, placing the parties at points 25 and 75 means that nobody is more than 25 away from a party. Of course, they might be 50 away from a winner, but if the two parties alternate, you could be no more than 25 away from a common outcome and no more than 25 away from the average effect. That's not so bad.

I'm not prepared to endorse extremism, but it's an interesting point.

Exit, Voice, and Loyalty: Midpoint

A few interesting observations:

1) Hirschman notes that lazy quasi-monopolies with public subsidies might like it when dissatisfied users exit instead of protesting. Public schools are happy if the most demanding parents transfer to private schools instead of going to School Board meetings. The Postal Service might be OK if (some but not all) demanding customers use FedEx instead of calling their congressman.

On one level this is obvious. But it's also economically interesting to note how organizations cushioned against market forces might get worse rather than better in the presence of competitive outlets.

2) He notes that similar things apply in politics. Some poorly-run countries prefer if former politicians move abroad rather than critiquing successors. Some countries are happy if dissidents go into exile, and might even leave them alone to send the message that exile is a great choice.