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Trapped Into Civic Participation, and A Note on Labor Mobility

October 30, 2012, 10:01 pm

Up until now, I had never know that there was actually a theory, propounded by people with a straight face, that trapping people in neighborhoods and institutions (like public schools) is a positive because it promotes civic virtue.  

If you own your home, then a lot of your wealth is tied in with the quality of your neighborhood. In theory, this should motivate you to vote more carefully in local elections. On the other hand, if you are a renter, and the neighborhood goes downhill, you will simply leave.

Collectivists prefer to trap households within specific government service areas. Their thinking is that with the “exit” option foreclosed, households will be forced to exercise their “voice” option, to everyone’s benefit. This is an argument against private schools. It goes back at least as far as A.O. Hirschman’s classic book, Exit, Voice, and Loyalty.

I would argue just the opposite, that this creates state monopolies ripe for abuse, and besides, is disastrous for labor mobility and thus the healthy functioning of labor markets.  People keep arguing that this recession is long because recessions after financial bubbles are always long.  I am not sure that is proven out by history.

I would argue a big reason this recession is long is that the nature of this bubble, being in housing markets, short-circuited one of the ways we get out of recessions, which is labor mobility.   Trapped in homes the government encouraged them to buy but now they cannot sell, people can't move to find new regional opportunities.  Where are the mass migrations to the North Dakota oil fields?

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Category: Economics
  • http://twitter.com/tjic tjic

    Apparently, during the era of American slave-holding, some slave owners argued that slavery was more compassionate than contract employment. The argument was that if you just rented a man by the day, you might not take care of him, but if you OWNED a man, you'd want a good return on your investment, so self-interest would demand that you treat him well.

    Which explains, of course, why slave-owners whipped their slaves mercilessly, broke families apart, branded freedom seekers, etc.

    I see that this theory has been updated so that it now applies to governments: low mobility means that governments will treat their citizens better. Just as they did in the USSR and still do in Cuba.

  • CTD

    I'm convinced that part of the housing bubble was related to education, actually. A madcap drive to get kids into the "best" public school district played at least some part in the huge inflation of housing prices.

  • Ted Rado

    We seem to have an endless supply of stories attesting to the incompetence, or worse, of the US government. EVERYTHING they touch turns to poo-poo. It would be difficult to come up with a better argument in favor of free enterprise than the US government. How anubody can be in favor of more government is a great mystery to me.

  • Nehemiah

    CTD, I think you are on to something. I know some people definitely stretch to get into neighborhoods served by highly regarded public schools. Just like labor mobility can facilitate an economic recover, I believe student mobility would facilitate a revival in public school education. Competition is a wonderful thing is everyone plays by the rules.

  • John

    I'll suggest that there's plenty of mass migration to North Dakota going on. On the way though this summer:

    - There were no hotels available 24 hours in advance in Dickenson, ND, which is on the edge of the boom area. They're filling up with people who can't find housing.
    - Some months ago there was a report that a new hotel sold out for months, well before it opened
    - The local papers were full of stories on the housing crunch. One problem was how to attract teachers, because new teachers couldn't afford housing on a teachers salary
    - I think I saw an article about tent cities

    - Heading east on I-94, we would see a dozen manufactured houses a day coming towards us.

    My impression is that the area is growing about as fast as it can, but at some point, the advantages of moving to a boom area are balanced by the pain. And most people aren't doing so badly elsewhere that moving to a location where you have to pay double/triple for a place to stay or live in a tent is appealing.

  • Andrew Garland

    The nature of the state at Cafe Hayek
    === ===
    [edited]  There is a notion that the state is a legitimate agency deserving respect; that despite its flaws, it generally promotes or tries to promote the welfare of its citizens. This is increasingly difficult to understand, much less to accept.

    The late Mancur Olson had a far more realistic view: The state is a stationary bandit. Ordinary people might have to tolerate this, but they should understand that dealing with the state is dealing with organized thuggery. Obey the state because it can unleash its guns and prisons on you. But, please don’t pretend that the state’s commands are issued with your best interests in mind.
    === ===

    EasyOpinions.blogspot.com

  • JKB

    I ran across this yesterday. It would be interesting to see if such an experiment could work in the US after the kids have been damaged by formal education, i.e., become passive, spoon-fed 'learners'

    "What happens if you give a thousand Motorola Zoom tablet PCs to Ethiopian kids who have never even seen a printed word? Within five months, they’ll start teaching themselves English while circumventing the security on your OS to customize settings and activate disabled hardware. Whoa. ..."

    Never Yet Melted » Maybe They Should Try This in American Inner City Public Schools