Seth Godin discovers the powers of exit and voice, but gets something gravely wrong

In this blog post, Seth Godin discovers the powers of exit and voice.

Coming to understand those powers is one of the inspirations of this blog, as you can read in the About section, where I explored why my parents chose to move to a different school district (exit), rather than try to change the one we were in (voice).

But, Seth goes off the rails here:

Capitalism ceases to be an efficient choice when those served have no ability to exit. For-profit prisons, for example, or cable monopolies. If you can’t exit, you’re not really the customer, and you are deprived, as a result, of voice.

Cable monopolies is not capitalism. They became monopolies through government regulation, which is not capitalism.

There may have been good reasons for that regulation (to keep right-of-ways from being clogged with cables) or not (that may have just been a convenient excuse cable companies used to limit competition).

Or both. See the Bootleggers and Baptists.

Whatever the case, we know the result. We were not happy with having just one cable provider, because that cable provider has little incentive to make us happy and frankly, can’t make us all happy, no matter how hard it tries.

Even with the most well-meaning folks running the company, it’s just tough to make everyone happy.

Enter the reason for competition. Competition gives us choices to make us all happier.

Folks seem to understand this when it comes to cable providers, but do not translate the lesson to things like schools, which have problems for the same reasons.

They often believe sending more money to schools will help solve those problems, but would bristle at the thought of sending more money to the cable monopolies to solve its problems.

In turns out, their bristling is the correct reflexive reaction in both cases. The answer isn’t more money. The answer is more power of exit, or competition.

Thankfully, through capitalism, technology is finding answers to provide more power of exit from cable monopolies, which are quickly starting to look like the Blockbuster Video of the twenty teens.

It’s also helping some with the school problems, but more can be done to lessen the school monopoly’s grip on their markets.

Folks don’t understand that the cable company problem and school problem are the same problem

I don’t understand Seth’s comment about for-profit prisons. Who does he think the customer is in that case? The prisoners?

The customers are the the government-entities that contract with them, just like when they contract with for-profit construction companies to build roads, sidewalks and buildings. The representatives of those entities have a right to exit if their needs are not being served.

Frankly, I think we need to look past the strict definitions of capitalism and government and think more in terms of top-down and bottom-up, as I wrote about here.



Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s