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Tomas Pernecky. Focus Groups in Social Research. If all I do is get rid of all the old tires and mud puddles on my property, there's still a lot of mosquitoes because they can breed otherwise and they fly. So, the entire neighborhood has to do this. Each of us can free-ride. What we'd like to do is have an agreement. But the agreement is not enough. Hobbes was right when he said that covenants without the sword are but words. Madison was right when he said that these kind of contracts are just parchment barriers.

We need some kind of enforcement mechanism, just like we need in bilateral exchange. And in fact, that's the only way that we can be free. The paradox is, recourse to voluntary terms under which we'll be coerced are the only terms under which we can be truly free, because then we can write contracts that can be enforced. The difference is that a constitution--finally answering your question--is an agreement among a group. It's not bilateral. There's not prices. What there is instead is an agreement about performance. And it may be that if we're producing public goods, we have an obligation to pay what looks like a tax, but is actually our contribution to the performance of the contract.

And, I need to have some way that I can leave--just like when we are going to lunch. There needs to be some way that I can get out. You can't just say, well, you living here is tacit consent; it's as if you signed the contract. We have to have actual consent.

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Which is why I'm not so sure that states and governments satisfy the conditions that I'm laying out. Because that's just a whole different question. Russ: We'll get to that. I join a club, and I submit to the rules of the club, which include, probably, a membership fee, which I pay voluntarily but coercively. I accept the fact that if I don't pay, enjoy the services that there could be a punishment for that. It could be that I'm going to be taken to court; it could be I'll be shunned, like you said.

It could be social. But in addition to that obviously example where I have a membership fee, there are rules of behavior within the club that I accept when I join the club. To take a silly example, I might have to wear a shirt if I'm in the restaurant of a literal club. And in that case, you could say, well, you can't tell me what to do. And your point is that you're not telling me what to do. I chose , freely, to submit myself to the coercion that if I want to eat in the cafe of the club, I have to wear a shirt. Guest: Just like the roofer is telling you what to do, you really do have to pay him.

No, I fixed your roof and you agreed to pay me. We have a contract. So, yes, he's telling you what to do, but it takes place after what Oliver Williamson called the 'Fundamental Transformation. Before the contract I can choose all sorts of things. After the contract, I'm bound by my agreement. And it's actually important to be able to achieve liberty that I can make those sorts of agreements by which I will be bound. The thing about clubs--it's an important example, and again it is Buchanan's work, as you said.

The thing about clubs is, those are excludable but nonrival. Which means, in technical economic terms, it's possible to withhold if you don't pay, but the good itself is nonrival. And an example is swimming pools. So, a lot of communities have swimming pools, but you could have a guy at the gate: Are you a member, not a member?

But I couldn't have an Olympic-size swimming pool by myself. We need people or more to have this large facility. So it's not something that the market could provide. What Buchanan says is, the market can't provide it, perhaps; but you don't need the state because these hybrid organizations, clubs, groups, can constitute themselves to provide this. It's not true that things that have the aspect of public goods can only be provided by the state.

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Guest: The mosquito example is interesting because it's not excludable. Russ: Yeah--I don't understand that. Guest: Come again? Russ: Finish up and I'll come back. Guest: The mosquito example, I don't have a guy at the gate saying okay, this guy didn't pay so these mosquitoes can't go onto his property. Russ: Or have to go. Guest: Forgive me: this guy did do the work; the mosquitoes can't go onto his property.

You didn't pay, so the mosquitoes can go onto yours. So, the difficult problem is, how can we constitute ourselves on things that are closer to public goods but in ways that still don't require state provision. Russ: I don't understand the Olympic size swimming pool. Obviously I can build an Olympic size swimming pool and charge people to come use it. So, I don't see that really as--why is that not a market? Why is there a problem with the market providing it? Guest: The group of people--that could happen. It almost never does, because it's risky. I might not get enough members.

Whereas the group is providing an enhancement to their--Buchanan's argument was, at least, and in fact we actually see this happen a lot. Very many neighborhoods have this sort of semi-private swimming pool arrangement. It improves the value of the property of everyone around. I guess I see this more as an empirical argument. It turns out, given the transactions costs of different contracting arrangements, we just do not see private swimming pools. We do see a lot of semi-public club swimming pools. And it must be--and I'm just making an ex-post Coasean argument, it must be that that's because that's the lowest transactions cost arrangement.

Russ: Yeah. I just want to push a semantic issue here, which is that we just made a distinction between three types of activities: market, state, and then this club. But to me, I like to think of the club as a different kind of market solution, and by market solution. Guest: Because you're from [the U. That's the way you Chicago people think. Russ: Because it's not--I don't want to just use the word 'market' to describe profitable activities.

I want to allow it to include voluntary activities. Because as I've learned from my friend Dan Klein, I think the distinction between voluntary and coercive is extremely useful. So, if I purchase a pool membership from a private, profit-maximizing actor, I don't see that as being much different from a group of us--not a group of us, because the group gets going and then after a while I just choose to join or not; there's a fee. The group isn't doing this, perhaps, to make money; but they are doing it to solve a problem.

And that's the way I like to think about it. There are different ways to solve problems. Some involve profit. Some are non-profit--which could be more of a club or co-op. And some are coercive, requiring taxation. He has a couple of papers in about the choice of institutional form as a way of making firms better able to provide these kinds of services. And I think in that sense it's fair to say it's a market. Maybe we shouldn't get hung up on this. But the series of papers that Fama wrote also said that you want to take this out of the for-profit zone just because people are more willing to make donations--for whatever reason--when they have a membership stake rather than an equity stake.

Russ: What you're really doing there is you are price discriminating. What you really want to do in some of these situations is charge a really high fee to some people because they value it a lot, or they just like the whole enterprise. And that's awkward to post those. So what they do instead is they post a relatively low fee to get a lot of members--and religious institutions do this all the time; and schools do it, that are privately run--and then they collect larger amounts from certain people, using social pressure, using rewards, using the desire of people to be lovely.

And they are able to then get different amounts from different people the way they would not normally in a for-profit situation. Guest: Yeah. Well, I think you have now clarified that this is--I shouldn't say only a semantic distinction, because definitions are important. You might say a voluntary, coercive, or state market difference--we agree it's private. And the private, voluntary part is what's interesting. Yeah, I like that.

Guest: So we might agree on that. Russ: Let's take one more example that you use in the book to help clarify this, which is the classical example of Ulysses and the Sirens. Talk about that as an example of coercion and freedom. Set that story up. Guest: It didn't occur to me for a long time, but this is actually an illustration of Oliver Williamson's Fundamental Transformation. So I'm going to go with The Odyssey.

Odysseus knew that in the future he was going to want to do something other than what he wants himself to do now. So, Odysseus I is trying to come up with a set of rules, knowing that he himself, Odysseus II, is going to try to break those rules. Now, the particular story, and this is from--Circe was warning the men that were sailing on Odysseus's ship: You are going to go by the Island of the Sirens, and these are beautiful women and they sing a song that's so seductive you will lose your senses; you will swim, you will jump overboard; your ship will be dashed on the rocks.

And all the rocks around the islands of the sirens are covered with the bones and wreckage of sailors and ships that were unable to resist this very seductive song. So, your sailors block up their ears with wax and cotton so that they won't be able to hear, but you-- Russ: At Odysseus's suggestion, right? Guest: Yes. Russ: Not Circe. Guest: Well, first--but Circe says: This is what you need to do. Russ: Okay. Guest: And then, yeah, Odysseus does it. But the reason I'm sending it up this way is, let's remember, Odysseus is the one giving orders.

Now, that's a perfectly plausible order: 'Okay, you guys, we are going into a dangerous place; block up your ears with wax and cotton. I order you to disobey my orders.


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You're the Captain. If we disobey your orders, this will be mutiny. I mean it. You must disobey my orders. Because I know the future Odysseus will be unable to resist this. I know that before, I want everybody to pay taxes. I also know that afterwards, I might want to cheat, if there's not some arrangement for making sure that I-- and everyone else--also pays their taxes.

So, the interesting thing is, this looks coercive. Suppose you were on another ship. So, what Circe said was, 'Bid your men, when you start telling them to set you free, to bind you ever more tightly. Because you'll be struggling to escape. Russ: Yeah; you left out the part that--Odysseus himself, using the prerogative of the Captain, left the wax out of his ears, because he wanted to hear the song. But then instructed his men to lash him to the mast so that he would not be free to steer the boat toward the rocks because of the seductiveness of the singing.

Guest: And he won't jump overboard. Russ: Correct. So, he's telling them in advance: Tie me up, and if I struggle, make sure that the ropes hold tight and don't listen to my orders to untie me; which I will probably give. Guest: Disobey my orders. Russ: Which, by the way reminds me of one of my favorite scenes in Young Frankenstein , when Gene Wilder says, 'No matter how much I beg, don't open that door. Teri Garr is filing her nails, and Igor is whistling or something; and they ignore him, because he told them to.

He orders them to. Russ: That's Frederick Frankenstein 2. So that's the symbol--if you look at the cover of the journal that Buchanan started, Constitutional Political Economy, there is Odysseus bound to the mast. So, the question is, can we come up with a set of rules that will bind us after we decide we don't want to follow them any more? Maybe because we disagree with the outcome. Because if we can't , we won't really be free. Odysseus would not have been free--they would have had to take a different route if he couldn't have done this.

Or, he would have had to put wax and cotton in his own ears; he wouldn't have had the option, which he wanted, was to hear the song and not die. Russ: So, let's now get to the will of the people. I'm going back to your earlier comment that started this conversation, piece of the conversation off. Basically you are arguing if I'm in a group--and I want to emphasize this because I want to come back to this point in a second--if I voluntarily accept membership in the group--this could be a contract in a bilateral exchange, but we're talking about politics so it's not bilateral, typically.

It's a group of people. We constitute the group. I choose a set of rules--we, excuse me--we choose a set of rules. And then, even if I don't like the outcome, which some of the people almost by definition will not, I abide by the rules, by the outcome, certainly. But you are also suggesting it has some sense of capturing our will.

And I'm going fight you on that for a little bit. So, try to make the case. Guest: Again, it's the Fundamental Transformation. I start out as an individual. Now, if we're talking about states, I really don't. I would have to be a member of some group because I can't possibly survive on my own. And so we usually tell this mythology about tacit consent, when it's a state, that if I live within a state then I am agreeing to its rules. And David Hume compared that to, if I'm drugged and taken aboard a ship and then I wake up the next morning and we're a hundred miles out at sea and you say, 'Well, you don't have to stay on this ship.

You could jump overboard and be devoured by creatures of the sea. I was taken aboard without my consent. What I want to argue is: I don't have to board this ship. I can board other ships. Or I can survive on my own. It's my choice to say, 'Looking at these rules, I'm going to accept these outcomes. Now I admit that that's a pretty difficult condition to meet, and many of the groups that we might think of as being coercive, that condition might not be met.

But my point is there's an existence proof. The will is to say, 'I think I'm going to be better off being a member of this group'. And one of the things I would want to know are: What are the exit provisions? What do I have to do to get out? So, the sort of example that we might worry about is, a homeowner's association in a neighborhood. And we start out, we have a set of rules for the homeowners' association. It happens where I live there are rules where you can't plant a tree or cut down a tree, you can't paint your house without permission from the homeowners' association.

But I knew that coming in; and that was the agreement that I accepted when I purchased the house--maybe because I don't want other people to have that right, either. So, it's a solution to what might an externalities problem: We don't want people doing bizarre things to their houses and hurting property values; but it means that I'm bound by that, also. Now the neighborhood association changes the rules and says, 'We're going to have much more restrictive decisions; and you can't change the color of your curtains.

We can see those through the window and you can't change the color of your curtains without our permission. In the second case it's not so clear because we're changing the rules in the middle. So, what I want to say--this isn't me; this is Buchanan's claim--the consent is not to outcomes. The consent, the will, the collective will, is to the constitution.

And oftentimes if you change the rules, that's coercion that wasn't consented to. So, that distinction may seem too subtle, but it means that we might be able to get consent; and that's the will of the group, the will of the individuals who make up the group, can be embodied in the constitution. Not in the rules when we change the rules.

Russ: So it seems to me there's two things that are left off of the earlier, two-part description of a small-c constitution. So, I think--correct me if I get it wrong--you said, Issue Number 1 is who is in the group; and Issue Number 2 is how do we decide--what are the rules by which we make group decisions? Russ: So I would say there are two more things that have to be made clear. One is, what are the rules for changing the rules?

And in the United States we have two ways to do that. We have the Amendment Process to the Constitution; and then we have the opportunity to call a Constitutional Convention. Which has not been invoked. But it could be. Guest: Well, it did happen once. And it turned out pretty--they changed a lot. So we may not want to do that. Russ: Right, so we did that once. But we haven't done it since. So: Who is in the group? What are the rules for making decisions? What are the rules for changing the rules? And I'm going to add-- Guest: That's part of 2. Russ: That's kind of--I know.

Guest: Divided. There's actually 5. But if you divide it into 2, the rules have to include rules for changing the rules. But you're still right. That's very important. Russ: And then the 4th thing I would add, which to me is central: and if we look at the evolution of the political process in the United States, to me, to be, is the central thing. And I understand this is really part of the rules, but I'm just breaking it out. What is allowed to be decided on? Is everything up for grabs? Because that's obviously--there's two points to be made there.

One is, that's going to affect my willingness to join the group. And secondly, how much leeway is there in the actual outcomes relative to the rules? Because we know the rules can specify all situations. Because we don't want to write a set of rules that cover every conceivable situation. That would be impossible--because of the knowledge problem, information, transactions costs. Guest: It would be expensive to try. And we'd fail. Russ: So, by definition, so if the rule says that the homeowners' association has the right to decide aesthetics, physical attractiveness, which means, would allow, say, a cutting-of-the-lawn requirement or painting peeling paint, etc.

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But does it allow curtains? At the time, everybody said, 'Of course not' when they created the agreement. But a later Head of the Homeowners' Association, who has got this thing for curtains, suddenly he decides that's part of the aesthetics; and there's a case to be made. So there's this--to me, there's a big range of discretion, uncertainty, that, possibly when the group is first constituted it's pretty unanimous.

There's a real consensus about what falls within the rules. But there's some slippage over time. And I see that when I look at the U. And I of course totally agree with you, as I think every listener will imagine, that I don't see the U.


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  6. The Constitution seems to have drifted. What would have been allowed in isn't allowed or is allowed in And as a result, the authority of the state has been expanded. Includes what I drink, what I do in my bedroom, my kitchen, etc. Those extensions or changes seem to me to be the challenge that any of this noble, overarching story has to do with reality, is that it sounds good, that we agree to the rules, but the rules don't always--it's not exactly what the rules apply to.

    Guest: There's two responses that I have. And I'll try to be brief. First, many of the issues that you're talking about apply equally well to any kind of complex, over-time contract between two individuals. So, the hold-up problem, the kind of Klein, Crawford, and Alchian, [Benjamin Klein, Armen Alchian, Harold Demsetz] Alchian-and-Demsetz problems, for a theory of the firm, we can't write a complete contract there, either. And so we need some way of adjudicating disputes.

    Maybe we can try to write it into the contract, but it's too hard to specify everything. So, if it's a long-term contract, one of the things that you might see is Coase-Theorem sorts of results where it might be easier for me to acquire my supplier rather than be subject to holdup problems. And so there's a question about the optimal size of the group. Even in private, bi-lateral contracts. So, that's always a problem of having slippage if it's a long term rather than one-off contract. That doesn't mean that it's easily solved. But it's not unique to choosing in groups.

    Choosing in Groups: Analytical Politics Revisited (Michael C. Munger)

    Russ: That's correct. Guest: Beckons[? And neither Buchanan nor I would want to argue that this is a way of justifying the stand. I don't think you can. What I do want to say is there are things that are private, and voluntary, but don't rely primarily, look like market institutions but use some sort of collective choice--voting or other way of aggregating the views of the people who are members, that nonetheless can serve the interests of the members in the group.

    And people will find themselves better off signing these sorts of contracts. Russ: Explain. Guest: So if anything--if anything, if groups of us--and this is the way the Lewis and Clark example that is in the book: Groups may use, not bidding but some sort of voting mechanism for trying to get information about what they should do because they are not sure. Individuals have views on this; we have to choose as a group.

    And so we use institutions. There's all kinds of ways of voting. It doesn't have to be majority rule. But they use some mechanism for voting, a non-market way of choosing. Which is a discovery process. Markets use prices as a discovery process for trying to decide the relative value of resources.

    Politics using voting as a discovery process to illuminate the relative value of different alternatives. And no individual in the group may know which one the group thinks is the right one to do. Does it work perfectly? But in many settings it may be only choice that we have. Russ: So, let's turn to voting. Which--and the example you start with in the book is really a beautiful one. It's a little bit complicated. But the gist of it is, is that Lewis and Clark, and their expedition, which starts off as their being all men but they later add Sacajawea, a woman, but it's mostly men.

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    And it's unbelievably miserable; and it's not clear they are going to make it back alive. They have weather threats, they have Indian threats; they have a problem that they may not have enough food. So, it's a really important decision to decide what to do now that they've reached the ocean: Should they--and their three choices are, if I have this correct: Head north, head south, or head inland. Is that correct? Russ: And so, what's fascinating to me--and I read Undaunted Courage , or I listened to it on tape; it's one of the best, most engrossing things I've ever listened to, or I'll call it read--it's an incredible, incredible book, and it's worth reading-- Guest: Stephen Ambrose wrote it, for listeners.

    Russ: And it's worth reading, even, if just for the ending, for the post-expedition ending. Unbelievable story. So, throughout the expedition, Lewis and Clark, they're the boss. There's two of them, the two of them. How many men start off on the trip? Was it 39, something? Guest: Including hangers' on, So, throughout the trip, they've been--it's not a democracy.

    They whip people, who don't obey decisions. Guest: Well, it's a constituted group that is not a democracy because it's a military hierarchy. Lewis and Clark are Captains; and the others, the highest rank is Sergeant. And there's no question what happens when an enlisted man disobeys an officer, in what in effect is wartime--in hostile territory.

    Russ: And so they come to this point and they do something surprising, you point out. So, describe what they do. Guest: Well, one bit of background: my co-author on a couple of earlier books was Melvin Hinich. And he and I were going to do a new edition of this book. It would have been very different. He called me on a Sunday and said, 'I think Lewis and Clark actually voted; and they had more than two alternatives'--which for technical reasons, people who study social choice, that's potentially interesting--'You should go look this up.

    But the next morning, Mel fell down the stairs at his house, broke his neck, and died. Didn't survive the fall. His wife found him at the bottom of the stairs. That was the last conversation I ever had with Mel. And I wrote a very different book. I didn't write anything for a while. I kind of shut down. But that example was something that Mel pointed me to.

    And what's interesting about it was that it was a choice that had an interesting structure because there's three alternatives with no majority in favor of any of them. But what's more interesting is what you've already alluded to. This was a military group. Lewis and Clark in the past had been the only people in the entire expedition that thought what turned out to be the South Fork of the Missouri River was in fact the Missouri River. All the men wanted to go north. Only Lewis and Clark said, nope, nope, we're going to take this south one; it looks like the Missouri to us; that's the one that's going to lead us to the Shoshoni.

    And the men said, 'Okay, you guys are the boss. Now it may have helped that Lewis and Clark were correct, and it was in fact the correct fork of the Missouri. So, it was not true that Lewis and Clark were in any way afraid of exercising their obligation to make choices and be responsible for them. They were perfectly happy to be in charge. Not one qualm in the world. Nonetheless, in this case they voted. So I think the first thing: they asked for a vote. So I think the first thing that's interesting about this is, Lewis and Clark themselves must not have had very strong views. They weren't sure which one was the right thing to do.

    They wanted information and they wanted to have, I think, the participants feel like they'd had some stake in the outcome. And those two are the reason that I think we often conduct votes. In groups, we might have informal--things that are not formally required by the rules--we still might ask everybody what they think. Now, maybe we count votes, or maybe it's just a deliberative process where everybody expresses their views. But there's something fundamentally human about those two ideas: let's see what everybody thinks so that we can get information: Maybe we're wrong.

    And second, we get a sort of affirmation that this is what we want to do with all of the problems of attributing will to a group. Because a group can't have a will. But this is what we as a group are deciding to do, and the chance to express it publicly like that--there's something very human. I describe in the book what the scene must have been like: It's 45 degrees; it's raining; it's been raining for 6 days. They're not in a hotel--they're in tents. Russ: They don't have any Gore-Tex, either. Guest: This is bad. Their clothes are rotting. They have to get this right.

    And so, each of them in turn says, 'This is what I think. They went to Fort Clatsop, and now you're back to the story that Ambrose tells so well. But in this one brief choice, they re -constituted themselves, as a different kind of group. Follow this author. New articles by this author. New citations to this author. New articles related to this author's research. Email address for updates. My profile My library Metrics Alerts. Sign in.

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