Do I have anything useful to add? Probably nothing that hasn’t already been said by someone else, but I’m too lazy to read everyone else’s post before making my own. Julian hints at what’s bothering me about this whole discussion when he says:
If libertarians are seen as basically unmoored and "up for grabs," both parties will have more incentive to court us. ... But the relationship between exit, voice, and loyalty is complex: The threat of exit augments voice to a certain extent (think of responsiveness to consumer complaints in competitive versus monopolistic markets), but one's willingness to make concessions in a coalition is going to be dependent on its apparent stability. You're not going to move across the country and convert to Judaism for a girlfriend you suspect will ditch you for the first cute bartender who winks at her. And, as I suggested yesterday, there are places where moves to more optimal policies from both libertarian and liberal perspectives are blocked by liberal fears that we'll exploit the diminished political popularity of more targeted social programs (say) to wipe them out altogether.Think of an alliance as a kind of contract. Contracts require some form of enforcement, but this contract has no sturdy enforcement mechanism. Libertarians can swear up and down to support Policy X, and liberals can swear to oppose Policy Y, but those promises won’t realistically bind anybody – probably not the promise-makers themselves, and certainly not future generations of policymakers. You can’t sue political parties for altering their platforms or politicians for breaking their campaign promises. The proposed liberal-libertarian bargain is thus not subgame perfect; both sides can predict opportunistic defection by the other side.
It’s true that cooperation can be sustained in a repeated game without external enforcement, generally by means of strategies of the "I'll cooperate until you cheat and then refuse to cooperate ever again (or at least for a really long time)" variety. It’s also true that such cooperative solutions tend to be fragile, especially in the presence of short time horizons. In politics, actors are not accountable for sufficiently distant costs and benefits; blame can easily be cast on various other parties (other politicians, other branches of government, etc.); and the vagueness and complexity of legislation obscures when true defections have occurred. All of these factors combine to make political bargains unstable at best.