Wednesday, May 12, 2010

Europe's (and our coming) Tragedy of the Commons

Tibor R. Machan

Is this stuff with Greece and, soon, with Portugal, Spain and Italy, and the rest of us all that surprising? Has it not been clear for ages that when people draw their support from a common pool, the resources will soon vanish?

Aristotle already noted this phenomenon when he said, “For that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everybody is more inclined to neglect the duty which he expects another to fulfill; as in families many attendants are often less useful than a few." (Politics, 1262a30-37) Biologist Garrett Hardin reaffirmed the point in an influential essay, "The Tragedy of the Commons," for the magazine Science, on December 13, 1968.

The gist of the tragedy is that commonly held (important) resources will be depleted and will not be replenished. And this doesn't apply only to how the wilds are being ruined by being held in common but also to national treasuries which everyone in a country believes is there for him or her to dip into indiscriminately. And then, with international communities, the tragedy isn't contained by national borders.

One of the largest commons these days is the European Union. Everyone in Europe is fighting to take from its common pool of stuff--mostly funds through such outfits as the IMF, the World Bank, etc.--but few are eager to replace what they have taken. And this applies to the citizenry, clearly, not only the politicians who want to please them. (The IMF draws a lot of its funds now from the USA! How long can that go on?)

And the same is happening in the USA, of course, what with common pools such as the so called Social Security fund slowly being drained. What are all those lobbyists doing in Washington? Looking to dip into the common treasury as deeply as they can. Getting stuff from the government is always enthusiastically pursued while refilling its coffers is not--who really volunteers to pay taxes, let alone more than one must fork over? That is just what the tragedy of the commons amounts to, get as much out as you can, and put as little back as possible.

The best way to deal with the tragedy of the commons is privatization! But of course that would help put an end to this constant promise of a free ride. Moreover, once people get used to getting a free ride, at least for a while, they regard it as a God given right for them to continue. And there you have Greece today and the rest of the welfare states of the globe tomorrow. (Actually, most of them are merely postponing their comeuppance.)

Privatization--making the stuff of the world private property instead of held in common--solves the problem because it imposes discipline. Everyone must cope with the limited stuff he or she has, can produce, can obtain through peaceful trade, nothing more. No one may dump his or her waste on the neighbor! No one may rip off the neighbor once out of private resources. Maybe in a few drastic emergencies such transgressions will be tolerated but not as a rule, which is how it goes now. Such discipline as privatization brings about would also handle most environmental problems. Even a fiasco such as the oil mess in the Gulf of Mexico would be more likely to be contained if the oceans itself were privately owned--without very serious assurance of safety, drilling would not be possible because private parties would be vigilant about protecting their rightful interests!

On numerous fronts, then, we see that the problems that keep showing up in the daily news are the result of reliance upon the commons. Hardin himself thought that a strict administration of the commons might solve the problem but he didn't take public choice theory into consideration--people "in charge" have their own agendas and will not really guard the ever elusive public interest.

One way to deal with all this is to come up with a sound constitution for a country! Constitutional economists, like James Buchanan, have been advocating this for years but the public and the political class knows that it would mean the end of their free ride. Never mind that such a free ride will end anyway. But folks do think they can continue eating their cake and having it, too. Not a promising picture!

Sunday, May 09, 2010

The Choice Haters' Error

Tibor R. Machan

If you keep up with works coming from the academy hoping to influence the world as I try to do--in part because I wish I could claim some success at the same task--you may know that during the last several years a spate of books has hit the market in which the target is consumer choice. Like how we are supposed to have too many choices when we go to the grocery store, the mall, or more generally, throughout the market place. Too many flavors of ice cream; to many makes of automobiles; too many styles of shoes and pants and so forth. Well, anyone who has ever been to a mall, like the pretty swanky ones in my neighborhood--South Coast Plaza, Fashion Island, and so on--can figure out what the beef is about. No one could possibly process all the options he or she faces when entering these places. (Ergo, let's have politicians and bureaucrats limit our choices--for our own good!)

But it's just this that should alert one to the problem with such laments. The plain fact of the matter is that most of us don't go shopping expecting to peruse everything that's on display from which we could make our selections. No. Even when one goes to a grocery store--one of these huge ones that used to amaze European, especially Eastern European visitors to North America--one usually knows the places where what one is after can be found. Yes, there are a lot of cereals available to choose from but people don't explore all of them but a few--say, the several varieties of granola or oatmeal. Or one goes straight to the seafood or cheese sections.

In other words, not everything is on display for everyone who enters. Thousands of people come to these markets and most of them know where their kind and range of merchandise is to be found. No psychological trauma will afflict them--as suggested by the choice-haters who write these books, aiming therewith to undermine the merits of the market place where all these things may be found--because of some kind of mental overload.

But then this is common sense and too many of the academic enemies of the market are looking for the worst case scenario instead of crediting shoppers with the intelligence required to narrow the sphere wherein they will make their selections. It isn't as if we all went shopping tabula rasa, without a clue as to what we wanted. Most people know pretty well which region of the market place they will be checking out when they get on the road to do their shopping.

I recall another area where something like this came up, namely, in how a great many urban planners dislike tack houses. Yes, these structures do look very similar when looked at casually or from the air. However those who live in them aren't standing about looking at their homes from the outside and when you enter these homes, you find all the variety that humanity is capable of displaying within its living spaces. So while looked at as some kind of art form, from afar, they may not be very appealing, such cookie-cutter homes are (a) affordable and (b) plenty different where it counts, namely, inside.

Frederick Bastiat, the great French classical liberal political economists, coined the expression, which is the title of perhaps his most famous essays, "That which is seen, and that which is not Seen." It points up how often intellectuals fail to see what is important in economic affairs because they only notice what's on the surface--like when they champion minimum wage laws since on the surface these appear to help wage-earners, never mind that once closely examined it turns out that such laws produce unemployment among just those who need work most, namely, the unskilled.

I think Bastiat's point is applicable elsewhere, also, including when it comes to this matter of how we face too many choices in the market, so many, in fact, that it traumatizes most of us and contributes to our unhappiness. No--look closer--it does not!