Thursday, August 25, 2011

From Machan’s Archives: The Deficit and the Tragedy of the Commons

(December 2004)

In the 4th century B. C. Aristotle identified a very important principle of community life. He demonstrated the social value of the right to private property. He said,

"That all persons call the same thing mine in the sense in which each does so may be a fine thing, but it is impracticable; or if the words are taken in the other sense, such a unity in no way conduces to harmony. And there is another objection to the proposal. 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)

This same idea was more recently clarified by Professor Garrett Hardin, in his 1968 article, "The Tragedy of the Commons," published in the prestigious magazine Science. Hardin gave the example of common grazing area used by several owners of cattle to feed their livestock. Because there are no borders identifying what area belongs to which cattle owner, the commons tend to be overused, not because of any greed but because each cattle owners wants to achieve the best possible results, namely, feed the cattle adequately.

The principle at issue has been very fruitfully applied to environmental problems and the conclusion has been drawn by many scholars that without extensive privatization of what are now treated as public properties - lakes, rivers, beaches, forests, and even the air mass - environmental problems will remain unsolved. Everyone knows that a problem exists with common ownership but no one can do anything about it without changing what is commonly owned to private property. The political will and savvy to achieve the solution is, of course, lagging far behind the analysis that identified the solution. Still, in this area, at least, such identification has occurred.

What has not been widely noticed is that a tragedy of the commons exists, as well, in our national treasury. We have here what by law amounts to a common pool of resources from which members of the political community will try to extract as much as will best serve their purposes. Be it for purposes of artistic, educational, scientific, agricultural, athletic, medical, or general moral and social progress, the treasury stands to be dipped into by all citizens in a democratic society. And everyone has very sound reasons to try to dip into it - their goals are usually well enough thought out so they have confidence in their plans. They know that if they receive support from the treasury, they can further their goals. So they will do whatever they can to do just that, namely, extract from the commons as much for their purposes as is feasible.

But, as both Aristotle and Professor Hardin knew, the commons are going to be exploited without regard to standards or limits - "that which is common to the greatest number has the least care bestowed upon it." Which explains, at least in part, why the treasuries of most Western democracies are being slowly depleted and deficits are growing without any sign of restraint. Japan, Germany, Great Britain and, of course, the United States of America are all experiencing this, as are numerous other societies that make their treasuries available to the public to use for sheer private purposes. For how else can we construe education, scientific research, the building of athletic parks, the upkeep of beaches and forests and so forth than the pursuit of special private goals by way of a common treasury?

Some might try to obscure this by claiming that all these goals involve a public dimension. Of course. So does nearly every private purpose - including the widely decried phenomenon of industrial activity that produces the negative public side effect of pollution and contributes to the depletion of a quality environment. Private goals can have public benefits. But their goal is to serve the specific objectives of some individuals. When AIDs research is supported from the public treasury, the first beneficiaries of success would be those with AIDs, not those who haven't contracted the disease. When theater groups gain support from the National Endowment for the Arts, there may be beneficiaries beyond those obtaining funding but they are still the ones who benefit directly, immediately. When milk producers gain a federal subsidy by having the price of milk fixed or their withholding of production compensated, they are the first to gain from this, not some wider public.

And so on with thousands of other "public" projects - they are, actually, supporting private goals, first and foremost. One need only observe who lobbies for them. But because the treasure is public property, there is no way to allocate what is in there rationally, with proper budgetary constraints. Instead politicians embark on deficit spending - taking non-existing funds, ones not yet collected but only rather uncertainly anticipated, and funding the requests without restraint.

And there is no end in sight. Only when the country no longer has the credit worthiness in the world community, so that its bonds will no longer be backed by hopeful lenders, will the Ponzy scheme be called to a screeching halt. We will have to declare bankruptcy and those of our citizens who had nothing at all to do with the enterprise will be left to hold the empty bag, namely, our grandchildren.

Not unless the treasury stops allowing private projects to be funded from its coffers, confining itself to the support of bona fide public projects - the courts, the military, and police – will there be an end that avoids the perhaps greatest tragedy of the commons. To reach such a position of financial responsibility, the governments of our society will have to sell off all the unwisely held common assets - lands, parks, beaches, buildings, forests, lakes and such - to private parties. They will thus liberate members of our future generations from the shackles that have been so irresponsibly placed upon them by means of the tragedy of the commons.

Tibor R. Machan holds the R. C. Hoiles Chair in Business Ethics and Free Enterprise at the Argyros School of Chapman University. His (unproofed) columns are stored @ &

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