Posts tagged tragedy of commons

Column on Who Needs Austerity When Some are Rich?

Who Needs Austerity when some Are Rich

Tibor R. Machan

Portugal is broke but austerity measures there are protested persistently. Greece is in the same fix. And indeed in America, too, the Occupy Wall Street crowd appears to believe that if even a few folks are doing very well, no one need tighten his belt since all that’s needed is to rip off those well off and force them to continue to work hard.

The math is, of course, terribly off — even if all the wealthy were raided for their resources, it would do very little to improve the situation of the vast numbers of those who need to cut back on their spending (including, especially, governments). It’s like a pyramid shaped storage of stuff, taking from the top and distributing it below isn’t going to create abundance. What is required for that is overall productivity, nothing less.

But these days millions of people, especially their politicians and academic agitators, hold the insane idea that wealth is collectively owned, sort of like in a family or commune. No private property is recognized so whatever anyone owns, everyone else owns as well. So if you have been profligate for years and now can’t pay your bills, never mind; there are those others with some money stashed away which can be confiscated because, well, it belongs to everyone. Never mind that it is just that kind of thinking and behavior that leads to widespread poverty, a direct result of the tragedy of the commons.

I have recounted this episode of my life before but it is relevant here again: At about 12 I was being lectured by a good communist teacher in my elementary school in Budapest about how we should all live by the Marxist idea, “From each according to his abilities, to each according to his needs” (taken from his famous essay, “Critique of the Gotha Programme”). I asked the teacher how would this work if my friend and I both started with a few bucks and I spent it on booze and he on wood. Once he made a nice little table, I’ll simply drink myself under it, so would he have to help me out, would his table be my table, as well? And this landed me in hot water. (Both the Nazis and Commies dealt severely with students who asked the wrong questions, what today would be called politically incorrect ones!)

The idea now is that so long as other people are productive and lucky, the rest of us need not fret since we can always dip into their stuff and conscript them to work for us. But since the math in this “solution” sucks, it leaves everyone without sufficient wealth and, moreover, tends to discourage people from trying to increase theirs. Marx knew that this would happen so he envisioned communism as the society in which everyone became a “new man” and would automatically work for the commonwealth, the public interest (is how it is called now). With self-interest having been erased from the human race, no one would mind being poor, having to cope with austerity.

Sadly, the Occupy Wall Street people and others of similar attitude around the globe haven’t experienced this necessary alteration of human nature, whereby no one cares about himself and his intimates but only about the society as a whole. (Not that that would work out but at least people might put up with it more compliantly.) They are very much concerned mainly with their own and their loved ones’ well being. Certainly they care nothing about the well being of those who are productive, especially on Wall Street. Instead they hold the view that other people must all become fierce altruists while they themselves can remain self-indulgent. (At least that is how they behave, so I think it is fair to attribute that line of thinking to them.)

That there are free loaders among us is no news, nor a tragedy. What is, however, really disgusting is how many erudite people throughout academia, governments, and the media egg them on in their pathetic misconceptions.

Column on Pitfalls of Shared Responsibilities

Pitfalls of Shared Responsibility

Tibor R. Machan

President Barrack Obama asserted in a recent speech dealing with the country’s enormous debt that what the country needs is to live by an ancient principle, namely, “the principle of shared responsibility.” He invoked this in his defense of his championing of the increased extortion of the resources of the wealthy, those who earn $250K or more per year. Why this “principle” should be invoked he didn’t say–he seemed to think it’s obvious.

Frankly the details are not what’s important her–what is is that extortion from rich and poor alike is evil and destructive of the country’s economy. In addition, the idea of unassumed share responsibility for economic mismanagement (either by individuals who ought to care for their household finances or by public officials who ought to care for the country’s economic affairs) is a very harmful one. Shared responsibility applies only where those who are to share have freely volunteered to do so. I am not morally and should not be legally authorized to conscript my neighbors to share the household debts I have assumed for myself in, say, my repeated refinancing of my mortgage.

It is interesting that a good many policy wonks complain when companies dump their waste into the public sphere–the air mass, rivers, lakes, or oceans. And they are right–such dumping is intrusive, a violation of the property rights of those whose sphere has been used without their consent. The idea of sharing the responsibilities assumed by various public officials in the name of the citizenry is no different. Some, very few, public expenses are, of course, the responsibility of all citizens–national defense, maintaining the legal infrastructure of the country, etc. But when public officials spend resources on what they deem to be important projects, such as a bridge in their district or a dam or a school, these are no shared responsibilities by any stretch of the imagination. These are the responsibilities of those individuals who elected to assume them. The rest of us, who have assumed different responsibilities, are not to be imposed upon by making us all share the burdens of fulfilling such responsibilities.

There is an ancient principle that President Obama ought to consider before he imposes responsibilities on those who didn’t consent to assuming them. It is “the tragedy of the commons.” Perhaps the best statement of this principles comes from the ancient Greek philosopher, Aristotle, who pointed out that

“[T]hat 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 principle is widely embraced by environmentalists who realize that when spheres are commonly owned, they fall into neglect. The same holds for shared responsibilities–people tend to assume that others will fulfill them and they do not need to worry. Even more importantly, it is nearly impossible to determine for a huge population in a country such as the USA just what is to be shared and what is not. Is one to share the responsibility for another citizen’s crimes, debts, children, etc.? Why, if you decided not to have any children, must you shoulder the responsibility of supporting them? Why share the debt that others have assumed unless you are a close friend or associate?

No, the idea President Obama floated in his discussion of how to handle the enormous national debt is a nonstarter. And the idea of coercing those making $250K or more to shoulder most of it is obscene. No one is going to pay attention to balancing his or her budget if others will be forced to pay one’s debts. It is also a terrible practice to support by the leader of a supposedly free country in which citizens may not be punished unless they have been shown to have committed a crime.

In fact, all this sharing of responsibility amounts to letting off the hook all those who acted irresponsibly in their finances, private or public.

Column on Beautiful & Bankrupt

Beautiful & Broke

Tibor R. Machan

My favorite place to live in America is California. But don’t get me wrong–one size does not fit all. And how wonderful that is, that people differ so much that they could be quite happy living in very different places, some in Miami, some in Houston, some in Cleveland, and some in the San Francisco Bay area. I love this since it helps to confirm my individualist position about human social life.

On a recent visit to Portugal, near Lisbon and right off the Atlantic Coast, I rediscovered that country after having been away from it for 40 years. And it comes across very different now from what it was back then. Most surprisingly it comes across to me like, well, California. Not only is its coastal weather relatively mild anddry but the place is teeming with attractive neighborhoods–not to mention notable history–of all kinds.

Most noticeably, for someone just there for a few days, is how polished is Portugal’s infrastructure. The roads are spic and span; everything is squeaky clean; trains run on time, more or less, and so forth and so on. All in all Portugal looked to me well cared for, again kind of like much of California. (To know what I mean, one needs to check out the hundreds of California junior and community colleges, most of which are built like architectural wonders.)

And, sadly, Portugal and California share something else that’s not to be lost sight of: they are utterly broke and in deep, deep debt. Children and grandchildren in both lands are at this point on the hook for billions to pay back or must ready themselves for defaulting on the debt and having their credit rating destroyed. Unless some angel shows up to rescue these admittedly attractive, appealing communities, their populations are knee deep in trouble. Businesses will flee and are already doing so in droves.

Countries, communities of all sorts, have gotten themselves into this mess by politicians promising the sky to everyone and making good on their promises by way of phantom resources. We know about this from many of our own experiences andthose of our friends and neighbors. (I am no exception at all, what with having refinanced my home several times so as to fulfill the dreams of some of the members of my family and then ending up “upside down,” so much so that the notion that I might retire some day simply cannot be entertained–I will have to die “in office.”)

In the past the dire predictions of sensible economists could be met by reminding them that people tend to edge up to the brink of economic disaster but then start to contain themselves radically enough so as to avoid plummeting to ruin. But while this holds reasonably surely in most people’s private lives, public finance follows different patterns. The tragedy of the commons kicks in and instead of seriously changing from irrational enthusiasm toward caution prudence, public officials–politicians, their cheerleaders, bureaucrats and the rest–get caught up in the spirit of the ponzi scheme, trying to escape the burden of intolerable debt by way of dumping it on someone else, some other institutions, hoping this will avoid having to face the music at any time.

But it seems this scheme just has run its course in most welfare states, and near andfar off future generations will have to suffer. I do not see a way out unless the citizenry of these countries and communities assumes, voluntarily, a hard line stance in favor of austerity. Is that likely? I do not sell people short and very often they do get it right in a pinch but it could also turn out that the financially failed states such as California and Portugal–and a whole lot of others–will have to undergo some very hard times and perhaps the rule of some dictator who will distribute the burdens according to his or her lights, never mind fairness or justice resources. We know about this from many of our own experiences and those of our friends and neighbors. (I am no exception at all, what with having refinanced my home several times so as to fulfill the dreams of some of the members of my family and then ending up “upside down,” so much so that the notion that I might retire some day simply cannot be entertained–I will have to die “in office.”)

In the past the dire predictions of sensible economists could be met by reminding them that people tend to edge up to the brink of economic disaster but then start to contain themselves radically enough so as to avoid plummeting to ruin. But while this holds reasonably surely in most people’s private lives, public finance follows different patterns. The tragedy of the commons kicks in and instead of seriously changing from irrational enthusiasm toward caution prudence, public officials–politicians, their cheerleaders, bureaucrats and the rest–get caught up in the spirit of the ponzi scheme, trying to escape the burden of intolerable debt by way of dumping it on someone else, some other institutions, hoping this will avoid having to face the music at any time.

But it seems this scheme just has run its course in most welfare states, and near and far off future generations will have to suffer. I do not see a way out unless the citizenry of these countries and communities assumes, voluntarily, a hard line stance in favor of austerity. Is that likely? I do not sell people short and very often they do get it right in a pinch but it could also turn out that the financially failed states such as California and Portugal–and a whole lot of others–will have to undergo some very hard times and perhaps the rule of some dictator who will distribute the burdens according to his or her lights, never mind fairness or justice.

Column on Why Welfare States Hemorrhage

Why Welfare States Hemorrhage

Tibor R. Machan

One central reason welfare states–or call them social democracies or whatever runaway mob rule most developed and developing countries are subject to these days (for the last thing they are is capitalist)–go broke is a basic flaw of the system, not the particular fault of politicians or bureaucrats or the devil.

Nearly all democracies now are unlimited, illiberal, and unrestrained by firm constitutional principles that prohibit spending more than what the treasury can bear. So the politicians are impelled by democratic forces to dole out support for their constituents without any regard for budgetary constraints. No budgets can be enforced since the very lawmakers and bureaucrats who would do the enforcement are themselves impelled by the democratic process to drain the treasury beyond rhyme or reason. Also, people just cannot be taxed endlessly–in time they just give up seeking to prosper.

Just imagine a family of five, with each using a copy of a credit card but none imposing self-discipline, so that whenever one of them wants to make a purchase, it’ll be done. Together the purchases reach way beyond the family’s financial resources, so, no surprise, the card will be maxed out in no time. Of course, credit card companies impose limits on card-holders but most families can obtain a half a dozen or more credit cards, so maxing out one doesn’t serve to discipline them, either individually or collectively.

Now add to this analogy the fact that when it comes to national treasuries, these are generally subject to carrying enormous debts and deficits. And those who are in time responsible for covering these are not yet alive or are very young, so they aren’t even in a position to express their protest about being saddled with these obligations they did not assume either individually or collectively. They are trapped into shouldering obligations very likely way beyond their capacity to cover. (There, by the way, goes “no taxation without representation”!) This is all exacerbated by the tragedy of the commons, since everyone also believes in getting as much out of the common treasury as possible with no thought about replenishing it. After all, what is in the treasury is all ours, a public resource, just as the resources around us in the wilds or the air mass belong to all of us, so that no private property rights serve to put borders around what people have available to use. Furthermore, public choice theory shows that politicians and bureaucrats work mainly to advance their own limitless agendas, having no clue at all what is in the public interest. So the pressures on the treasury are enormous.

There is a school of economic thought that aims to remedy matters, called constitutional economics–lead by George Mason University Nobel Laureate economist, James Buchanan–with the public policy objective to putting constitutional limits on spending. Some states of the union make an attempt at this but usually without much success, again because the democratic process tends to override all attempts at restraint. If politicians can ensure their own elections and reelections by promising to raid the treasury “for the benefit of voters”–never mind that altogether this is not really feasible but only a deceptive promise–they will do whatever they can to accomplish this goal. Those on their staffs or whom they appoint are not likely to stand in their way since they will be fired in a jiffy if they try.

It comes out to be a proverbial Hobbesian war of all (groups) against all. Labor, business, education, science, the arts, farming, you name it, and everyone is asking to gain support from the treasury and the politicians proudly assume it to be their duty to accommodate the requests however impossible this is.

The late Mancur Olson, a brilliant student of the welfare state, argued (in his book The Logic of Collective Action [U. of Michigan Press, 1965]) that this process is literally unstoppable and only a major meltdown can put a halt to it, followed by, perhaps, some revolutionary changes in the system. But so long as the democratic process continues (me thinks), everything will just repeat itself (even though now the meltdown may well be on its way globally).

I know of no solution to all this other than to insist that the very problem be communicated to the citizenry, relentlessly, repeatedly, and vigilantly, so that despite everyone’s tendency to get on the dole, wisdom and prudence would in time prevail.

All of this needs to begin at home, but sadly macro-economists–including our current president–are telling everyone to spend, spend, and spend some more, for therein, miraculously, lies our salvation. Yet, contrary to this nonsense, in the end the best cliche to follow is that one just cannot get blood out of a turnip.

Column on Europe’s Tragedy of Commons

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!