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Familiar with the parable called "Tragedy of the Commons"?
It goes like this:
Villagers share grazing land. Instead of each one having their own fenced piece of it, they are all free to use the whole extent of the pasture. Every villager owns one cow and everything works great.
One day a local idiot realises that he could get rich by having more cows. He buys ten cows and uses the common pasture to feed them.
Other villagers get pissed off bacause: First, the idiot gets richer than them. Second, he've uses the property that's at least partially owned by them to make the money.
It feels like free riding. Thus, each other villager buys ten more cows to get even.
The pasture becomes rather crowded at that point and in short time it turns into a sea of mud.
Shortly after the cows die of hunger, followed by the villagers not long after that.
That much for the parable.
So far so good.
Now think about this: The name "Tragedy of the Commons" implies that the morale of the above story is, to put it simply: "Private property good, public property bad." See the logical fallacy here?
Not yet? Well, to prove that the scenario described by the parable is caused by public ownership of the pasture, you have not only to show that it happens when the land is public, but also that it does not happen when the land is privately owned. And we haven't considered the latter option yet!
So, let's have a look at what happens when it is privately owned. Everyone has it's own piece of pasture safely fenced and everybody feeds their cattle only on their own land.
Once again the local idiot buys ten cows instead of a single one that his pasture would be able to sustain in the long run.
The villagers laugh because they know that having that much cattle is not sustainable and the idiot is going to fail eventually.
However, he's not going to fail in short term. He becomes ten times as rich as everyone else, builds a big house for himself, buys a Ferrari, starts playing golf with important people etc.
At this point other idiots from the village, guided by pure envy, resign at long-term sustainability and buy ten times more cows than their land is able to support.
The majority, however, still laughs as they know that the idiots are going to fail in the long run.
In the meantime, the supply of milk, butter, cheese, beef and leather to the market steadily increases. The idiots are producing ten times as much goods after all. At the same time, the number of consumers of dairy products and beef doesn't change. In other words, the supply increases but the demand stays fixed. And according to Economy 101, the prices are going to drop.
Everyone's going to gain less. The idiot has to sell his Ferrari, but he still fares pretty well. He has the big house and goes hunting with important people.
The honest guys stop laughing though. Suddenly, they are earning a fraction of what they've were used to. To survive and feed their families, most decide to buy more cattle and start overgrazing even though they know it's not sustainable in the long run.
The most stubborn ones live of debt and are unable to pay back. Later on they go bankrupt and their land is auctioned and sold to the idiot, who in turn buys more cows and starts overgrazing it.
In the end, all the land is turned into sea of mud and everyone dies of hunger, except, maybe, for the idiot who uses the connections he've made while playing golf and hunting to get into politics.
As can be seen, both "commons" and "private property" scenarios lead to the same outcome. Thus, calling the parable "tragedy of the commons" is misleading. The real name should be "the tragedy of overgrazing" and the morale should be: "If prople overutilise resources, everyone's going to suffer in the end."
Except that it's a pretty bland statement. Definitely not as catchy as "public bad, private good" that we've seen before.
Can we do better than "overgazing bad"?
Well, it feels like we can. Intuitively, there seems to be more substance to the parable than that. Thus, let's analyse it further.
The intuition is that private property is better than commons because the idiot would fail faster if he overutilises his own land compared to when he gets a free ride on the commons sharing the land with well-behaved individuals.
In other words, the way to fight overgrazing is to let the perpetrators fail as fast as possible.
Yet more formally: If overexploiters fail before they manage to distort the market, everything is going to be OK. If they distort the market before failing, the market will collapse.
The sustainability policies should thus be crafted in such a way as to speed the failure. Privatisation is one such policy. It's not very efficient though. Speed of failure as a consequence of overexploiting private property doesn't match the speed of modern markets. The former may take years, the latter happens in couple of days.
One can think of different measures to speed the failure. Privatisation is one such measure. It's not very efficient one though. It may still take years to fail on a private property. The really fast way to make the overexploiters fail is regulation: Fine them out of business once they start misbehaving. And, to get back to the topic of this essay, fines work equally well on commons and on private property.
Martin Sústrik, Nov 29th, 2013
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I always saw the tragedy of the commons as very similar to the prisonner's dilemna: the optimal strategy for each individual leads a globally unoptimal situation.
A real-life exemple: elections. Your vote is not going to tip the scale, and so voting is a waste of time. Except that if (mostly) everyone does this, it only leaves a handful of idiots / fanatics / paid voters to decide on the issue.
Interestingly, most people get very upset when you suggest that voting is a waste of time. More understandably, most people condemn the idiot in the tragedy of the commons. So there seems to be a strong "sense of the commons".
Incidentally, I've been thinking about the elections lately. I wanted to write an essay calling the urge to vote based on "if everyone did not vote…" argument for what it is, namely an example of magical thinking, as if the fact that you go and vote somehow made others more likely to vote. And I think you are right, some people would feel offended by that.
Great essay!
When cows are gone you can dig for gold,… Not scaling the cows business could be a mistake. Unless by cows you mean just environmental resources.
The real question: what is the worst case scenario and can we survive it? If not then let's regulate. If yes (with proof!) then let's suck it up. Next time someone else will look like an "idiot" anyway.
These ideas are not mine. They are the main point of Nassim Taleb's Antifragile book.
PS: small typo s/prople/people/
Worst case scenario? All cattle dead. Are the villagers able to survive it? Yes. They can move elsewhere. Should we accept the scenario, just because it's not a global collapse? I doubt it.
I like Nassim Talebs books as well, unfortunately, haven't read the last one yet.
or what about "The tragedy of abusing the commons for private exploitation"?
as indicated, it's rather the privatisation of the cows, and the resulting short-term individual profit-seeking that's causing the tragedy.
Yes. However, keep in mind that profit-seeking is the main driving force in the economy. Once you make everything public, people are not incentivised to work, improve, produce stuff etc. See what happened with the Soviet-style socialism.
The real goal is to balance the profit-seeking and sustainability.
The point of the article is not to propose some system to achieve that (I don't have one) but to make it clear that privatisation is not a panacea and "tragedy of the commons" which is often used as an argument for privatisation is in fact an argument against over-exploitation, whether of private or public property.
Is profit-seeking really the main driving force? Or rather does it have to be? I found this text on the history of money to have some interesting things to say on that topic.
"the Tiv women of central Nigeria who are constantly giving gifts, but never of the same value, to respond a gift with an equal gift would end the social debt and by implication, the relationship"
Seems that social status may also be a potent driving force. Which might not be too far fetched when for example considering things in the light of SCARF SCARF or similar models of driving forces.
And really, the massive ammounts of economic value produced in for form of Commons based peer-production should make one a little skeptical of the profit-seeking world view.
The article discusses the "tragedy of the commons" which is itself based on the model of a human being as "homo economicus". I am showing then even within the homo encomicus paradigm, the parable doesn't really apply to private vs. public, rather it's a general statement about overutilisation of resources.
As for moving beyond homo economicus paradigm: Yes, when people are not lacking basic means to survive and when they are relatively confident about being able to survive in the future, quest for social status becomes more important driving force than profit-seeking. From that point on, accumulation of wealth is driven by desire to improve one's social status rather than other way round.
While that may seem silly, there's a good reason for that: In societies beyond dunbar number there's no way to maintain social status using traditional means (gifts and such) The only fully scalable way of maintaining status (in other words, making it possible to prove your status to any other human beign, even if you haven't met them before) is money.
So, if you are thinking about alternative ways for the economy to work, you'll have to solve the scalability problem in some other way.
As a thought experiment consider the effect of this change to the scenario: The right of property cannot be held without compensation to the other commoners. Think Henry George style land value taxation.
In the traditional Russian agriculture commons, the "Tragedy of the Commons" was solved fast and efficient. The scarce resources, the frail and unsure agriculture required that such things simply would not happen. So, the commons either expelled such a guy or even set his house on fire and kill excess kettle: cruel but decisive.
A guy that tries to use more than others do was called "мироед" ("miroyed", the one who eats what should be distributed among all).
The Russian commons' goal was very simple: all the members should keep alive until the next harvest, even if the weather or other conditions were unfavourable, which was happening too frequent. So all resources were gathered together and distributed evenly.
From what I read, the "tragedy of the commons" hardly ever happened with actual common grazing lands. Stable societies always impose some kind of system to prevent it. Your is just one of many examples.
Where it does happen, it seems, are the societies that are to large to impose such tribal system of control (above Dunbar's number?) or societies that are changing to fast to evolve any efficient system.
many have been experimenting with idea of some progressive taxation for using common resources… in addition to VATs, "tax on air", "tax on emissions", … it'd add forces preventing destruction of resource by homines economicii
:)
Taxes collected can be used to replentish the resource, e.g. fish hatcheries for fishermen… and the circle is complete
:)
being from Russia, I'm not aware of any examples of "Tragedy of the Commons", communities take care of idiotic actions quickly when voices are equal…
There were many examples of overutilization mistakes of planned economy, during Stalin rule when dissidents were shot immediately, literally leading to famine and deaths… and I am afraid it might come back.
IMO, inequality is what causes tyranny of monopolies, leading to inevitable mismanagement… but that's another story. Remember, inequality caused Communist Revolution in Russia and nazism in Germany :)
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