Friday, May 31, 2013

Tragedy of the Commons


We attended an event this week where we were given a copy of a relatively short book titled “After the Welfare State,” which in itself is enough to trouble one’s mind.

Turns out you can download the entire book here.

The opening ‘essay’ really caught our attention:

The Tragedy of the Welfare State
By Tom G. Palmer

Many approaches to the welfare state focus exclusively on the intentions of those who support it, or offer mere descriptions of current income transfer programs. This essay draws on the economics of common pool resources to examine the welfare state as a dynamic and evolving system, a “tragedy of the commons” that has created incentives for its own exhaustion.


The welfare state has something in common with fishing. If no one owns and is responsible for the fish in the lake, but one does own all the fish he or she can catch and pull out of the lake, everyone tries to catch the most fish. Each reasons that “if I don’t catch the fish, someone else will.”

Each of us may know that catching lots of fish now means that the lake will be fished out, but so long as others can catch whatever I don’t catch, none of us have an incentive to limit our fishing and let the fish population replenish itself. Fish are caught faster than they can breed; the waters are fished out; and in the end everyone is worse off.

Environmentalists, economists, and political scientists call that the “tragedy of the commons.” It’s a serious problem and is at the root of a great many of the environmental crises facing the world today, from depleted ocean fisheries to air and water pollution and other problems. But it’s not limited to environmental problems.

The welfare state operates like a commons, too, and the tragedy is unfolding as you read this. In modern welfare states, everyone has an incentive to act like the irresponsible fishermen who fish out the lake, except that the resource we’re plundering is each other.

Each person seeks to get as much as he can from his neighbors, but at the same time his neighbors are trying to get as much as they can from him. The welfare state institutionalizes what the French economist Frédéric Bastiat called “reciprocal plunder.”

Because we can plunder each other, people reason, “if I don’t get that government subsidy, someone else will,” and each has an incentive to exploit the resource to exhaustion. They justify taking government funds on the grounds that they’re “just get-ting back what they paid in taxes,” even when some of them are getting a lot more than was ever taken from them.

Everyone has an incentive to take. This tragedy has a dimension not present in the case of the depleted fisheries: because we’re plundering each other, we not only spend resources to plunder our neighbors, but we also spend resources to avoid being plundered by those same neighbors, which makes us all worse off to that extent.

Not only are we plundered, but we are increasingly being plundered beyond all sustainable levels. The result is exhaustion. It’s where we’re heading now with welfare states.

As we read, this passage in particular struck home:

Because we can plunder each other, people reason, “if I don’t get that government subsidy, someone else will,” and each has an incentive to exploit the resource to exhaustion.

While you may have forgotten its relevance, we have not.  This is EXACTLY the argument that many made when the possibility of the state providing ‘free money’ to construct a new elementary school in Brunswick was being discussed.  “We must take that money, because if we don’t, someone else will get what should rightfully be ours.”


This ‘free money’ Tooth Fairy view of reality continues to pervade local thinking as exemplified by Brunswick Clueless United.  The Tooth Fairy is normally presumed to live in the fantasy land that is Augusta, but when it can’t be counted on to send funds from the state house, it’s presumed to have relocated to our ‘town commons.’


So you need to contact your Fairy Godmother and let her know you’re going to need a cash infusion to cover your property tax increases from here on out.  In perpetuity, if that hasn’t already dawned on you.

Tell her ‘it’s for the children.’  It works with everyone else; maybe it will work with her.

Yah, shurr.

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