Tuesday, May 31, 2011

The Needs of the Many

" Logic clearly dictates that the needs of the many outweigh the needs of the few"

-Spock, Star Trek II, The Wrath of Khan

In 1968, Science Magazine published an article by Professor Garrett Hardin entitled The Tragedy of the Commons.  Despite the fact that Dr. Hardin was a biologist, his words have been very influential in the field of economics.  One of the classic ideals of capitalism, as defined by Adam Smith in The Wealth of Nations is that individuals acting in their own self-interest will end up benefiting society as a whole as if they were being led by "an invisible hand" (in other words, "greed is good").  The "invisible hand" theory has been used by those who want to minimize government regularions to justify their position.  By their reckoning, there is no need to regulate commerce when people acting in their own self-interest will end up acting in the public interest.

Hardin's "tragedy of the commons" provides a counterpoint to the "invisible hand" theory.  In his artcile, Hardin describes a scenario that was first described in 1833 by William Forster Lloyd.  His scenario harkens back to colonial times when there existed a "commons":  a central area owned by nobody where farmers were free to graze their cattle.  If each farmer acted purely in their own self-interest, they would ask themselves what the cost is to them to add an additional animal to his herd.  On the plus side, the farmer would get 100% of the profits from the sale of the additional animal.  On the other hand, the commons would suffer from the overgrazing caused by that additional beast.  However, that additional cost would be shared among all of the farmers in the town.  Therefore, each farmer would decide that it is in their best interest to add another animal to their herd.  After all, they share the cost but get all of the benefit.

Each farmer, making these individual decisions to maximize their own gain, would naturally seek to maximize their own individual herd.  However, if every farmer does that, the commons eventually would be reduced to ruin due to extreme overgrazing.  No individual farmer would seek to reduce their herd for the good of society as this goes against his own self-interest.  Each farmer would have to individually decide to sacrifice some profits for the good of the community.  However, we have seen time and again that this does not work.  Somebody must step in to prevent individual self-interest from destroying common property.  That "body" usually is the government.

Dr. Hardin gives several examples of "commons" in our modern world, and how we cope with their overuse:

1. Parking:

In popular urban areas, parking often is at a premium.  Usually there is a limit to the number of parking spaces available in a given area.  If people were free to park where they wished for an unlimited amount of time without cost, there would be very little free parking.  To cope with this, cities have instituted parking meters which allow people to pay to park for limited durations of time.  If people park longer, then they get a parking ticket and have to pay a substantial fine.  By imposing a cost on parking, it is now in people's self-interest to limit their parking.

2. Air Pollution:

The air we breathe is the ultimate commons.  It is a vast resource that we use on a daily basis without any cost.  Companies can also make use of the air.  Consider the manufacturing plant which needs to expel waste into the air.  It is in the self-interest of a company to belch chemicals into the air in order to make their product.  One company making this choice individually probably isn't going to affect air quality.  However, if you get thousands of companies making this choice, you end up with smog as thick as pea soup.  In order to prevent this, governments have imposed various taxes and regulations which make it expensive to pollute.  In that way, it is no longer in a company's self-interet to overuse the atmosphere.

3. Fishing restrictions:

Each individual fisherman obviously would want to catch as many fish as possible.  Since each fish means additional profits, the more fish you catch, the more profits you make.  However, there is a limit to the number of fish available in the ocean.  Some need to remain uncaught so that they make be allowed to reproduce and replenish the supply of fish.  If every fisherman acted in their own self-interest, eventually fish would disappear due to overfishing.  Therefore, the government imposes restrictions on fishing:  licenses, limits, fines, etc.  This forces fisherman to limit their catch.

Some may say that these regulations are coersion.  After all, each restriction is a limit on people's freedoms.  Who wants the government telling them where they can fish, where they can park, etc.  However, Dr. Hardin points out that individual freedom must be balanced by what is good for society as a whole.  Unlike what the "invisible hand" theory states, maximizing individual gains does not maximize societal gains. 

Interestingly, if you read Dr. Hardin's article carefully, you will see that his discussion of the tragedy of the commons is used to argue in favor of some unspecified sort of population controls.  His contention is that we need to "[relinquish] the freedom to breed, and very soon."  Obviously, it goes to show that we can't go too far in the direction of maximizing societial good either.  As with all things, there needs to be moderation.

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