The tragedy of the commons

Cows in an overgrazed commons.

Central Falls, Rhode Island, is bankrupt.  The city, at 1.29 square miles, was once famous as the most densely populated city in America. Bordered on the east by the Blackstone River, Central Falls was at the heart of early America’s Industrial Revolution. But water-powered foundries and textile mills quickly became a thing of that past, leaving Central Falls’ skilled workforce high and dry.

In more recent years, Central Falls’ politicians continued to spend money as if they still had a tax base. They made generous pension promises to the city unions who elected them, creating liabilities that couldn’t possibly be met. So now they are broke and retiree benefits have been slashed in half. There are no winners.

How did this happen?  The most likely cause is a phenomenon called “the tragedy of the commons,” a theory describing human behavior when dealing with shared resources.  Ecologist Garrett Hardin wrote an influential article on the topic in 1968, describing the behavior of a group of herders who all shared the same parcel of land.  Since no one herder owned the land, each was motivated to maximize personal return, resulting in overgrazing to the detriment of all.

This effect can be seen wherever private ownership is absent.  Fishing fleets deplete ocean fisheries.  Graffiti artists deface public property.  Vandals destroy anything that is not theirs.  Politicians make promises they cannot fulfill (it's not their money).

The good news is that humans are very resourceful, recognizing the problem and developing creative solutions.  Taking the long view, farmers often organized and regulated the use of common grazing lands.  The federal government allocates fishing rights and radio frequency spectra. And enlightened politicians recognize that heavy taxation and reckless spending impair the economy that supplies them with tax revenues.

Here is what you can do.  Be aware that the economy, whether local, national, or global, is a commons. We all rise or fall on the tide of jobs, capital, and opportunity thereby produced. The economy is enhanced by the animal spirits of individual entrepreneurs and investors and is depleted by the ravages of short-sighted politicians.

Make your choices wisely.  Take the long view.  Educate yourself. Remember that there is never something for nothing.

The people of Central Falls, often portrayed as victims, repeatedly elected their betrayers.  Be smarter than that.