The Stimulus Package & “Tragedy of the Commons”

Posted on April 14, 2009

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In reading recent articles reporting how  Illinois, Ohio, and California are seeking funding for infrastructure projects from the Federal Stimulus package, a basic concept in economic theory continually pops into mind.  It’s called the “Tragedy of the Commons.”  Garrett Hardin formalized this theory back in his 1968 article in Science magazine, and it’s a concept that dates back to 1833 by a mathematical amateur named William Forster Lloyd.

Hardin wrote that the lesson in understanding the “Tragedy of the Commons” includes:

The social arrangements that produce responsibility are arrangements that create coercion, of some sort.

In this case, coercion is not meant in the typical malicious way as it’s commonly used today, but coercion is referring to the concept of  “payment.”  Hardin goes on to clarify his use of the word coercion:

The only kind of coercion I recommend is mutual coercion, mutually agreed upon by the majority of the people affected.

Hardin continued his work in developing this concept throughout the rest of his career and authored an less technical explanation of this theory for the Library of Economics and Liberty.  In this overview of the Tragedy of the Commons, Hardin states:

Whenever a distribution system malfunctions, we should be on the lookout for some sort of commons.

So what does this mean in terms of the Federal Stimulus Package?  Each state, when personified, views their individual right to federal funding independently from other states.  That is, California cares not what Illinois does or spends, because California (and rightfully so) cares only about it’s own personal well-being.  This is a natural economic order – individuals seeking their own personal interests.  The problem is not that states are acting selfishly, but that the government has developed this pool of money for states to act in such as way without any serious retribution (coercion).  Yes, states are allegedly required to pay back the money in a timely fashion and adhere to certain federal guidelines.  However, the history of debt forgiveness past and present is prevalent in the United States (the Obama administration is already “vowing sympathy for individuals behind on tax payments.“)

In the end, the federal stimulus money will be spent, and in Hardin’s words, the grazing fields will be bare.  All of us will be worse off because there’s no serious governing mechanism to consuming the public resources allocated by the stimulus package.