Friday, July 29, 2011

Commons


“I had a dream I saved the world.”--Natalie Hara

The commons. In economics we often talk about the tragedy of the commons. It is a concept that seems to elude even the brightest of us sometimes. Ellinor Ostrom has explored the concept for over 40 years and still a full explanation and the repercussions of it have eluded us. So what is the tragedy of the commons? What makes a good common? And how do we manage it?

First, imagine your neighbors next door are having a huge party on a Thursday night. You have to wake up early the next morning for an important business meeting—something that completely threatens your welfare; if the meeting goes poorly you could be out of a job. The noise is raucous and discordant. No matter what you do to try to block out the noise it persists. Finally, in an exhausted rage you yell to the neighbors next door to, “keep it down! People are trying to sleep!” The volume temporarily drops and for a moment all seems well, but soon the party reaches its zenith once again and you are left sleepless. Finally, in total exasperation, you call the cops with a noise complaint.

And that is the commons and how we have managed it for years. The commons is a space that isn't owned by one person, but by everyone. The noise has no border or barrier; it is a thing that, despite what we do to give control to one individual or another, it bleeds across any artificial human border. A wall—a conventional one anyway—cannot contain a loud enough noise. It is the tragedy of the commons that the mutual experiences of you and the neighbor are degraded because the noise cannot be managed to either of your satisfactions. Often people try to dictate some sort of direct agreement between each other with a commons (in this case yelling at one another to keep it down). For whatever reason, these agreements are often lacking in enforcement or individual adherence and someone breaks the agreement. The sound peaks again and someone (you) is at a disadvantage.

Now go back to the scenario. The cops have left and the party has continued, much more muted. Soon, twenty, maybe thirty minutes later, the sound is back up again. It is like a jet plane is taking off and so is your temper. In a huff, you turn your sound system toward the neighbor's house and blast Rebecca Black's “Friday” on repeat.

This kind of escalation is common in the tragedy of the commons. Without an agreement that anyone adheres to about how to deal with a common pool resource, in this case the noise, there is a propensity to over-consume until everyone loses. That is the tragedy of the commons; a total loss because everyone is taking until there is no more. Here there are so many sounds that everyone loses—the rule of law has failed to enforce anything and the new agreement assures the destruction of everyone's well-being.

Now flip the scenario. You are having a chill party, having fun because your friends are in town and the sound might be a bit loud but the next door neighbor is yelling at you to “keep it down! People are trying to sleep!” You try to keep it down, but the sound of the party steadily rises; you are having fun. Then the cops come, you assure them that the party will tone down. But apparently it isn't enough because 20 minutes later all you can hear is Rebecca Black's “Friday.”

And it isn't hard to see how the problem fails to resolve itself. In the tragedy of the commons the problem is escalated even further because it doesn't involve just two neighbors but a whole neighborhood. And no one is quite sure where the sound is coming from. At this point we end up with a headache and no sleep. That's the tragedy, a tenuous agreement falls apart in the cover of anonymity.

Many things are common goods. Sound and air, water, information systems, parks, and views. The general way that we manage our common goods is through different systems of ownership and proprietorship. Water rights are a good example of the variety of ways of managing a common good. Private buyers can purchase water rights, often large developers. Generally a public utility controls a large number of the water rights and distributes water via a water system, managing it to maintain it somehow. But intake is poorly monitored and often private owners will use more water than there is. This is an especially large problem in desert states like Nevada where actual water can vary greatly from the water that has been delegated. Furthermore there is a certain selfishness to how the system works—humans get all the water and nature often gets none. This causes droughts where there should be none.

The issue is how we have devised our public policy. Generally our system of laws regarding the management of common pool resources has been a piece-meal one. Systems devised thousands of years ago have changed little in the intervening time. Management is often effective though even in ungoverned systems. The common denominator seems to be effective communication or shared goals. In systems where there are competing interests and little communication between interests a resource tends to deplete until there is none (ex: the silence disappeared because the yelling was ineffective and the two neighbors had different goals, sleep and fun). The natural conclusion to this should be democratic governance—but it doesn't have to be. A unitary authority can manage a resource better than popular majority in many cases. In a democratic system the question becomes, “how much am I willing to hurt myself to hurt those I work against?” In a unitary authority it is totally dependent on the benevolence of the authority, it is equivalent to a monarch, sometimes good and sometimes in-bred and dumb.

So where does that leave us? There are no straight answers. The tragedy of the commons is a mind-bending problem that has found many functional ways to manage itself and many dysfunctional ones that hurt the consumers.

At Mama's house I was trying to sleep but David was playing video games loudly. I went into his room and asked him to turn it down a notch. David, seeing my displeasure and being empathetic to my state of mind, didn't turn down the sound. Instead, he found a blanket, draped it over his door and closed the door. It made for super-effective sound proofing. He could play his games at full intensity and I could sleep peacefully. It was an agreement about the commons and it worked.

Effective management of the commons is predicated on better communication and empathy not more intricate laws.