Journal 6

Statement:

-The best way to resolve the tragedy of the commons (over fishing of common bodies of water etc...) is to privatize sections of the commons (instead of using government regulation)

Response from Dad:

My first thought is that the commons are already regulated.  One of the problems that we are faced with may simply be enforcing the existing regulation.  Enforcement of any regulation is a complex matter especially regarding international bodies of water that are deemed "common".  It is all too easy to simply assert, as many do, that because this is a complex matter we should inevitably privatize these common waters. The motivation behind privatization lies less in finding a solution that is equitable to all and environmentally sound, but more in the pursuit of profit.  What have we learned from the sub-prime fiasco?  Are we to believe that the institutions that profited so royally from creating complex financial vehicles, and then pedaled them irresponsibly to an uninformed public, should be the ones to monitor their own feckless behavior?  The global economy was devastated by these acts of greed from a select sector that was inadequately regulated.  Many of the "big fish" were saved in an effort to prevent the global economy from collapsing even more than it did. But the "little fish" are not being bailed out. We are all paying the price for the mistakes (and greed) of a few.

Rebuttal:

I think you are absolutely correct when saying the commons have are already been regulated, at least people have attempted to regulate them.  The biggest problem we are facing today with regulation is “Who regulates the regulators?” Even the people that are supposed to uphold legislation will turn their backs when personal or financial motives are on the table.  When examining a common area such as a fishery, it is very difficult to limit consumption because one does not know what the competitor will do.  This theory or “Game” is referred to as Prisoners Dilemma.  When studying this game, the important lesson to be learned is everyone will be better off through cooperation (ie. Consuming less).  When one-person defects (consumes more than his/her fair share) the cooperator is worse off while the defector enjoys personal gains.  The bottom line is there will always be the temptation to “Defect” because of profit.  We can see this defect occur from both the consumers and the regulators of the commons.  This is why regulation and cooperation are not the solution to the tragedy of the commons.

It is time to start looking for another solution, and I believe we can find that through privatization of the commons.  Call me a right wing nut job, but the less the government is involved with these matters, the better off we are.  Yes, the main goal behind this is for firms and individuals is to maximize profits but is that a bad thing?  We can make an environmentally conscious decision while keeping firms and investors happy as well.  By privatizing, people will own a certain chunk of the common area.  All of the resources in that area would belong to the individuals and/or firms.  When firms look at these things as personal assets, they will be more careful with the way they use them up.  Going back to the fishery example, fishermen, in theory, will fish at a slower rate, to give time for fish to reproduce.  Overfishing would cause a draught in the amount of fish seen in the future.   Profits and net income will fall if this occurs.

You raise a good point when you argue that we cannot trust firms looking to gain profit.  Yes we have seen this in the past.  Yes we are currently suffering the consequences.  These “Big fish” did most of their manipulation with investors in the stock market.  Many lied to investors by presenting “Complex financial vehicles” to show they were making profit when really they were suffering losses.  The problem with the actions of big business in the stock market is a topic of debate for another time.

Privatization of the commons is different because firms know there is not an infinite supply of resources and they will be responsible with what they own. Also there will not be the uncertainty of others “defecting”.    This creates the environment for firms to continue maximizing profit while becoming the solution to the tragedy of the commons.