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Home > Libertarian Objections
"Fallacy of the Commons"
by Bob Powell, 3/09/05
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When confronted with a situation that cannot be addressed at the individual level, but requires a collective solution, libertarians are in denial. A striking example is that they recast a very real structure like the "Tragedy of the Commons" to be a "Fallacy of the Commons". Added: Response to a critic. The dynamics from growth to overshoot & collapse and the difficulty of estimating exponential behavior.

Jump to:
The "Tragedy of the Commons" structure for fishing.
- The Commons: What Tragedy? by Wilton D. Alston. This is a commentary by a Libertarian critic who calls me an "Economic Ignoramus" ... now this is fun: :-)
- Response to 'The Commons: What Tragedy? by Wilton D. Alston. My response to this Libertarian: 
- From Growth to Overshoot & Collapse. On the dynamics of growth that lead to collapse ... nothing grows forever!
- Environmental Overshoot & Collapse: The last stage of the dynamic and what the inhabitants did to Easter Island ... 
Humans are doing this to the planet as a whole and that's even without the devastation that's being caused by global warming.
The Carbon Bathtub is looking at the atmosphere as a "carbon bathtub" as described by John Sterman of MIT. This explains why there is global warming, why emissions must be cut in half, and why inaction on the greenhouse gases threat will continue to make things incredibly worse.


Libertarians recast the very real structure, the "tragedy of the commons" (Wikipedia entry), as a "fallacy of the commons."

The libertarian "solution?" Sell off the commons to individuals who will take care of them. That argument is addressed in this section of the Wikipedia entry.


The "tragedy of the commons" is a situation where rational action by individuals to improve individual performance results in destroying the ability of the whole system to perform. And as system performance is degraded, it also degrades individual performance. When confronted with a situation that cannot be addressed at the individual level, but requires a collective solution, libertarians are in denial.


  • overgrazing on land destroys the land's ability to grow feed
  • groups benefit more from getting more resources from a common organizational resource pool, but overload the common resource (e.g., quality, HR, reproduction services)
  • individual engineering teams increase the electrical functionality of the system they're designing when they draw more on the electrical power system, but overall exceed the electrical system's ability to supply power
  • firms benefit from economic activity that causes pollution, but increase negative health impacts for all
  • developers profit from more development that uses common infrastructure, but overwhelm infrastructure

Their solution to this degradation of system performance is to simply, for example, "sell off the oceans." The rationale is that when individuals own them, the individuals will take care of them.

Then, in a display of illogic, this critic denies this "solution" requires a world government to force other nations to agree to selling the commons they use and to enforce the individual property rights. Further, this critic says that "You see only force.  I see negotiation, agreement and treaties between nations, not force." Note that this comment doesn't answer the question about what to do when some don't want to sell.

Besides, it's impossible to sell off all commons, for example, to "sell off the atmosphere," even if everyone wanted to sell.

Libertarians rely of the free market price mechanism to regulate supply and demand, but there are situations where price sends exactly the wrong mechanism to preserve the resource. For example:

  • Overfishing depletes the fish stock and the ability of fish to reproduce. In this case as supply declines, the price increases. But a "market" signal of increased price leads to even more fishing and even more rapid destruction of the commons. The market sends a price signal in the wrong direction.

And the tragedy of the commons structure isn't just relevant to situations like environmental pollution. It integral to markets when there's inelasticity of supply and demand.

For example, it's relevant to farming.

  • Every individual farmer comes to the logical conclusion that they can increase farm income by increasing the amount of land in production and by increased use of technology. But the increased supply in the presence of inelastic market demand (people only eat so much no matter how much price falls) decreases prices so that all farmers have less income. This results in calls for government subsidies and in small farmers being bought out by larger farmers (which does not decrease the supply of land).

There are two ways to deal with this structure:

  • understand that overcoming this structure requires cooperation toward a larger goal that manages common resources and benefits competing parties
  • apportion the expense of long-term collective loss to individuals or limit individual activity (grazing fees, fishing limits, land allowed in production, development impact fees)

Because libertarians attempt to rationalize away the inescapable need for collective approaches to deal with such a structure, there's little potential for reaching common ground in dealing it.

The "tragedy of the commons" is one of many systems thinking archetypes. For more see The Archetypes, Generic Structures & Examples. Also, The Squeeze on Farmers explains the structural causes of increasing farm subsidies.


8/12/09. Response to The Commons: What Tragedy? by Wilton D. Alston

Summary: A libertarian praises the right of the "free market" to destroy a common resource: "Why do these specific fish need to be preserved? Who gets to decide? How do they know? Who should pay because of it? Why?" It's this kind of "thinking" that made Easter Island uninhabitable and will do the same to the planet, if not successfully opposed.

It's worth reading to understand how cleverly misguided they are.

At Mr. Alston's archives the title of this article is Economic Ignoramus: Wilt Alston teaches one. Here's another place to find what he wrote: The Commons: What Tragedy?


So here, this ignoramus responds ... :-)

Well, we know right away where we stand: mutual contempt. That's OK. I'm in good company; he even calls Paul Krugman, Nobel Prize winner, clueless.

My response to Mr. Alston: he's a libertarian fool. And yes, I realize that's redundant. He wears libertarian blinders that do not allow him to perceive reality. Those with such a distorted view of reality are not simply ignorant, they are, quite literally, insane.

And yes, this may seem harsh, but considering the impact of their beliefs and proposed policies based on those incredibly-flawed beliefs, it's really quite mild.

He begins with what he represents as an economic mistake: the Defense Department creating a web-based voting system that cost $830K in 2006 that only 63 people used to vote.

Stupid, eh?

Well, not necessarily. For two reasons. First, supporting the right to vote is not simply an economic issue. It's an issue of democracy. Someone who perceives the world primarily in terms of economics naturally perceives this as stupid. Second, the number who used it initially is one thing, but that number pales in comparison to the number who will use it in the future.

Mr. Alston implies I am a "bleeding heart" liberal wanting "success and happiness for everyone." Actually, whether I am or not is beside the point ... the point being that to have an economic system that functions, one does not deify the "free market" when it fails. I describe some of the ways it fails at Invisible Hand Drops Ball & Economics 101.

He claims to find "errors of both logic and basic economics" in what I've written above. He objects that my observation that "The market sends a signal exactly opposite to that required to preserve the resource" does not tell the whole story.

He does not deny the market sends the wrong signal. Instead, he plays the Lone Ranger theme and has another market signal ride to the rescue. He writes, "the marginal value of the last few fish might be so high as to preclude the trade of those resources ...".

And he notes the cost of supplying the fish will increase to increase the price. To reduce the cost of finding fish, fishing fleets now use sophisticated sonar technology to more efficiently hunt down every last one of them.

And, well yes, the increased price of fish discourages purchase. But by then the resource can be destroyed. Remember there are, thanks to "conservative" economics, enough people -- the top 1% -- for whom price is no object.

That profits are eventually affected is shown in the "Tragedy of the Commons" archetype. It's the delays, and that they allow the not-shown overrunning of carrying capacity, that kill you.

(cont'd below inset)

Here is the "Tragedy of the Commons" structure for fishing.

R1 and R2 are reinforcing feedback loops showing the incentive of each fisherman to fish more and more (more hours, more boats, extended range) to increase profits.

This increases "total fishing" and, after some delay, increases the "effort required per fish caught". It takes some time to recognize that the effort required has definitely increased, that the increased effort required isn't just temporary, but a persistent condition. Also, the use of technology can delay the increase in effort required.

When "total fishing" exceeds the ""sustainable ocean fishing capacity", balancing feedback loops B3 & B4 show the increased "effort required per fish caught" reduces profits.

While this does reduce profits, the delay can be enough that the ability of the fish to reproduce reduces the "sustainable ocean fishing capacity", i.e, ocean "carrying capacity" (this feedback is not shown.)

This is the basic structure. Also not shown is that scarcity increases prices and creates incentives to keep fishing regardless of the impact on the resource. Fishermen use technology to more easily find remaining fish and keep costs down.



It's exactly the kind of "thinking" illustrated in the "The Commons: What Tragedy" piece that made Easter Island uninhabitable (described below) and it will do the same for the earth unless this ideology is successfully opposed.

He asks why the resource should be preserved and states that that's not an economic question, but a moral one. He writes:

Why do these specific fish need to be preserved? Who gets to decide? How do they know? Who should pay because of it? Why?

Who gets to decide? In a democracy, it's decided by democratic processes. But that's really not OK for thinkers like this. It's the "free market" god that should decide.

Yes, I do realize that's also redundant because, to libertarians and economic conservatives, the "free market" IS GOD (see The Conservative Mind). He essentially maintains that just because there's a common resource doesn't mean that it should be preserved ... the "free market" will decide, regardless of the economic cost.

And excuse me, it's both an economic and a moral question. Why should one group of people be allowed to destroy a common resource? Privatizing profits by destroying a common resource should not be allowed ... it's theft from the commons. Oh, yes, libertarians don't believe there should be any such thing as the commons ... everything should be sold off ... privatized. If not, the world falls short of their libertarian perfection.

The Wikipedia entry "Tragedy of the Commons" has this:

The article describes a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even when it is clear that it is not in anyone's long term interest for this to happen.

Well, it's not at all clear to Mr. Alston or to libertarians in general.

He writes about me:

He wants the scarce resource to exist at some equilibrium usage point whereby it is used for satisfaction while simultaneously not dipping below some supposed over-use point. How is this over-use point deduced a priori?

Overshoot and collapse is a well-known dynamic. It is possible to determine when we're approaching what he calls a "supposed over-use point." Carrying capacity can be overrun, destroying the resource for everyone. See the sequence ... growth ... limits to growth ... overshoot & oscillation ... and overshoot and collapse in From Growth to Overshoot & Collapse below. See other common systems thinking structures in The Archetypes, Generic Structures & Examples.

Added 4/8/14: There are visible signs of the effects, not only in the number of fish, but in the size of fish that are not apparent unless examined over decades. See: We are close to eating bait fish and jelly fish as big fish numbers plummet. It points to a piece at NPR: Big Fish Stories Getting Littler by ROBERT KRULWICH, 2/5/14

He asserts

The blogger also assumes that the fishermen are too dumb to realize that their "Golden Goose" could eventually be in danger. Instead of modifying their behavior – fishing at a specific agreed-to, dare I say, voluntary rate (beginning to farm the fish, etc). – they just power ahead, blindly pursuing profit.

I don't just "assume" it. I state categorically that this happens (see the overshoot and collapse of haddock catch, and how Easter Island was made uninhabitable, below); it's called The Fallacy of CompositionIndividually-logical actions can be collectively irrational. People tend to do what's in their own self-interest, regardless of the impact on the whole, which is all too often to easy to ignore and difficult even to perceive because it happens in the future after long delays.

Added 1/20/16: Overfishing is continuing despite their libertarian fantasy that the "free market" will take care of it.

Why we’ve been hugely underestimating the overfishing of the oceans By Chelsea Harvey 1/19/16

Overfishing and the subsequent decline of the world’s fish stocks can be a threat to the food security of cultures that rely heavily on fish — but Pauly suggests that if we implement better management techniques in the future that allow these stocks to replenish themselves, we may be able to feed more people than we thought, as the new data suggest.

On the other hand, the higher catch numbers also suggest that fishing has been even more unsustainable in the past than scientists thought. And the world is now suffering the consequences, as the authors point out.

Their second major finding was that fish catches have been sharply declining from the 1990s up through 2010 — much more severely than the FAO has reported. At first, the authors thought that these declines might be due to increased restrictions by certain countries on fishing quotas in recent years. But when the researchers removed those countries from their calculations, they found that the catch data was still caught up in a downward trend. ...

With good management, though, there’s room for optimism, Pauly suggested. "The fact that we catch far more than we thought is, if you like, a positive thing," he said during the teleconference. "If we rebuild stocks, we can rebuild to more than we thought before. Basically, the oceans are more productive than we thought before."

That's a big IF. But ocean pollution is reducing ocean carrying capacity. And remember Fukushima

"The Ocean is Dying": Marine and Animal Life Die Offs, California Coast
Pacific Ocean is "Turning Into a Desert" By Mac Slavo, Global Research, 5/27/15

... The ocean is dying, by all accounts – and if so, the food supply along with it. The causes are numerous, and overlapping. And massive numbers of wild animal populations are dying as a result of it.

Natural causes in the environment are partly to blame; so too are the corporations of man; the effects of Fukushima, unleashing untold levels of radiation into the ocean and onto Pacific shores; the cumulative effect of modern chemicals and agricultural waste tainting the water and disrupting reproduction.

A startling new report says in no uncertain terms that the Pacific Ocean off the California coast is turning into a desert. Once full of life, it is now becoming barren, and marine mammals, seabirds and fish are starving as a result. According to Ocean Health: ...

Ocean Life Faces Mass Extinction, Broad Study Says by Carl Zimmer, 1/15/15

A team of scientists, in a groundbreaking analysis of data from hundreds of sources, has concluded that humans are on the verge of causing unprecedented damage to the oceans and the animals living in them.

“We may be sitting on a precipice of a major extinction event,” said Douglas J. McCauley, an ecologist at the University of California, Santa Barbara, and an author of the new research, which was published on Thursday in the journal Science. ...

"Sea creatures sick, dying or disappearing at alarming rate all along Pacific coast… Some wonder if it’s fallout from Fukushima" — New York Times: "Ocean Life Faces Mass Extinction" — Study: "We may be on precipice of major extinction event" in marine wildlife (VIDEO)

But, "Oh, never mind, the 'free market' God will take care of it," say libertarian fools.

Oceans Will Have More Plastic Than Fish By 2050, Study Says by Melissa Chan 1/19/16

The world’s oceans will be filled with more plastic mass than fish mass by 2050, the World Economic Forum said Tuesday.

Blindly pursuing "individual self-interest" is not always in one's "best interest." For libertarians, that these are the same is "revealed truth," but like much religious belief, it's unfounded.

What libertarians fail to understand is that for living systems, the whole is quite literally more than the sum of its parts. An inability to recognize this reality is a sign of debilitating, ideological blindness. See Primacy of the Whole.

Social problem solving requires an understanding of social systems. Libertarians don't understand them and even deny they exist ... "it's only a collection of individuals."

He writes:

Why is it that people like this blogger almost always assume that they, or someone they pick, are smarter than everyone else?

I don't maintain I'm smarter than everyone else, just that I have a better grasp of reality than libertarians, who are blind to systems effects.


On the minimum wage: He has a paragraph attacking the "price control" "commonly known as a minimum wage."

My response:

As long as the economy is manipulated to assure there are more people needing jobs than there are jobs, then there must be a minimum wage. See There's no 'free market' for Labor on how game theory explains why wages are forced to between zero and subsistence level. An at-the-Federal-level, managed undersupply of jobs is why there are Poverty Wages for Ag Workers.

In praise of price gouging: He has another paragraph attacking "anti-price-gouging laws." He considers the need for generators in a natural disaster. He states,

If the price of generators is allowed to rise uncontrolled in response to new demand, it is almost certain to reach a point high enough that the last few will sit in the store unsold, but they will be available. That is, the generators will not sell out. Further, at that resultant price point, suppliers will be falling all over themselves trying to find more! Conversely, if the price is held low, say with anti-price-gouging laws, it is inevitable that every generator for miles will sell out. The student of Austrian economics knows that none will show up to replace them. (If generators could be supplied at the lower price, there wouldn’t be a shortage!)

His "Austrian economics" is no help to those in need of immediate assistance ... those who may even die for lack of a generator. It matters not to him that the merchant will still obtain a fair profit when the generator is sold for the normal price. He demands the right to price gouge.

His market signal of increased price -- even to the point where they sit in the store unsold -- cannot help if the delays are such that more cannot be acquired in time. This may very well be the case when transportation is disrupted ... even food and water were not reaching many trapped in New Orleans after Hurricane Katrina.

The "free market" may very well not maintain ready supplies of excess inventory to provide for major emergencies, even if transportation is available; manufacturing more can result in very long delays.

Long delays in the system can severely weaken, or even negate, the feedback mechanism of higher price and make it impossible to provide additional supply, even when there's emergency demand. Nevertheless, he maintains those generators should sit on the shelf.

But then, to libertarians, this is a "moral" question, not one of economics. And, he maintains, government should not be allowed to interfere with libertarian "free market" economics.



8/13/09: From Growth to Overshoot & Collapse

The rate of change is increasing ... that's acceleration!
[Note: this is a supplement to my Response to 'The Commons: What Tragedy? by Wilton D. Alston' just above.]

Overshoot Examples: 27 Horrible images that prove that we are destroying the earth.


This reviews the structures associated with exponential growth, limits to growth, and overshoot & collapse. In this last case, we have experienced ocean fish depletion and making Easter Island uninhabitable. We're in the process of doing the same thing to Earth itself.

"Change isn't what it used to be."
Charles Handy, The Age of Unreason, 1989

Looking at the behavior over time of variables in a system gives us a clue to the structure driving the system. Here's an overview of the structures.

Exponential growth (or decline) is an indication of reinforcing feedback (technically known as "positive" feedback).

"Limits to Growth". Initial exponential growth that saturates is evidence of reinforcing feedback that's overcome by balancing feedback (technically known as "negative" feedback). The structure producing this behavior is known "Limits to Growth".

When there are delays in a "Limits to Growth" structure, it produces Overshoot & Oscillation.

Overshoot & Collapse. When the "carrying capacity" of the system is eroded in a Limits to Growth structure, it results in Overshoot & Collapse.


The Structures Explained ... with Examples

Below are examples of each of these behaviors over time with the generic causal loop diagrams (CLDs) showing the structures producing the behaviors.

Growth Causal Loop Diagram
Exponential Growth

The structure at right produces exponential growth. Take the "E" in the variable names to represent either "Easter Island" or "Earth."

Read the CLD as follows:

"S" means a "Same" direction change; O means an Opposite direction change. See Reading Systems Diagrams.

A greater fractional rate of growth (for example, the larger the fractional rate would be say, 0.03 or 3 percent) the larger the flow, "population growth rate", of humans being added to "PopE". A larger "population growth rate" increases the PopE (number of humans), which in turn increases the "population growth rate" because more humans are procreating. "PopE" is what's known as a "stock" in system dynamics; in this case, it's the accumulation of humans over time ... the integral of the flow over time.

This is an example of reinforcing feedback that produces exponential behavior.

The equation for "popE growth rate"

"popE growth rate" = "fractional rate of growth" X "PopE" (units in humans/year, for example).

... or alternatively there could be a downward spiral ...

A more negative "fractional growth rateE"  decreases the population growth rate, "PopE growth rate". This decreases the PopE (number of humans), which in turn decreases the "popE growth rate" because fewer humans are procreating. This reinforcing feedback also produces exponential behavior ... only in this case it's exponential decay.

Below are examples of exponential growth.

The graph below shows the exponential growth of world population.

World Population Growth from Business Dynamics by John Sterman, MIT

Here's the exponential growth of GDP. Like world population, U.S. population has also been increasing exponentially, so it makes sense that long term GDP has been increasing similarly. But, because of offshoring, GDP is currently falling and, I believe, will begin collapsing ... see On stimulus, "trade" anti-stimulus, and the GDP equation.

U.S. Gross Domestic Product Growth from Business Dynamics by John Sterman, MIT

Here's the exponential growth of the number of transisters on a chip (note the use of a semi-log graph in the inset to clearly show the exponential behavior, which is linear plotted with a y-axis logarithmic scale). [The "Best Fit Exponential" doesn't show up in this scanned image.]

Growth in Transisters per Integrated Circuit - Moore's Law - from Business Dynamics by John Sterman, MIT

Here's the change in vehicle miles traveled in the U.S.

Growth in Vehicle Miles Traveled from Business Dynamics by John Sterman, MIT

The associated exponential decline of public transportation is thanks to massive roadbuilding subsidies. Road building drives growth and assures "you can't get there on the bus".

Decline in Public Transit Passengers from Business Dynamics by John Sterman, MIT

The two graphs above relate to sections in John Sterman's book, Business Dynamics (p. 178), on his Traffic Congestion Model. His problem focus and what the model explains:

Americans spend 8 billion hours/year stuck in traffic.
Lost productivity due to traffic congestion: $43B - $168B
Road rage & shootings ... "What went wrong?"

The graph below shows increasing prison population. See the reinforcing feedbacks at Addiction to Prisons. Talk about unsustainable! Makes us proud to be in the "land of the free", doesn't it?

Added 8/31/10: One of the reinforcing feedbacks shown at the link above is that those who profit from prisons lobby for more prisons. A current example:

Corrections Corporation of America (CCA) will profit from Arizona's SB 1070 "illegal immigration" bill. CCA already rakes in a good $11 million [corrected] every month, courtesy of the state of Arizona, and once (if) the new harsh anti-immigrant law SB 1070 goes into effect and the number of immigrant detainees rises, that corporation is poised see its profits spike.

U.S. District Judge Susan Bolton of Arizona issued a preliminary injunction against SB1070 in United States of America v. Arizona on July 28, 2010. The federal government is challenging the constitutionality of the Arizona bill. The court did not, however, strike down the entire law or rule it unconstitutional. The court said certain sections may not go into effect with the rest of the law. They are likely to be unconstitutional, according to the court.

Growth in Prison Population, also from Business Dynamics by John Sterman, MIT ... except I added the point for the year 2000.

Limits to Growth Causal Loop Diagram
Limits to Growth

It's impossible for exponential growth to continue forever. Growth eventually reaches a limit. It's a fact of life.

The book, Limits to Growth by Donella Meadows et al., met great opposition from growth advocates in denial of reality. A turn of phrase representative of this denial is "sustainable growth." There is no such thing; it is an oxymoron.

The Limits to Growth structure at right shows that increasing population, "PopE", reduces "resource adequacyE" to in turn reduce "fractional growth rate". This is a balancing loop, "negative feedback," that limits the growth of population.



Below are graphs that illustrate the "Limits to Growth" behavior. There is always something that limits growth.


The graph below shows the growth of sunflowers. Like us, they don't keep growing taller forever.

Limits to Growth of Sunflowers from Business Dynamics by John Sterman, MIT

Saturation of cable TV subscribers:

Limits to Growth of Cable TV Subscribers from Business Dynamics by John Sterman, MIT

Saturation of physicians adopting pacemakers:

Limits to Growth of Physician Pacemaker Adoption from Business Dynamics by John Sterman, MIT

Overshoot & Oscillation

When delays are added to the system, what we get is overshoot with oscillations. It's like an underdamped mechanical spring & and weight system (e.g., a Slinky). This one shows oscillations in aluminum production.

Overshoot & Oscillation of U.S. Aluminum Production from Business Dynamics by John Sterman, MIT

Here's oscillation in the population of London.

Overshoot & Oscillation of Population of London from Business Dynamics by John Sterman, MIT

This is one I created while writing The Tangle of Growth showing oscillations in home prices. If this graph were extended to today, it would show another peak and the current home price collapse.

Overshoot & Oscillation of Home Prices

Overshoot & Collapse

When population increases, there's additional load on the system that actually erodes carrying capacity. Below is the structure of overshoot and collapse. It shows another balancing loop that destroys system capability. This results in enormous economic loss.

Limits to Growth with Erosion of Carrying Capacity Causal Loop Diagram

Here's an example of the the collapse of silver prices ... a speculative bubble.

Overshoot and Collapse of Silver Prices from Business Dynamics by John Sterman, MIT

Here's the overshoot & collapse of nuclear power capacity. Balancing loops always arise to oppose exponential growth ... eventually.

Overshoot & Collapse of Nuclear Power Capacity from Business Dynamics by John Sterman, MIT

Here's the overshoot & collapse of Atari sales. Remember Atari? Big deal at the time. Organizations can die not just because of expanding too fast; see Organizational Evolution: Successive barriers to growth for which organizations must be prepared (pdf 254K).

Overshoot & Collapse of Atari Sales from Business Dynamics by John Sterman, MIT

Here's the overshoot & collapse of haddock catch. According to Mr. Alston (above) no one has a right to say the productive capacity of this species, or even the species itself, should be saved. It's up to his "rational" "free market" to "decide" and who are you to question that?

Overshoot & Collapse of Haddock Catch from Business Dynamics by John Sterman, MIT

Here's one that's leading to the collapse of the U.S. economy. Taking out the blip from the dislocations associated with 9/11/01, the fit from 1991 through 2006 is an almost perfect exponential (R-squared is .9757, where perfect is 1.00). See the first graph at The Trade Deficit and the Fallacy of Composition.

I didn't know when this exponential growth would stop, but I knew it would. That's because extending the projections showed the trade deficit would be at ~50% of GDP in 2007 and at ~100% of GDP in 2012 (assuming even a rapid 5% GDP growth from 2005 on). Obviously, this could not happen ... and it did not ... 2006 was the high point. Even so, even at current levels, the trade deficit is massive anti-stimulus that occurs EVERY YEAR. Our "free market", "free trade" policy spells economic disaster and is the fundamental cause of U.S. economic woes.

Who thinks the U.S. can keep running up its "trade" debt forever? Only "free market", "free trade" advocates who blame government for everything.

The sequence: offshoring to increase corporate profits, loss of good jobs, lower wages, less government tax revenue and more fiscal debt, more personal debt. Then there are more calls for lower taxes and less government, even though the problem is not that people are taxed too much, they're paid too little.

Overshoot of the trade deficit. ... will it oscillate or collapse? My original bet was collapse, but temporary economic stimulus has allowed a rebound ... see the latest Jobs & "Trade" Data Update. Nevertheless, the U.S. can't keep running up "trade" debt forever.

There couldn't have been a better plan to destroy the U.S. economy than this.

Environmental Overshoot & Collapse

The overshoot & collapse of Easter Island is a textbook case. Here's John Sterman on what happened on Easter Island from Business Dynamics: Systems Thinking and Modeling for a Complex World, 2000:

... one of the most remote spots on earth, is a small island of about 160 km2 located in the eastern Pacific. Easter Island is most famous for the giant stone statues, known as moai, that dot the island.  ... prior to the arrival of the first humans, Easter Island was lushly forested and supported a diverse set of fauna, particularly birds. However, as the human population grew, the forests were progressively cut to provide wood and fiber for boats, structures, ropes, and tools, as well as to provide firewood.

There is clear stratigraphic evidence that soil erosion increased with deforestation as rain washed away the unprotected soil.  Without tree cover, wind speeds at ground level increased, carrying still more valuable soil into the sea. The erosion was so severe that sediment washed from the higher elevations eventually covered many of the moai, so that European visitors thought the giant statues were just heads, when in fact they were complete torsos averaging 20 feet in height.

The overshoot and collapse of Easter Island is but one of many similar episodes documented in the history of island biogeography. In each case, population growth led to deforestation, the extinction of native species, and unfavorable changes in local climate, rainfall, and agricultural productivity, followed by starvation, conflict, and, often, population collapse.

A precipitous decline in population had set in by about 1680, accompanied by major changes in social, political, and religious structures. Spear points and other tools of war appeared for the first time, and there is evidence of large battles among competing groups.  Some scholars believe there is evidence of cannibalism during this period.

Oh, boy ...

So the natives cut down all the trees, ...

Easter Island Tree Cover from Business Dynamics by John Sterman, MIT

... which led to the inability of Easter Island to maintain a population.

Easter Island Population from Business Dynamics by John Sterman, MIT

So to answer Mr. Alston's question, are people just

"... too dumb to realize that their "Golden Goose" could eventually be in danger. Instead of modifying their behavior -– ... they just power ahead, blindly pursuing profit" ...

... and I might add, "self interest"?

The answer is absolutely. They would. They have. They do.

Why would we do that? First, because we're myopic. We tend to see only local conditions and our own short-term well-being, not the big picture. And second, because our mental models are incapable of intuitively dealing with exponential growth and turning points.

The graph below shows how poor we are at recognizing the enormous speed of exponential growth. It quite literally boggles our minds.

Humans are poor at estimating exponential growth - from The Logic of Failure, Recognizing and Avoiding Error in Complex Situations by Dietrich Dorner, 1996

And the one below shows we're lousy at recognizing turning points. This is why forecasting is so difficult. Extrapolation yields pretty good projections, except at turning points,  where it matters the most.

Jay Forrester, the founder of the field of system dynamics, says that if one wants to improve, say, sales forecasting, get rid of the sales forecasting department. That's because they will lead you astray at the worst possible time.

Humans are poor at recognizing the point of overshoot - from The Logic of Failure, Recognizing and Avoiding Error in Complex Situations by Dietrich Dorner, 1996

Overshoot & Collapse of Planet Earth

We're doing the same thing to the planet earth thanks to the same kind of individually-logical, but collectively-irrational behavior that happened on Easter Island. We'd better pay attention, if we're going to keep "this island Earth" habitable. See Global Warming: An Inconvenient-to-Understand Truth and Global Warming: The Carbon Bathtub that explains the physics of the system.

Don't think humans are killing the golden goose? Think again:

The Sixth Great Extinction Is Underway—and We’re to Blame by Jeffrey Kluger, Time, 7/25/14
The Earth has been stripped of up to 90% of its species five times before in the past 450 million years. Now it's happening again—and this time there's no rogue asteroid responsible.

Not to worry though. The libertarian "free market" will save us.

Beware libertarian "common sense" ...

"Common sense is a
bundle of prejudices we
develop before the age of 18." 
Albert Einstein

Other resources:

To understand "free market" failures: System dynamics meets the press by Donella Meadows. It was an invited paper at the 1988 System Dynamics Conference, published in the 1989 System Dynamics Review. She describes how criticizing the "free market" in the conservative media is too often just not allowed. To do so is the economic right's version of being politically incorrect.

“Learning in & about complex systems,” by John D. Sterman, System Dynamics Review, 10(2-3), 1994.

Link to the 2009 conference I just attended ... there are links to many of the papers presented.

URL: http://www.exponentialimprovement.com/cms/commonsfallacy.shtml

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© 2003 Continuous Improvement Associates
Libertarian Denial of The Commons, Global Warming & Path Dependence
I Can Disprove 'Progressive' Anti-think
Government Dysfunction
"Fallacy of the Commons"
The Commons: What Tragedy? by Wilton D. Alston
Problems: A Society's or An Individual's?
Command and Control
Libertarian Quotes
There's No Collective or Social Reality
Objection to 'Explaining Liberal Principles'