| Source: Continuous Improvement Associates http://www.exponentialimprovement.com/cms/commonsfallacy.shtml Libertarian Objections See also below: Objection: 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. Response: 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. Examples: 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: 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. There are two ways to deal with this structure: 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.
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. At Mr. Alston's archives the title of this article is
So here, the 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)
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. (cont'd) 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:
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:
Well, it's not at all clear to Mr. Alston or to libertarians in general. He writes about me:
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. He asserts
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 Composition. Individually-logical actions can be collectively irrational. 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. 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:
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:
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,
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
Summary: 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.
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.
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:
Below are examples of exponential growth. The graph below shows the exponential growth of world population.
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.
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.]
Here's the change in vehicle miles traveled in the U.S.
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".
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:
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:
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.
Saturation of cable TV subscribers:
Saturation of physicians adopting pacemakers:
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.
Here's oscillation in the population of London.
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 & 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.
Here's an example of the the collapse of silver prices ... a speculative bubble.
Here's the overshoot & collapse of nuclear power capacity. Balancing loops always arise to oppose exponential growth ... eventually.
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).
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?
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.
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:
Oh, boy ... So the natives cut down all the trees, ...
... which led to the inability of Easter Island to maintain a population.
So to answer Mr. Alston's question, are people just
... 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.
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.
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. Not to worry though. The libertarian "free market" will save us. Beware libertarian "common sense" ...
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Here is the "Tragedy of the Commons" structure for fishing.
