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Protecting Our Cultural Commons from Opportunism

In 1968, ecologist Garrett Hardin wrote a famous essay titled The Tragedy of the Commons. Borrowing from an example first employed by William Forster Lloyd in 1883, Hardin explained why a common pasture is prone to being ruined from overgrazing. His goal was to lay out the basic logic of what is now known in game theory as the commons dilemma. In doing so, he hoped to demonstrate why the problem of overpopulation is so daunting and would therefore likely require the exercise of government power to solve it.

These kinds of problems are prevalent in large societies and they are hard to solve. They are not the result of stupidity or irrationality. Most cannot be solved by creating rules against socially ruinous behavior even if everyone endorses the rules and agrees to obey them.

The reason why commons-dilemma problems are so hard to solve is that they are the result of perfectly rational behavior. A central tenet of economics is that individually rational behavior is normally consistent with promoting the common good. But when the benefits and the costs of actions are not realized by the same decision-maker, a wedge is driven between the common good and that which most benefits the individual.

Consider Hardin’s common pasture. Suppose there is an amount of total grazing that best promotes the common good, so the village establishes a rule limiting grazing to achieve that result. If we set aside morality, then the problem is that in all but the smallest villages, such a level of grazing will not be achieved because such a rule will not be followed. This is true even if everyone agrees with the wisdom of the rule. This is because each individual knows he can do even better if he overgrazes a little while everyone else follows the rule.

The crux of the problem is that the benefit of breaking the rule is enjoyed solely by the opportunist, while the cost of doing so is shared by the entire village. In this case, the benefit to the opportunistic farmer is that his cows get to eat an additional bushel of grass. The cost is that this leaves one fewer bushels of grass in the common to be shared by all farmers tomorrow.

This strong incentive to renege on an agreed level of grazing produces a paradoxical result. If morality is ignored—that is, if the rational promotion of self-interest is all that drives decision-making—then each farmer will rationally act to improve his welfare by breaking the rule if he thinks it very unlikely that he will be caught. But when they all do so, they all end up worse off because the common pasture is then ruined. This is called a dilemma because the behavior involved is perfectly rational for the decision-makers involved, so there appears to be no rational way out of the problem.

We naturally suspect that a small common pasture shared by only a few farmers is not likely to be ruined by overgrazing. Three farmers can easily devise the kind of communal solution that scholar Elinor Ostrom documented in her work. It’s easy to keep an eye on just two other farmers who use the same 150-acre common pasture. Even if one could get away with cheating, the benefit derived from doing so would likely harm the other two enough to arouse suspicion. And since actual farmers are not likely to be completely amoral, their innate moral reluctance to harm others would also likely arouse feelings of guilt for having harmed their neighbors noticeably.

But what about a 10,000-acre common used by 200 farmers? This is the same number of acres per farmer, but sheer size produces an important difference. Sheer size drives the effect of a little more grazing by one farmer on the whole commons to essentially zero. It is almost certain no one will even notice if a little more grass is eaten, so the innate moral reluctance to harm others will be rendered moot. But this is true for all farmers from the village, so they all do it, and because they all do it, the common pasture is slowly but surely ruined. As we consider ever larger villages and common pastures, the wedge between individual welfare and the common good widens, so the problem worsens.

How does Hardin’s common pasture relate to the cultural commons? In the cultural commons, each untrustworthy act amounts to taking advantage of the high-trust society that has been built up over the years. The benefit of doing so for any citizen might be great, but the harm done to a large, high-trust society is often imperceptible. Just as one more bushel of grass does not noticeably degrade a large common pasture, one more act of untrustworthiness does not destroy a large, high-trust society’s trust conventions or noticeably change its level of total output.

Suppose you discover a chance to exaggerate a tax deduction with no chance of being caught to get an additional refund of $500. The benefit to you is having another $500 to spend. In a society of 25 persons, this act would cost each individual $20. This might be noticed, and even if it wasn’t, your innate moral reluctance to harm others would likely lead you to expect to feel guilty.

But things are very different for a large society like the United States. In the United States the cost to other individuals is $500 divided by 325 million people. This is obviously too small to be noticed, and will not produce guilt due to harming another person. So the cultural commons of a large society is far more likely to suffer from trust-eroding opportunism than the cultural commons of a small society.

More generally, if the rational promotion of self-interest is unbridled by moral restraint, then everyone will act on all golden opportunities. This is the very definition of an untrustworthy person. In large societies especially, this ruins the cultural commons because when individuals behave in an untrustworthy way, they enjoy all of the benefit from doing so while bearing little or no cost. And even if individuals possess a measure of moral restraint due to their innate moral reluctance to harm others, the cost of experiencing feelings of guilt will be driven to nearly zero because there will be little or no harm done to those with whom these individuals can empathize.

This is devastating because such completely rational opportunism makes it irrational for people to presume that others are trustworthy. This destroys the high-trust society, which drives up transaction costs directly because we can’t trust each other. It also drives up transaction costs indirectly by making it impossible to sustain highly trust-dependent institutions.

For some time, the effect of group size on trust was largely overlooked in theoretical and empirical work because trust was typically framed in small-group terms. Even when using large samples of anonymous subjects, trust was still modeled in bilateral fashion. This meant the harm done to B from A’s taking advantage of B is fully or mostly borne by B, so the guilt A would expect to feel from harming B would be significant even if B were a stranger, because our ability to empathize makes us think of even strangers as individual persons whose lives matter.

More recent work considers the effect of group size on trust, and some of it takes care not to model trust in bilateral fashion. Broadly, the evidence shows that trust behavior weakens with group size, which obviously presents a problem for societies that hope to benefit from large-group cooperation. People appear to prefer limiting trust to small groups where they can most rationally count on others’ unwillingness to harm them. This suggests that overcoming the commons dilemma is likely to be very hard for large societies.

The most obvious example of how a common pasture’s upkeep might be neglected would be failing to adequately fertilize it. Similarly, a high-trust society’s upkeep might be neglected by failing to adequately cultivate pro-social behaviors and moral values, since individuals who possess these qualities are more likely to be good people who will provide a better start for building a good society, all else the same. But as concerning as this form of neglect is for a high-trust society, it pales in comparison to neglecting to invest adequate resources into combating the abuse problem.

Fertilizing to increase the productivity of a common pasture is futile if overgrazing is out of control. A village cannot spread enough fertilizer to beat an overgrazing problem any more than an individual can earn enough money to beat an overspending problem. A farmer who is willing to break the rules will just graze more cattle when increased fertilizing produces more grass per acre. Similarly, making better people by cultivating pro-social behaviors and moral values is equally futile if opportunism in general and untrustworthy behavior in particular are not strongly suppressed.

Suppose a firm has expensive machine tools that are frequently stolen. Buying better machine tools or buying them at a faster rate will not solve the problem; it will likely make it worse. What is needed is investment of resources into combating theft, in addressing the abuse directly by, for example, investing resources into security personnel. No amount of investment into machine tools that can increase the productivity of the firm will actually increase the productivity of the firm if the abuse problem is not addressed.

Analogously, no amount of investment into the cultural commons to cultivate pro-social behaviors and moral values will produce a high-trust society if the abuse problem is not adequately addressed. Lots of nice people can try to create a high-trust society by example, but if more than a small proportion of the population always acts on golden opportunities to benefit themselves at the expense of the common good, this approach cannot work. Rational people, even very nice rational people, will not extend trust to strangers if it is irrational to do so.

A large society that aspires to be a high-trust society therefore needs to address the abuse problem above all else. How can this be done? One way to produce this result is through a moral belief that behaving in an opportunistic way is inherently wrong (not from a moral belief that requires a calculation of what is morally best at the point of decision). For persons who have such beliefs, it is irrelevant that a forbidden act might bring great personal reward and noticeably harm no one.

Actually achieving this condition is difficult. It requires investment into the inculcation of moral beliefs that have little reason to come naturally to us, because in the small-group environment we evolved in, harm-based moral restraint was normally sufficient to produce adequate trust. Large-group trust is superfluous in small groups, so ideas pertinent to large-group trust but not small-group trust have had no reason to be reinforced by cultural natural selection.

Only once the abuse problem is addressed—by investing adequately into the inculcation of moral beliefs that can produce trustworthiness in large-group contexts—does it becomes worthwhile for a society to invest in pro-social behaviors and moral values (as well as building up the kind of virtues discussed by Aristotle, Max Weber and Deirdre McCloskey). The societies that adequately address the abuse problem and also invest heavily in such prosocial behaviors, moral values and virtues are the societies that flourish the most.

 

 

Excerpted from Why Culture Matters Most by David C. Rose, with permission from Oxford University Press, Inc. Copyright © 2019 by Oxford University Press. All rights reserved.

Featured image: Kolozsvár Braun Hogenberg, by Joris Hoefnagel, 1617

Comments

  1. These kinds of problems are prevalent in large societies and they are hard to solve. They are not the result of stupidity or irrationality. Most cannot be solved by creating rules against socially ruinous behavior even if everyone endorses the rules and agrees to obey them.

    […] If we set aside morality, then the problem is that in all but the smallest villages, such a level of grazing will not be achieved because such a rule will not be followed.

    Perhaps the problem, then, is large societies. You don’t need a food standards agency in a village of 150 people, since anyone who makes someone sick by carelessness or fraud will be whipped out of town. You need a food standards agency when you have a million people. But the same alienation which means that you need the agency also means that the people within the agency will be prone to bribery, laziness, bureaucratic inertia, and using the letter of the rules to pervert their spirit.

    Obviously we cannot return to villages of 150 people. But we are currently a very mobile people in the West, and disconnected from our communities, both vertical (history, sense of place) and horizontal (neighbours, local groups). If we were to stay in one place for longer, travel less, work with our neighbours, buy local goods and services… we’d be smaller scale again, and would have less need of large agencies and the like.

  2. This isn’t necessarily the problem, rather your second paragraph identifies it better. It is a combination of rapid population growth and the fragmentation of society. It will be more difficult to trust someone who you don’t know, especially in big cities my neighbors constantly move.

    In the US moving is somewhat part of the culture. I had a discussion with someone in the US about moving. They looked at me funny when I told them I plan to live in the same place for the next 20 years.

  3. A good article, but it doesn’t go far enough in detailing the problems of Opportunism. Because the other aspect of morality that should be considered when encouraging moral behaviour, is the extent to which amoral actors are willing to draw upon the funds accrued through revenue and taxation. Government funding is a precious resource with finite limits. Most of the OECD countries employ around 15 to 20% of the workforce in public sector jobs, but how many of those jobs are truly providing valuable services to the community, which the market cannot supply?

    There needs to be a system for Government that incentives workers to find cost and labour savings within their own departments, and allows them to put forth ideas under a shield of anonymity, so that they can benefit financially, without their bosses and coworkers finding out that they are the ones pointing at waste and inefficiency. There also needs to be a system for surveying the public and small business holders what aspects of Government they find onerous or intrusive, along with a questionnaire about what services they would value- because if you reassure bureaucrats that their labour will simply be reallocated to more productive use, rather than eliminated, they might have fewer qualms about getting rid of their coworkers jobs.

    Where liberals go wrong, is that they don’t realise that we are already well past the sustainable limit for Government spending, in terms of the revenue that it is possible to raise. It certainly doesn’t help that many suppliers, Unions and special interests seem to see Government resources as tantamount to a winning lottery ticket. Both healthcare and pensions for the elderly are in the process of skyrocketing in costs, and insoluble as problems because democracies are inherently unable to address them (because old people vote). Against this backdrop, it is vital to see Government revenue like a precious resource that has already passed it’s Hubbert peak:

    Unlike Oil, technology is unlikely to resolve this issue, as the incentives aren’t in place to naturally reduce headcounts in existing bureaucracies, to reallocate them into more productive uses of labour.

    But the principal benefit of leaner, more efficient Government able to articulate more services, is that it is more likely to reduce the type of behaviour that the article describes. The Laffer curve proves that as taxes rise beyond a certain point, revenue falls- but there is nothing that states that this tax ceiling is necessarily fixed. If citizens saw their Government commissioning ditch-digging and dredging to prevent floods (a sore point in the UK, at the moment), perhaps the more fortunate in society would be willing to part with a greater portion of their income, beyond the already high levels they pay.

  4. The two sentences contradict each-other. It’s possible for me to know 100 people. It’s not possible for me to know 1,000 people, still less 10,000 or 10,000,000. This is an idea which has been brilliantly expressed by David Wong.

    https://www.cracked.com/article_14990_what-monkeysphere.html

    Larger societies enable us to have universities, mobile phones, intensive care medicine and many other wonderful things. But they also give us bureaucracy and corruption, and all kinds of crime and so on.

    Ideally we would take the good from each while minimising the bad.

    As for Geary’s point, I think it’s in the nature of bureaucracies to perpetuate themselves - Pournelle’s Iron Law and all that.

    And this feeds into the theory of social complexity, that as societies become larger they become more complex to handle their size, and the systems they build to handle the complexity initially add value; the systems have a maintenance cost, but their benefits are much greater. But over time the systems themselves become more complex, and their cost rises until eventually they exceed the benefits they provide, and either the systems or the society itself collapse; this is of course a process of centuries.

    We can think for example of the way US healthcare sucks up twice the public funds of that of Australia, while giving slightly worse outcomes - it’s just a more complex system. Or we can consider defence technology across the West. I’m reminded of what the mayor of Curtiba Jaime Lerner said:

    “If you want creativity, take a zero off your budget. If you want sustainability, take off two zeroes.”

    But as I said, no bureaucracy will ever support its own diminution. At best you slow its growth for a while. At some point its costs so vastly exceed its benefits that people just scrap the entire thing. Since we’re talking about Hubbert’s peak, I would suggest that cheap surplus energy is required to enable a bloated bureaucracy. As that diminishes eventually it’ll all fall down - people will be forced to live a more localised less mobile life, and will come up with their own local systems.

    For example, what if the US federal government had a shutdown lasting more than a year?

  5. One day I’d like to write the oath of the bureaucrat, that everyone has to recite when they latch on to the public tit:

    I am now joining the public service. I understand that I will be eating the taxpayer’s lunch and that I am therefore the taxpayer’s servant, not her master. I understand that I am likely to become fat, lazy, stupid and slow as I become comfortable in my job. I will tend to want my department to become bigger and bigger. But I understand that, for all these reasons, it will become necessary from time to time for myself and my whole department to be purged. As a condition of my employment – with it’s generous pay, outstanding benefits and easy duty – I pre-authorize, and I understand, that I am subject to such purging as it becomes necessary, which it inevitably will.

    Something along those lines.

  6. either that or:

    • covered and uncovered people are mixed together in US “outcomes” while Australia covers everyone. If you compare people with insurance Australia vs. US, are Australian “outcomes” still better?
    • Americans are fatter than Australians. This is caused by differing modes of transportation, recreation, human genetic nonuniformity, food culture, working and sleeping hours, accessibility of outdoor areas, depression caused by economic inequality, etc., but not healthcare. It is pretty obvious from the advice given that your doctor does not cause you to be fat because all doctors everywhere give about the same don’t-be-fat advice, or at least I think they do. If not we can just fix that one thing and be done.

    I get that you’re trying to give an example of cost disease, and I’m nit-picking. Probably cost disease is real, but it’s extremely hard to pin down. If it does exist, it would make sense that it evolves resistance to efforts to pin it down.

  7. With reference to Newfoundland in particular, it was the traditional inshore fishermen who were way ahead of their governments on this. They wanted the big factory freezer trawlers out, they wanted the larger, non-traditional foreign fishing fleets out; it was the federal government and incompetent scientists at DFO who were saying that everything was OK. At least until the fishery collapsed. (I was in Nfld. from ‘86 to ‘93, it was an interesting time, to say the least.)

  8. You have a heart of stone, Chris. You never thought of the struggling artists of Europe who couldn’t feed their starving children with cheaper cod.

    Tsk-tsk.

  9. building up the kind of virtues discussed by Aristotle, Max Weber and Deirdre McCloskey

    Quillette readers should know that Diedre McCloskey is a truly rotten human being. I strongly recommend reading at least Chapter 2 of Alice Dreger’s book Galileo’s Middle Finger. In it you will find the horrifying story of how McCloskey and two other M2F transexuals attempted to destroy the career - and the life - of psychologist Michael Bailey. Bailey had the nerve to agree with an earlier paper that described some M2F transexuals as ‘autogynophilic’ - that is, men who were aroused sexually by thoughts of being women, being dressed as women, etc. This was seen as an attack on the legitimacy of transgenderism, and thus Bailey had his professional career attacked, as well as finding himself accused on the Internet of sexually abusing his own son. Nice, people, no? Get the book through your local library and learn just how bad it was, and just how vicious and unhinged McCloskey and her partners were/are.

    Please note: in the past I have enjoyed reading McCloskey’s economics books. I’d still recommend them.

  10. One more example of a great Quillette topic, pretty good article, but sadly, a ridiculous conclusion. The solution to people cheating is to “incluclate moral beliefs”? That has to be the dumbest idea I have ever heard. Fortunately, it’s not practiced hardly anywhere I can think of. What is practiced is punishment.

    Even in the animal kingdom, cheating exists, and even meerkats aren’t mean enough to subject a fellow meerkat to a values training seminar. Cheating animals are shunned, kicked out of community for a time, then usually, allowed back in. Punishment with restitution.

    It’s not that hard of a concept and one pretty basic to economics. Create a set of rules that are as objectively clear as possible and as easy to follow as possible. Any farmer can have up to 30 sheep on the commons during one day/month, no more. When you come graze, you sign your name on the registry. Very clear rules, very easy to follow, easy to enforce. If someone is caught grazing without having signed up, they lose grazing rights for x number of months. If someone comes more than once/month, they lose grazing rights for x months. This really isn’t rocket science. As long as the punishment clearly outweighs the benefit modified by the likelihood of getting caught, this is pretty straightforward.

    There are plenty of situations, however, that are much more complicated. Air pollution, for example, can come from a wide variety of sources so the rules about what’s acceptable are complicated. Additionally, it’s much harder to monitor and thus much easier to cheat. But the basic principles still apply. Make the rules as clear as possible, reasonable requirements (like signing a registry when you come to graze a field) are essential, and in situations like this, the cost of getting caught will likely need to be much higher given that the chance of getting caught is much lower.

    The system of clear rules and punishment isn’t perfect and it’s obviously gamed all the time, but not because of the unworkability of the system. I would argue that the most likely problem here is the almost inevitable corruption of government. I would bet that a huge part of the true difficulty of the commons comes from the power inherent in monitoring and enforcing communal behavior. A shared common grazing area can live with a few cheating farmers. But if it’s managed by a corrupt sheriff who sells additional grazing days for bribes or blocks people from their rights unless they pay bribes, that’s a much bigger (and more frequent) problem. And when the management in question is considered wasteful, poorly managed, untrustworthy and distant, like the IRS, it engenders cheating behavior.

    There are many examples of commons being shared effectively and fairly when the ability of government to use rule enforcement for corrupt gain is limited or when the system of oversight is local, fair and reasonably well executed.

  11. As large corporations vertically integrate, they become similar to governments: because there are no market prices within the corp., they can’t do the necessary economic calculations.

  12. I still have business cards which say “Disney Interactive” on them. (They also say that I was a Senior Systems Engineer with them, back in the mid-Nineties.)

    Thanks for the chance to do some bragging. :slight_smile:

  13. Cost transparency is something that has been proposed recently, at the federal level. Oh boyyyy are they fighting it. Some of the most ridiculous arguments are being made against it. My favorite is ‘it’s too complicated’. Sure, in 2019 it’s too complicated to post a freaking price list.

  14. In Australia, you can go to whatever GP or specialist you like, though of course they have different prices. Essentially no specialists bulk-bill, you’ll always have to pay something. But note too what I mentioned: many of them work in both. There are obstetricians in private practice at Monash Private, if during your Monash Public visit to give birth you have complications, the private obstetricians quite literally walks across a corridor into the public to come and help you.

    I agree. Health like education is something which by its nature, you can always spend more money on it, whether public or private, you can always argue for more staff, better-paid, better-trained, more hospital beds, more machines that go ping. Obviously there’s a point of diminishing returns, and just as obviously there will be - as in the rest of the economy - all sorts of rent-seeking behaviour, regulatory capture, people trying to insert themselves as useless middlemen, and other manifestations of ordinary old greed. This needs restraining, whether by government or market forces. And I think as you said a mix of the two works a bit better than either on their own.

    Per capita public healthcare spending and per capita GDP, in PPP USD
    Australia: 4,708 vs 53,379, ie 8.8%
    USA: 9,892 vs 65,122, ie 15.2%

    Nup.

    Also of interest, if you look at government education spending in Australia and the US, it’s 5.3% vs 5% of GDP. US outcomes of education are worse than Australia’s for general education, but better for producing highly-educated people. Overall, same-same. But it does demonstrate that it’s not just the sheer pile of cash you throw at an issue, it’s also how you spend it.

    You are evidently not spending your healthcare money as well as you could.

    Thus my original point:

    The US is a larger country than Australia, so its systems will likewise be larger, and tend to greater complexity. The more parts a machine has, the more friction, and the more things which can break down. Some parts of society are so politicised and offer so many opportunities for graft that their cost inflates even as their effectiveness and efficiency falls.

    In the US that’s healthcare (among other things), in Australia that’s roads and rails. Your healthcare is excessive complex and has inflated prices, our road-building and railways are excessively complex and have inflated prices. There are historical reasons for both. However, these sorts of problems always appear in large societies.

    If we scale down, many of these problems will disappear.

  15. Interesting, I thought ‘marriage mate’ was primary. Anyway, you can’t be too careful around those Ozzies.

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