Tuesday, October 26, 2010

I'm afraid I am a bit short on time...

I am sorry to have missed last week's discussion on Zero-Sum Gain. I hear there was extensive debate about the classification of the stock market; is the trade of shares likely to benefit everyone involved? This is a tough question that the great figures of economics can debate while I watch my shares in the market increase in relative value.

This week's article on Collective Theory is a gift in my attempts to explain away liberal jabbering on the tragedies of common resources. It happens that, while I was unfamiliar with the name, I have been discussing the conclusions of collective theory for quite some time. The Taylor Grazing act has been around for more than half a century. Permits are granted on a long term basis, giving incentive to use their rangelands responsibly in order to ensure continuing profit. Water resources in the Western US are allocated in a manner that forces an economic expression of ecological principles. As a final example, the permits granted to fishermen in the Gulf of Alaska are bestowed as a sort of property where holders have direct monetary incentives to adhere to sound ecological principles.

Naturally, there are a great number of examples that have nothing to do with natural resources where governments have managed to build an effective system to regulate collective action. My peers here may have a greater number of examples to nullify this selection; I hope there can be a discussion that I can bring back to those professors of mine who pick one perspective to indoctrinate with.

I suppose the question I find most thought provoking is: Is government by nature less capable of dealing with collective action? I am inclined to believe that there are cases where a central regime can more effectively promote wellness than the spontaneous cooperative relationships proposed by Ostrom.


  1. As I see it, Ostrom's research is all about getting past the simplistic private/public and market-failure/government-solution dichotomies that dominate the debate on common pool resource management. The question shouldn't be "when markets fail, can government do better?" or even the converse that "when governments fail can the market do better?" The question I see Ostrom raising is "under what conditions can individuals, through collective action, cooperate to overcome social dilemmas in the absence of an established external enforcement mechanism like the market's profit-loss motive or the State's coercive laws and regulations?" It's about the conditions under which self-regulating institutions (whether private or public) emerge and promote the spontaneous order and rules of the game that are conducive to social cooperation.

    Does that make sense?

  2. I am very appreciative of Ostrom's explanations of the complicated nature of collective theory. I've never believed it could be as simple as Dr. Todd's thought that people are always and inevitably out for profit; as she declared this 'fact' in lectures I would observe classmates signing the names of absent friends to provide attendance credit. This action offers debatable benefit to the forfeiter and considerable risk. Altruism is the most reasonable explanation for forfeiting activity.

    Ostrom cites extensive literature and draws conclusions that I could apply to this situation. In particular, the frequent interactions between the involved parties would support the altruism. The expectation of reciprocity may also impact a decision to sign an absent person's name. This counters the simplistic view that individuals are exclusively out for personal gain (surf the grading curve by destroying the grades of peers).

    It does make perfect sense. Camilla was right to compliment the readability of Ostrom's work. By my examples I hoped to provide case studies where collective action is regulated by government in a manner that preserves ownership and adds economic incentives to responsible decisions. This, in contrast to the myriad examples from Ostrom where existing interests in a situation cause economic incentives to be included in responsible decisions.

    I know that Ostrom's work here does not directly challenge external enforcement mechanisms as a system of overcoming social dilemmas. This particular article does address exactly the question that you have presented.

    I wonder about the implications of this research. Would it follow from these results that self-regulating institutions will inherently be more successful at maximizing desirable results than an institution influenced by external enforcement mechanisms? Reasonable arguments could be made for either perspective.