Тег: Tragedy of the Commons

What to do with the “free rider” effect in the case of ancap in the sphere of defense, security, and law?

Evgeny Fishkin

I have had to answer something like this many times, but it’s easier to answer briefly once more than to search for links to old posts.

General recommendation: increase the level of decentralization. The more decentralization there is in a particular sphere, the fewer free riders there are—there are no incentives left for them.

Decentralization in the sphere of defense means arming oneself. To a neighbor with a rifle, you are no longer just a neighbor, but also someone who will provide friendly cover fire. There is a non-illusory danger of an attack by a serious enemy—this is a great excuse for regular team-building activities. Have a few shots, then go drink beer.

Decentralization in the sphere of security is, conventionally speaking, about keeping private keys yourself rather than on an exchange. Installing an alarm system in your apartment so that security you’ve hired arrives on call, rather than some state police. And so on.

Decentralization in the sphere of law means settling things yourself, and if you cannot, turning to those you trust, rather than those appointed by other people. Most conflicts are resolved out of court even with a state, although, one would think, here is a centralized conflict resolution service provided to you, why not use it? Inconvenient? Exactly!

Why doesn’t this picture surprise us? Because it is natural behavior when there is no state.

Online bullying

I was asked to comment on the case of Zalina Marshenkulova.

I will briefly outline the facts. Till Lindemann filmed a music video that apparently contains (I haven’t watched it) sex scenes. Several actresses turned out to be Russian; they were deanonymized, their contacts were posted on 2ch (I don’t read it), and calls for violence were made right there. Zalina asked for the contacts to be removed, after which 2ch began calling for violence against her as well.

I’ll start by saying that calls to remove anything from 2ch are pointless. The main point of this garbage heap is that things are posted there anonymously and without censorship. If 2ch were to introduce systemic censorship, people would simply move their trolling to a less stifling platform. If the owners of such platforms are persecuted, people will start writing on the blockchain of some Steam or Voice.

I recommend everyone reread the chapter from Mechanics of Freedom published the day before yesterday about the public good. When someone writes a post on 2ch, it is a private good: the author receives all the benefits from the publication that interest them, and the opinion of others either doesn’t interest them at all or is one of the benefits for them. When someone tries to systematically fight certain types of publications on 2ch or deanonymize their authors, it is a public good. Such activity can bring small benefits to a large group of people, but the person who puts in the primary effort spends disproportionately more than the benefit they personally receive. Others spend nothing, except for the money to buy popcorn.

Public goods always suffer from underproduction. I have encountered a similar problem in my own chat. I positioned it as a place where one could chat with me on random topics or clarify something regarding the channel’s publications. No ideological filtering was intended; the only request to the public was to remain friendly. It’s unknown what the majority of the public wanted, but the targeted efforts of a small group were enough to turn the chat into a rather unpleasant place for me. I barely suppressed the urge to delete the chat, transferred the creator rights to another person, and since I cannot maintain friendliness toward its participants right now, I simply archived it. Mockery, stupid repetitive copypastas, attempts to fish for more personal information for deanonymization or to demonstrate my incompetence—all these are things that bring me no joy and are extremely costly to fight, so it’s easier for me to abandon the chat entirely than to try to ensure a pleasant atmosphere there.

But as soon as someone tries to bring something from the internet into real life, the situation reverses. An attempt to harass a person in real life over some nonsense attributed to them on the internet is the production of a public evil. All the costs fall on the perpetrator, while the internet just laughs, especially if the perpetrator fails in a funny way. It doesn’t even matter if they succeed in humiliating the target of the harassment in a funny way or fail miserably in a funny way. The attacker gains no significant benefit. For the defending party, self-defense is a private good from the production of which they receive all the benefits, and therefore they are fully motivated to invest in it.

It is thanks to this system of economic incentives that we have the internet as a space of relative freedom, including for stupid aggressive jokes—and offline as a space of relative safety, where one can actually get hit for stupid aggressive jokes. Responsibility for aggression online and impunity for aggression offline are not perceived as the norm. And the only thing we can do to ensure there is less stupid aggression on the internet is to work on the general softening of manners.

An example of stupid aggression from the internet

When is the tragedy of the commons a good thing?

In the script for the video about the free-rider problem and the tragedy of the commons, I emphasized how bad this is for users of a shared resource and what strategies have been developed to combat it. Now, I want to talk about a case where the tragedy of the commons is actually a good thing, and fighting it is bad.

The entire focus is on what exactly constitutes the shared resource. Imagine a rare resource such as consumer demand. Everyone has the opportunity to produce a certain good or service, sell it, and make a profit. While the market is empty, a few producers will make superprofits, and the thirst for gain will attract many other suppliers to this patch. Competition for the consumer’s attention quickly leads to a decrease in margins. To maintain profit, volumes must be increased, and this finally exhausts the shared resource. The consumer receives an enormous abundance of cheap goods, which they are ready to push in the greatest possible quantity, as long as the consumer is willing to buy. Here is a “buy one get one free” promotion, here is an installment plan, here is a sale, here is unlimited access for a fixed subscription—just buy it.

Admit it, if you put yourself in the consumer’s shoes, this phenomenon cannot help but be pleasing. But the producer, for whom this is a terrible tragedy of the commons, tries to fight it. As we know from the video, two strategies are possible here: privatization and cooperation.

Privatization means the appropriation of consumer demand in a certain industry by a specific producer—in other words, the creation of a monopoly. Other suppliers are forbidden from selling certain goods and services to consumers. That’s it; now there is no need to chase sales volumes, and superprofits can be earned with fairly modest investments in production. However, part of the profit will have to be invested in protection against competitors, and they are not idling, so these costs will tend to increase.

Cooperation means that anyone can satisfy consumer demand, but a number of restrictions are imposed upon it. This is usually expressed in strict industry standards that effectively secure the dominant position of those players who are ready to invest significant capital into production, while outsiders are filtered out. However, a lot of attention must be paid to controlling that producers do not cheat. In this regard, a recent case comes to mind with some European auto concern that faked data on the exhaust emissions of its engines to save money on complying with environmental standards. But the classic example is, of course, medieval guilds. The quality of their goods was high, production volume was low, and profits were magnificent. Only the black market eventually undermined their dominant position, and a tragedy of the commons occurred, which we know as the Industrial Revolution.

So, when you are told about the harm of competition and the benefits of cooperation, as well as the inevitability of natural monopolies, it is important to understand: these people are quite sincere and not fools at all. It’s just that you are a resource to them.

A Christmas market is a tragedy of the commons in all its glory: consumers are happy, they are lured in with all their might, and they look more than they buy

The free rider problem and the tragedy of the commons – new video

Check out the new video on the Libertarian band channel! This time, our focus is on two interconnected terms: the free-rider problem and the tragedy of the commons.

The free-rider problem is the bane of any community. One step to the right or one step to the left, and you either have the tragedy of the commons with the collapse of any productive cooperation, or the state with its total slavery. In the video, we outline the main approaches to solving the problem.

And at the beginning of next year, the final episode of the second part of the cycle on libertarianism awaits you, in which I will try to reveal the image of our main enemy—the state.

What about water supply and housing and communal services in a free market?

анонимный вопрос

Let me talk only about water supply so as not to dilute, pardon the pun, the topic.

To provide a city dweller with water, it is necessary to:

  • find a water source
  • extract the water
  • deliver the water to the consumer

For all of this to work in a free market, each of these stages must be able to be carried out without coercion and bring profit to the person who carries it out. Now, let’s go through the points.

Find a water source

Given the presence of bodies of water, this is a relatively simple task, so let’s consider a more difficult case: searching for an artesian basin. To carry out this work, it is necessary to hire a specialized organization that will deploy its recording equipment on the ground, use it to obtain data from depth, process it, and draw conclusions about where the boundary of the basin is and, therefore, what the water reserves are. That is, it is necessary to reach an agreement with the owners of the land where the survey will be conducted, pay them the agreed compensations, and carry out the exploration. This task is not unsolvable.

In Russia, where all subsoil belongs to the state and land can belong to private individuals, geological explorers pay landowners for land damage, and the profit will ultimately go to whoever acquired a license for extraction from the state. In a free market, it would more likely be like in the USA, where subsoil rights belong to the landowners, meaning they are even more interested in the exploration of the subsoil beneath them. Also, as far as I could understand, the data obtained during exploration possess a certain redundancy, and therefore the disagreement of some landowners or the impossibility of surveying due to the location of buildings on the land will not significantly hinder obtaining a result. In other words, at this stage there are no particular difficulties for the market—there are ordinary entrepreneurial risks, where the money for exploration is paid, but no basin is found.

Extract the water

Here, again, the greatest theoretical difficulty is the situation involving an artesian basin. The thing is that it is usually large enough that the water intake wells exploiting it can be located on the land of different owners. If there are many consumers and little water, it is important to prevent the tragedy of the commons, otherwise the source will not be able to replenish naturally due to excessive extraction.

Several such cases are analyzed in detail by Elinor Ostrom in the book “Governing the Commons”, where she presents the main principles that extraction organizations must adhere to in order to prevent the degradation of the resource. Here, they will need a fixed agreement on water extraction norms, a monitoring body, and the ability to stop abuses, using a graduated system of fines. Moreover, interestingly, it is very important that there be a possibility for contract enforcement, but no less important that no state attempts to interfere in the process of concluding the contract itself. That is, for the confident resolution of such types of property conflicts, the existence of a developed free market is not just desirable, but absolutely vital.

Deliver water to the consumer

The question of who will lay and repair the water pipeline is similar to the question of who will build roads. Roads are built by those who need them, namely the owners of the real estate to which the road leads, because it increases their value. In the same way, a water pipeline passing through a plot of land increases its value, because it means that a water-consuming facility can be built on the land and then quickly and easily connected to the water supply.

So the picture here will be roughly the same as at the exploration stage. Either the landowners pay for the pipes on their land themselves, or, at least, they grant the water supply organization permission to lay the pipes, for money or free of charge—depending on what they agree upon.

Summary

Roughly the same approach can be applied to other infrastructure objects and other spheres of housing and communal services. The process of providing a service is broken down into stages, each of which must bring profit. At each stage, property conflicts may arise, which must be resolved by concluding contracts, and these contracts will either provide direct mutual benefit, such as a land lease agreement for laying communications, or be the result of a compromise, such as an agreement on water extraction quotas. And all these complexities, of course, do not compare to the complexities of organizing the same thing through central planning mechanisms—that is where the task is truly solved haphazardly: it consumes tax money and leaves the consumer dissatisfied.