[Ragnar]

This is a tedious explanation, though extremely important. A better writer could surely give a more clear concise explanation. But are there any flaws in my reasoning? Please feel free to expand or rebut.

For a long time I’ve written off incessantly growing government as the product of dishonest politicians. Giving deals to their buddies at the expense of the taxpayer. Realizing that more government power gives incentives to more businesses to pay them off, or to contribute to the candidate who will not hurt their bottom line as bad as the opponent. This is definitely part of it, but even if all the politicians were honest, it’s the big spenders that will rise to the top due to the tragedy of the commons.


The tragedy of the commons asserts that individuals will privatize the benefits of a communal asset, and externalize the costs (that is take the benefits from it, and pass the cost off to the community). The traditional explanation of the problem is about farmers grazing their cattle on communal lands. Tom Bethel in his book “The Noblest Triumph” gives what I think is a better example.

Imagine we have an apartment building with 100 units, all of the same size. To save cost when setting up the utilities in the building only 1 set of meters was installed. Every month the bill for various utilities is divided by 100 and charged to the individual tenants. The problem is that the incentive for frugality in utility usage is completely nullified.

Frugality is effectively punished, and waste is rewarded. Say you cut your utility usage for the year by $300 by using little heat, or air conditioning, and always shutting off lights when not in use. You really did deny yourself $300 worth of utilities, suffered through the heat and the cold, but for your sacrifice you saved yourself a total of 3 dollars. All the other tenants also save $3 due to your frugality. Do you think many tenants will make the choice of being frugal? No, they will all realize that utility usage only costs them 1/100th of the market value, so usage will skyrocket. Utility usage for the building will be far higher than in a building with individual meters (i.e. where utility costs are privatized).

A more extreme example would be a group of 100 people pooling the cost of buying their cars. Were I a member of that group, I would go out and buy a Lambourghini tomorrow, what the hell it only costs me ~$3000. The problem is everyone else would realize the same thing and we all go broke.

How does this apply to government spending and our politicians? Lets make a simplified hypothetical model of the country and its population. Assume we have 100 million people in the country:

100 million people in the country
10 States of 10 million people.
10 cities (per state) of 1 million people.
10 localities (per city) of 100,000 people

Your locality is in need of a new sewer system, which will cost about 10 million dollars($100 per head). Your local politicians find a way to push the cost off to the City, saving their constituents 90% on the sewer system($10 per head for the entire city). Unfortunately every other locality will likely have an equivalent problem to push off on the city, which will eat up that 90% savings to your locality. So it’s a wash. It would have cost the same amount either way.

The problem is that since your locality is only paying for 10% of their improvements the incentive for every locality is to make 10 times more improvements. ($100 million per locality, 1 billion for the city, $1000 per head) All the communities do this and impoverish themselves. Now we have a real problem, how do we get out of it?

Our new politician John Q. Pennypincher decides the answer is to bring spending back to the locality level. His policies make it through, so now we will pay for our improvements ourselves. Due to bringing them closer to being individualized we realize spending $100 million (1000 per head) is ridiculous and curtail improvements back to $10 million worth($100 per head).

Here is the problem the rest of the communities are still passing the cost of their improvements off on the state. Instead of paying $100 and saving $900 per citizen our locality ends up paying $100 in local taxes and $900 to the state (for all the other localities), we spent the same amount and accomplished only 10% of the improvements of the rest of the city. While those that did not curtail their improvements saved $100 and got all their improvements. Pennypincher will never get re-elected. The community will elect someone who will again pass the cost off to the city.

This scenario is replayed all the way up the line. In this system cutting costs is a benefit to the whole, but punishes any group that does so. The further up the line you can push your expenses, the greater the benefit to your community, and the worse the harm to the entire country.

These incentives make it impossible for any frugal individualist politician to make it to high office. They are weeded out along the way because their policies actually harm whatever community elects them, while at the same time they are the only policies that can benefit the country.

Unfortunately I see no realistic solution. There are 2 ways out, what I see as most likely is government growth continuing incentives driving politicians to spending us further and further into poverty and fascism, till economic collapse, and subsequent restructuring of the government.

The other possibility though I find it highly unlikely is a consensus of the population waking up, realizing that these incentives will lead government to spend us into fascism and collapse. Doing what they can to influence a curtailing of the scope of government, empowering and electing true individualist politicians (as opposed to Republicans who want 1% less govt. than democrats). Finally proactively forcing restrictions on government action and funding. Unfortunately this would take people acting against their short term interests and concentrating on the long term, which is why I find it unlikely.

[DTguitarist99]

Good post, but I also think a major part of it is pork-barrelling (wasteful spending by politicians on their home states). Politicians always have to be concerned with their constituency, and usually that conflicts with the interests of the nation as a whole. The politician is rewarded when he steals the money of the taxpayers to pay for wasteful programs in his home state/district. The politician, when he tries to get reelected, can then list all the things he did for his state/district when he was in office. If he didn't do any pork-barreling, it would look like he did nothing worthwhile, even if he was a major contributor to important legislation. Since that legislation is passed by groups of politicians, no one politician can claim credit for it. A politician can claim to single-handedly introduce all sorts of programs for his constituents, though. The constituents will be impressed and will likely vote for that politician.

Voters have to wake up and realize that even if it seems like pork-barreling benefits them, ultimately it harms them. Like ragnar said in his post, what we're dealing with is a large pool of money, the taxpayers money. Since that money does not belong to the politicians, they are inclined to waste it. Any pork program will involve large amounts of waste. The more the federal government spends, the more it wastes. And if voters keep demanding that their politicians spend more on their home state, without being concerned about waste, then there will be more and more wasting of the taxpayers money.

[Proctor]

I see as most likely is government growth continuing incentives driving politicians to spending us further and further into poverty and fascism, till economic collapse, and subsequent restructuring of the government.

Well, either that or the city council or national government will pass a law that prevents localities from shifting the cost higher up the ladder.

[Ragnar]

Isildur, good point, the incentive to waste goes both ways, for all but the president (who would benefit from economic progress overall due to frugality)

Kolzene, I never explicitly recognized why capitalism and fascism are sometimes grouped together, because Fascism IS Socialism. Now I see that it is because capitalism attempting to become "socialized" generally will not take title from the owners, but will merely take defacto ownership by controlling the owners in relation to their property rather than taking title directly for itself. i.e. fascism.

I have to disagree about fascism and socialism being the 2 paths though. Fascism and socialism lead to the same place. The 2 paths are capitalism and socialism (which includes fascism as one route to it). I'm just showing that the incentives close off the capitalist path, leaving only 1 place to go.

Well, either that or the city council or national government will pass a law that prevents localities from shifting the cost higher up the ladder.

Thats part of my point, that for any part (i.e. one county, city, state) to do so is against their interests, because they are still forced to pay their collective superiors for that which they don't recieve any wealth from.

The way I see out of this incentive structure is for taxation to be charged to the groups at all but the local level, all individual taxation would be funneled through their locality. Not sure whether it would work or not, I just began thinking of it last night.

For example lets say we have 30% federal taxes, 5% state, 5%city, and 5% local, instead of all these taxes being collected from the individual directly, the local (or smallest collective) would collect all 45% of it, send 40% to the city, which would forward 35% to the state, and the state sends 30% to the fed. This gives each level the incentive to restrain rising costs at the expense of their constituents. All levels have the ability to (and an interest to) refuse to fund wasteful spending at the higher levels by refusing to pay for them.

This holds the larger collectives in check and now each locality benefits from its frugality. At this point though the free rider problem creeps up. Some states might decide to not pay the federal government anything, but they still get the benefit of military protection.