TT's Lost in Tokyo — by TokyoTom

Yes, another BP post!

I was a bit critical in my last post of Ron Bailey’s suggestion that a gross “cost-benefit” analysis was a sufficient basis for supporting risky ocean drilling activities, without regard to the institutional structure (a government-managed commons) and incentives at play (profits accruing only to oil firms and royalties to government, but resource users facing downside risks with no rights to disapprove or exercise oversight).

Now I’m puzzled, because in a June 8 post at Reason Online Ron specifically acknowledges the very important research of Nobel Prizing winning political economist Elinor Ostrom (see my posts on the relevance of her work here) on the ability of communities of users to effectively manage commons resources and so to dodge the “tragedy of the commons” outlined by Garrett Hardin. Ron’s post makes particular note of the possibility of effective cooperative management of fisheries, in contrast to the tragically counterproductive  mismanagement by governments of collapsing fisheries and refers to an excellent study by libertarian law prof Jon Adler that is very relevant to the mismanagement by the federal government of marine resources in the Gulf. Here’s the salient port of Ron’s post (emphasis added):

The good news is that research shows that just talking can make Hardin’s logic of ruin anything but inevitable. In fact, historical research shows that Hardin’s overgrazed meadows are rare. For example, the tragedy of the commons didn’t occur in Medieval England because local herdsmen negotiated a set of rules (communication) and established enforcement mechanisms (punishment) to allocate access to scarce pasturage among themselves.

Elinor Ostrom and her colleagues have repeatedly found the same thing in their field work. All over the world, local people talked among themselves and worked out serviceable rules for protecting and benefiting from common pool resources, like streams, forests, and fisheries. Take the famous case of the harbor gangs among lobster fishers in Maine. Although the state government says that anyone is legally permitted to catch lobsters commercially, the harbor gangs restrict access by outsiders by cutting the buoy lines to the traps set by interlopers. This informal management results in a more sustainable fishery and boosts the incomes of the local fishers. A study published in the Proceedings of the National Academy of Sciences last fall found that local communities are much better at managing forest commons than are governments. In contrast to government management, local communal ownership boosted incomes and forest sustainability.

Ostrom previously noted that large studies from “around the world challenge the presumption that governments always do a better job than users in organizing and protecting important resources.” In fact, a 2002 study correctly noted, “The overall state of the world’s fisheries is much worse today than 45 years ago, even though most fisheries have come under government regulation in this period.” By preventing local people from talking among themselves, it is often the case that governments actually create prisoner’s dilemmas over resources that result in the tragedy of the commons.

Here’s to hoping that Ron and other libertarians start recognizing and elucidating  the very negative role that the government has played in the Gulf crisis, by preventing fishermen, oystermen, shrimpers and the like from exercising control over the resources that sustain them, but has instead very tragically favored – and ineptly/corruptly overseen – oil companies, thereby skewing incentives, frustrating management between fishers and oil companies, and setting up directly the presently unfolding tragedy of the commons.

The problem that we see in the Gulf and other offshore drilling is very much akin to the “Avatar”-like problems of mineral exploitation elsewhere around the world: oil or other mineral extraction companies operate without extensive property rights but on the basis of government approvals, with the companies and governments/elites  reaping the rewards, but with non-consenting natives bearing all of the downside risks. Gulf coast fishermen and residents, meet the indigenous peoples of Ecuador, Nigeria, and New Guinea.