A Level Economics 51: Tragedy of the Commons

1. Importance of Property Rights in a Market System:

Property rights refer to the legal ownership and control that individuals or entities have over assets, resources, and goods. In a market system, property rights play a fundamental role in facilitating efficient resource allocation and promoting economic growth. Here's why property rights are essential to the functioning of a market system:

• Incentive to Invest and Innovate: Secure property rights provide individuals and businesses with the assurance that they can enjoy the fruits of their investments and innovations. When people know they will reap the benefits of their efforts, they are incentivized to invest, take risks, and innovate, leading to increased productivity and economic growth.

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• Clear Ownership and Transferability: Property rights allow for clear ownership and transferability of assets. This enables individuals to buy, sell, or trade property, goods, and resources in the marketplace, promoting efficient allocation based on supply and demand.

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• Resource Allocation: Property rights facilitate the efficient allocation of resources by providing a framework for individuals to decide how to use and manage their property. Resources flow to their most valued uses as people make decisions based on their preferences and economic incentives.

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• Encouraging Specialization and Trade: With secure property rights, people can specialize in the production of goods and services they are most efficient at producing. This specialization leads to increased productivity and fosters trade, where individuals can exchange their products or services for other goods they desire.

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• Enforcing Contracts: Property rights are essential for enforcing contracts and agreements. When people trust that their rights will be protected, they are more likely to engage in transactions and trade with others, fostering economic cooperation.

2. Tragedy of the Commons and Market Failure: The tragedy of the commons is a situation where a commonly held, shared resource (such as a grazing pasture, fishery, or air and water quality) is overused and depleted because no individual or group has exclusive property rights over the resource. This leads to market failure and inefficiency due to the following reasons:

• Lack of Exclusivity: When no one owns exclusive rights to a resource, there is no incentive for any individual to protect or preserve it. Each person acts in their self-interest, using the resource to their advantage without considering its long-term sustainability.

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• Overconsumption: As more individuals use the shared resource to maximize their own benefits, it leads to overconsumption and depletion of the resource beyond its sustainable capacity. This creates a situation where the resource is eventually exhausted or damaged, negatively affecting everyone.

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• Negative Externalities: The tragedy of the commons results in negative externalities, where the actions of one individual negatively impact others. For example, overfishing in an unregulated fishery leads to reduced fish populations, affecting the livelihoods of other fishermen.

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• Inefficiency: The overexploitation of the commons creates inefficiencies in resource allocation. Instead of being allocated to its most valued uses, the resource is depleted and underutilized, leading to lost economic opportunities and social welfare.

Market Failure and the Role of Government:

The tragedy of the commons is an example of market failure because the free market cannot efficiently allocate the shared resource when property rights are not well-defined. In such cases, the government can intervene through regulation, establishing property rights, or implementing policies to address the overuse of the common resource. By creating property rights or setting limits on resource use, the government can incentivize sustainable management and prevent the depletion of shared resources, leading to more efficient resource allocation and improved social welfare.

---Inequities in Property Rights


In modern-day societies, property rights can exhibit inequities that result from various factors and historical developments. These inequities can lead to disparities in access, ownership, and control of property, exacerbating social and economic inequalities. Here are some ways in which inequities in property rights manifest:

Historical Disadvantages: In many countries, historical injustices and discriminatory policies have led to certain groups, such as indigenous populations or marginalized communities, being systematically denied access to land and property ownership. As a result, they face ongoing disadvantages in acquiring and holding property.

Land Concentration: In some regions, a significant portion of land is concentrated in the hands of a small elite, while a large section of the population has limited access to land ownership. This concentration of land ownership can perpetuate economic disparities and limit opportunities for social mobility.

Urban vs. Rural Property Rights: In urban areas, property rights may be better protected and enforced compared to rural regions, where informal or customary land tenure systems prevail. This disparity can lead to greater insecurity and vulnerability for rural communities in terms of land ownership.

Gender Disparities: Women often face discriminatory property laws and cultural norms, which restrict their rights to own and inherit property. These gender disparities can limit women's economic independence and exacerbate gender-based inequalities.

Inheritance Rights*: Inequity in inheritance rights is another aspect of property rights that contributes to social and economic disparities. In some societies, inheritance laws may favor male heirs over female heirs, perpetuating gender-based inequalities in property ownership and limiting financial security for women.

Lack of Legal Recognition: In some countries, certain types of property, such as communal land or informal settlements, may lack legal recognition. This can lead to insecurity of tenure and vulnerability to forced evictions, particularly among vulnerable populations.

Gentrification: In urban areas, gentrification can result in the displacement of long-standing communities due to rising property values and rents. As wealthier individuals move in, property prices increase, making it difficult for existing residents to afford to remain in their neighborhoods.

Addressing these inequities in property rights requires comprehensive policy measures and legal reforms to ensure fair and inclusive access to property ownership and control. Governments can enact laws that protect the rights of marginalized groups, strengthen land tenure systems, and ensure gender equality in property ownership. Additionally, land redistribution programs, affordable housing initiatives, and measures to address gentrification can help promote more equitable property rights.

In conclusion, inequities in modern-day property rights are rooted in historical legacies, discriminatory practices, and inadequate legal protections. Recognizing and addressing these inequities is essential for promoting social justice, economic opportunity, and sustainable development. Governments play a crucial role in enacting policies to protect property rights and promote fair and equitable access to resources for all members of society.

---* Inequities in Inheritance Rights

Inequity in inheritance rights is another crucial aspect that contributes to social and economic disparities in property ownership. In many societies, inheritance laws and cultural norms can perpetuate gender-based inequalities and favor certain privileged groups, leading to unequal distribution of wealth and property. Here's how inheritance rights can contribute to inequities in property rights:

1. Gender Bias: In some countries, inheritance laws may favor male heirs over female heirs, leading to gender-based disparities in property ownership. Women may face limitations in inheriting property, especially in patriarchal societies, which can restrict their economic opportunities and financial security.

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3. Primogeniture: Traditional inheritance systems in some cultures follow primogeniture, where the eldest son inherits the bulk of family property, leaving younger siblings with limited or no inheritance rights. This practice can exacerbate wealth concentration within a specific group, leading to unequal access to resources.

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5. Intestate Succession Laws: When a person dies without a will (intestate), inheritance laws dictate how their property will be distributed among heirs. In some cases, intestate succession laws may not adequately protect the rights of surviving spouses, children, or other dependents, leading to potential injustices.

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7. Wealth Concentration: Inheritance can contribute to the concentration of wealth within certain families or social classes. When large amounts of property and wealth are passed down through generations, it can perpetuate economic disparities and limit opportunities for social mobility.

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9. Informal Inheritance Practices: In many regions, informal inheritance practices may prevail, leaving vulnerable individuals, such as widows, orphans, and disadvantaged groups, without proper legal recognition of their inheritance rights. This lack of formal protection can lead to property dispossession and vulnerability to exploitation.

Addressing inequities in inheritance rights is crucial for promoting social and economic justice. Governments can play a vital role in enacting inheritance laws that promote gender equality, protect the rights of vulnerable groups, and ensure fair distribution of property among heirs. Efforts to promote legal awareness and empower marginalized individuals to claim their inheritance rights are also essential in addressing these inequities.

In conclusion, inheritance rights can significantly impact property ownership and wealth distribution in a society. Addressing the inequities in inheritance laws and cultural norms is essential for promoting equitable access to property, reducing wealth disparities, and ensuring equal economic opportunities for all members of society. Governments must actively work towards creating a fair and inclusive framework that upholds the principles of justice and equality in property rights.

State or private? Painful school choice that still fuels inequality in Britain

Will Hutton in The Guardian

 

Locals and Harrow boys meet outside Lord’s at the 1937 Eton v Harrow cricket match. Photograph: Jimmy Sime/Getty Images
 

I remember vividly one harrowing night at the end of the school summer term 23 years ago. My nine-year-old daughter was inconsolable. All her friends were leaving her very good state school to be placed by their parents in various private schools in the Oxford area. She cried at her loss. My wife cried. Her younger sister cried, because her sister and mother were crying. The house was drenched in tears. We were living the continuing divisive disaster that is the British education system, the most socially engineered to advantage privilege in the world.

At the playground swings a few days earlier, I had overheard a group of mothers explaining to one another why they were going private. The state schools weren’t challenging enough for exceptional children like their own and the comprehensive was only just recovering from a reorganisation. They just weren’t prepared to take the risk. Best of all, their daughters could continue their friendships and mix with other children like them.

I remember thinking that the local comprehensive didn’t deserve such criticism; it got an exceptional proportion of its students to university. But it was part of the national conversation that there was little good in state education, dominated, as it was, by trade unions, trendy teaching methods, an ideology that all should have prizes and a general lack of commitment to excellence. Two years later, Chris Woodhead was appointed chief inspector of schools. The language and attitudes of those mothers at the swings suddenly became the lingua franca of the man charged with improving our schools.

His death last week was the trigger for another outpouring of brave-Chris-the-man-who-said-it-like-it-should-be-said pieces, admiring his honesty in declaring that there were 15,000 teachers who should be sacked, his excoriation of soft teaching methods and praise of his insistence that kids needed to acquire both skills and knowledge for knowledge’s sake. His target was the “blob”, the educational establishment identified by former education secretary Michael Gove, who defend “collectivist” public education and the mediocrity of the status quo. The consensus was that we need yet more of that energy now to mount the ongoing fight against the liberal/left blob still defending the indefensible.

Except there has been a quiet revolution taking place in our state schools, especially primary schools, which would be hard to imagine if the blob really was as effective in sustaining mediocrity as its critics say. The inconvenient truth is that the state school system is in the round good and improving. Sir Michael Wilshaw, who enraged so many educationalists by insisting when he took the job as chief inspector of schools that he would tolerate no excuses for failure, now declares that after 7,000 school inspections over the last year, 82% of primary schools and 71% of secondary schools are good or outstanding.

Governance is better; leadership is better; incentives are better; teachers are better motivated; trade unions support higher standards; academies are working; even initiatives such as Teach First are making a measurable difference. Indeed, a recent Sutton Trust report found that there are now 11,000 ex-Oxbridge teachers in the state sector, having doubled since 2003. Young men and women, as I know from my college in Oxford, want to make a difference to society rather than teach the already privileged. In some parts of the country, there has been something of a revolution. London now outperforms the rest of the country in GCSE and A-level results, a legacy of the last Labour government melding a Woodheadian commitment to academic rigour with more collectivist money and encouraging and rewarding better leadership. A generation of education reform has worked.

Yet I have no doubt that there are groups of middle-class mothers at playgrounds still shaking their heads at the well-publicised problems of the state system – despite its improvement. They need state schools to be crap to justify what would otherwise be an obvious attempt to advantage their own children over others and embrace the social apartheid of private education. The centre-right press ensures that every failing is magnified, every success under-reported. Wilshaw, complain centre-right commentators, has gone rogue. Doesn’t he know that state school teachers are unionised second-raters who don’t understand the importance of literacy and numeracy and who put up with disruptive classes? Ofsted should be abolished and the state school system dismantled into a system of free schools removed from all forms of suffocating public influence. Indeed, with the government pledged to create another 500 on top of 400 already created, the free school movement is well entrenched.

Which, as it grows, will become a disaster. The derided blob has always had one aim: to offer the best education for all. It probably did over-emphasise comprehensiveness over excellence in the 1970s and 80s, but those days are long gone. Today’s left/right blend of commitment to universality, less bad funding, rigour and leadership has worked. The danger is that the government is going to kill that alchemy and by rolling back universality, publicness and, crucially, the funding so crucial to recent success, further worsen the dreadful inequalities besetting education and wider society. But from their point of view, who cares? The casualties of this process don’t vote Tory anyway. Their constituency is the opters-out, private and public; 48% of Tory MPs are privately educated.

Opting out is the process that fuels inequality, still the hallmark of our education system. The Sutton Trust found that despite the recent improvement, children from the richer fifth of neighbourhoods are nine times more likely to go to a good university than the fifth from the poorest. Inequality defines life chances. Part of the explanation is private schools: part that socioeconomic background is crucial to family stability; and part that free schools and academies are disproportionately represented in richer areas. If we want a society in which the mass flourishes, then fragmenting our system into one built on autonomy, opting out and individualism – cementing inequalities – is precisely the wrong direction of travel.

Anthony Seldon, outgoing headmaster of Wellington College, complains of the narcissism of so many parents – videoing, rather than watching, school plays and rarely turning up for parents’ evenings. But that is where the values of libertarian conservatism leads. Looking back, my wife and I felt that parents like us should stand by the universal system; our daughter did well and many of her friends at the time, whose parents believed in their exceptionalism, have had unhappy lives. It would have been so much better if those children had been allowed to stick together in a system that spelled out their togetherness while teaching them with rigour. The English tragedy is that we will never get there.

The banality of evil

NISSIM MANNATHUKKAREN

  

The HinduIllustration: Deepak Harichandan

 

When carnage is reduced to numbers and development to just economic growth, real human beings and their tragedies remain forgotten.

Empires collapse. Gang leaders/Are strutting about like statesmen. The peoples/Can no longer be seen under all those armaments — Bertolt Brecht

German-American philosopher Hannah Arendt gave the world the phrase, “the banality of evil”. In 1963, she published the book Eichmann in Jerusalem: A Report on the Banality of Evil, her account of the trial of Adolf Eichmann, a Nazi military officer and one of the key figures of the Holocaust. Eichmann was hanged to death for war crimes. Arendt’s fundamental thesis is that ghastly crimes like the Holocaust are not necessarily committed by psychopaths and sadists, but, often, by normal, sane and ordinary human beings who perform their tasks with a bureaucratic diligence.

Maya Kodnani, MLA from Naroda, handed out swords to the mobs that massacred 95 people in the Gujarat riots of 2002. She was sentenced to 28 years in prison. She is a gynecologist who ran a clinic, and was later appointed as Minister for Women and Child Development under Narendra Modi.

Jagdish Tytler was, allegedly, one of the key individuals in the 1984 pogrom against the Sikhs. He was born to a Sikh mother and was brought up by a Christian, a prominent educationist who established institutions like the Delhi Public School. A Congress Party leader, he has been a minister in the Union government. The supposedly long arm of law has still not reached him. Guess they never will, considering that the conviction rate in the cases for butchering nearly 8000 Sikhs is only around one per cent.

For every “monstrous” Babu Bajrangi and Dara Singh, there are the Kodnanis and Tytlers. Evil, according to Arendt, becomes banal when it acquires an unthinking and systematic character. Evil becomes banal when ordinary people participate in it, build distance from it and justify it, in countless ways. There are no moral conundrums or revulsions. Evil does not even look like evil, it becomes faceless.

Thus, a terrifyingly fascinating exercise that is right now underway in the election campaign is the trivialisation and normalisation of the Gujarat pogrom, to pave the way for the crowning of the emperor, the Vikas Purush. If there was some moral indignation and horror at the thought of Narendra Modi becoming prime minister until recently, they have been washed away in the tidal wave of poll surveys, media commentaries, intellectual opinion, political bed-hopping, and of course, what the Americans think, all of which reinforce each other in their collective will to see Modi ascend to power.

Banalisation of evil happens when great human crimes are reduced to numbers. Thus, for example, scholars Jagdish Bhagwati and Arvind Panagariya write a letter to The Economist on the latter’s article on Modi: “You said that Mr. Modi refuses to atone for a ‘pogrom’ against Muslims in Gujarat, where he is chief minister. But what you call a pogrom was in fact a ‘communal riot’ in 2002 in which a quarter of the people killed were Hindus”. So, apparently, if we change the terminology, the gravity of the crime and the scale of the human tragedy would be drastically less!

This intellectual discourse is mirrored in ordinary people who adduce long-winded explanations for how moral responsibility for events like the Gujarat pogrom cannot really be attributed to anybody, especially the chief minister, who is distant from the crime scene. No moral universe exists beyond the one of “legally admissible evidence”. To be innocent means only to be innocent in the eyes of law. But what does evidence mean when the most powerful political, bureaucratic, and legal machineries are deployed to manipulate, manufacture and kill evidence as seen in both the 2002 and 1984 cases?

Another strategy of banalisation is to pit the number of dead in 2002 with that of 1984 (Bhagwati and Panagariya go onto assert that 1984 “was indeed a pogrom”). Modi’s infamous response to post-Godhra violence is countered with Rajiv Gandhi’s equally notorious comment after his mother’s assassination. In this game of mathematical equivalence, what actually slip through are real human beings and their tragedies.

Banalisation of evil happens when the process of atonement is reduced to a superficial seeking of apology. Even when that meaningless apology is not tendered, we can wonder to what extent reconciliation is possible.

The biggest tool in this banalisation is development. Everyday, you see perfectly decent, educated, and otherwise civil people normalise the Gujarat riots and Modi, because he is, after all, the “Man of Development”. “Yes, it might be that he is ultimately responsible for the riots, but look at the roads in Gujarat!” It is a strange moral world in which roads have moral equivalence to the pain of Zakia Jaffrey and other victims.

Ironically, along with evil, development itself becomes banal. Development becomes hollowed and is reduced to merely economic growth. E.F. Schumacher’s famous book Small is Beautiful has a less famous subtitle, A Study of Economics as if People Mattered. But when development is banal, people do not matter. Nor does the ecosystem. There are no inviolable ethical principles in pursuit of development. If Atal Behari Vajpayee was the mask of the BJP’s first foray into national governance, development becomes the mask of the Modi-led BJP’s present attempt, and a façade for the pogrom.

But what is fascinating is how such a banal understanding of development has captured public imagination. The most striking aspect of the Gujarat model is the divergence between its growing economy and its declining rank on the Human Development Index (HDI). For instance, in the UNDP's inequality-adjusted HDI (2011) Gujarat ranks ninth in education and 10th in health (among 19 major states). On gains in the HDI (1999-2008), Gujarat is 18th among 23 states. In the first India State Hunger Index (2009), Gujarat is 13th out of 17 states (beating only Chhattisgarh, Bihar, Jharkhand and Madhya Pradesh).

Yet, shockingly, prominent economists like Bhagwati participate in this banalisation by glorifying the Gujarat model. His response to the poor record of Gujarat is that it “inherited low levels of social indicators” and thus we should focus on “the change in these indicators” where he finds “impressive progress”. If so, how is it that many other states starting off at the same low levels have made much better gains than Gujarat without similar economic growth?

These figures and others about a whole range of human deprivation are in the public domain for some time, but, astonishingly, are not a matter of debate in the elections. Even if they were, they would not apparently dent the myth of the “Man of Development”. Such is the power of banalisation that it has no correlation with facts.

Even as the developed countries are realising the catastrophic human and environmental costs of the urban, industrial-based models of boundless economic growth (in America, the number of new cancer cases is going to rise by 45 per cent in just 15 years), we are, ironically, hurtling down the same abyss to a known hell — India fell 32 ranks in the global Environmental Performance Index to 155 and Delhi has become the most polluted city in the world this year! The corporate-led Gujarat model is an even grander industrial utopia based on the wanton devastation of mangroves and grazing lands.

In a recent election opinion poll, the three most important problems identified by the voters in Punjab were drug addiction (70 per cent), cancer caused by pesticides (17 per cent) and alcoholism (nine per cent)! This is shocking and unprecedented, and it stems from the fact than an estimated 67 per cent of rural population in Punjab had at least one drug addict in each household. Nevertheless, the juggernaut of development as economic growth careens on.

Disturbingly, the scope of questioning this banalisation of evil and development diminishes everyday. Many reports emerge about the self-censorship imposed by media institutions already in preparation for the inauguration of a new power dispensation. A book which raises serious questions about the Special Investigation Team’s interrogation of Modi hardly gets any media attention and, instead, is dismissed as propaganda against the BJP. It does not matter that the same journalist subjected the investigation in the anti-Sikh pogrom to similar scrutiny. And the pulping of the book on Hinduism by a publisher portends dangerous tendencies for the freedom of speech and democracy in the country.

The vacuity of the attempts to counter the banalisation of development is evident in the media discourse on elections. Just sample the much-lauded interview conducted by the nation’s conscience keeper with Rahul Gandhi. In a 90-minute conversation, Arnab Goswami could ask only a single question on the economy — on price rise. This is in a nation, which, on some social indicators, is behind neighbours like Sri Lanka, Nepal and Bangladesh. Elections are not about the substantive issues of human well being, environmental destruction, and ethics, but are reduced to a superficial drama of a clash of personalities.

Fascism is in the making when economics and development are amputated from ethics and an overarching conception of human good, and violence against minorities becomes banal. Moral choices are not always black and white, but they still have to be made. And if India actually believes this election to be a moral dilemma, then the conscience of the land of Buddha and Gandhi is on the verge of imploding.

Why doesn't anyone believe in public-spirited concern?

 

After I tweeted about a pot of honey not being allowed on a plane, Twitter replied with a puerile display of sniggering frivolity

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• • Richard Dawkins
  • theguardian.com, Tuesday 5 November 2013 11.30 GMT

'Aren’t our rule-merchants playing into Bin Laden’s dead hands by their futile displays of stable-door-shutting?' Photograph: Andreas Meier/Reuters

I was on the website of a bank. I patiently slogged through all my details, not forgetting mother's maiden name and name of first pet. With a sigh of completion I finally clicked submit. "We're sorry, our system is down this morning. Please try later." Er, couldn't they have warned me before I started? I did log in later, went right through the whole rigmarole and finally received the bank statement I needed.

I could have left it there but I was feeling public-spirited. Mightn't my experience help them make their website more user-friendly? So I telephoned. A succession of courteous robotic voices led me to an equally courteous human. And now here is my point. I was trying to benefit other bank customers in general. She thought I wanted satisfaction for myself in particular. It appeared to be outside her comprehension that somebody might take the time to make a public-spirited suggestion to help other people.

"May I call you Richard? How may I help you, Richard?"

"Well, I've been on your website trying to get a bank statement, and I'd filled in the whole form before I was told that the system was down anyway. Could I suggest … "

"My apologies for that, Richard, let me help you now. What exactly is it you require?"

"Er, no, I don't think you understand. I've already got what I personally needed. I want to report the difficulty I had, so that you can make sure other people don't suffer the same inconvenience in future."

"Richard, please tell me what is the date of the bank statement you need, and I'll have it sent to you."

"No, I already have the bank statement I need. I'm trying to help other people in my situation … "

I might have been speaking Volapük. She simply didn't understand a word of Voluntary-Public-Spirit.

On another occasion, in 2009, I was commissioned by Prospect Magazine to fill its regular slot on "If I ruled the world". I wrote it on a plane, and began with an incident I'd just witnessed at Heathrow security. A young mother was distraught that the tub of ointment she needed for her child's eczema had been seized.

"The security man was polite but firm. She wasn't even permitted to spoon a reduced quantity into a smaller jar. I couldn't grasp what was wrong with that suggestion, but the rules were unbendable. The official offered to fetch his supervisor, who came and was equally polite, but she too was bound by the rulebook's hoops of steel.

"There was nothing I could do, and it was no help that I recommended a website where a chemist explains, in delightfully comedic detail, what it would actually take to manufacture a workable bomb from binary liquid ingredients, labouring for several hours in the aircraft loo, using copious quantities of ice in relays of champagne coolers helpfully supplied by the cabin staff.

"The prohibition against taking more than very small quantities of liquids or unguents on planes is demonstrably ludicrous … one of those 'Look at us, we're taking decisive action' displays."

Once again my motive was public-spirited, and now there was no question of self-interest because the fated ointment wasn't mine. The woman's experience had been a particular peg on which to hang a general point. Unfortunately, when I returned to make a similar point on Twitter this week, I foolishly chose a peg that was vulnerable to misinterpretation as self-interested. And the result was a puerile display of sniggering frivolity such as only Twitter can serve up.

This time the dangerous explosive was not eczema lotion but honey. And it belonged to me, at Edinburgh airport, bound for Heathrow with only carry-on luggage. Though the jar was small, it exceeded the limit laid down by the rule-happy officials of airport security, and it was thrown away.

I tweeted to the effect that every time I see an incident of this kind I sense it as a victory for Bin Laden. However calamitous the destruction of the twin towers, doesn't the bureaucratically imposed vexation to airline passengers all over the world mount up to a prolonged and distributed, albeit far less traumatic, victory? And aren't our rule-merchants playing into Bin Laden's dead hands by their futile displays of stable-door-shutting?

But because the honey was mine not a young mother's, my motive could surely not be other than selfish. "Stop whining about your lost honey." In vain did I protest that I couldn't give a damn about my honey. I was making a point of general principle, trying to be public-spirited. "If you weren't so ignorant, you'd know the rules about liquids." In vain did I reassure the tweeting twerps that I know the rules all too well. That's precisely why I'm campaigning against them.

I say nothing of the feeble jokes on "bee" and "be" and Pooh Bear. My point here is the one brought out by my encounter with the bank clerk. What is it that renders some people incapable of conceiving how a person might be motivated not by narrow self-interest but by a public-spirited concern for the common weal?