Self-Governance Works

Even as the nanny state grows larger, the spirit of the Enlightenment and Adam Smith still burn brightly. Can a living Nobel laureate shine the light of truth on a dark economic time?

Much of what government does is based on the premise that people can't do things for themselves. So government must do it for them. More often than not, the result is a ham-handed, bumbling, one-size-fits-all approach that leaves the intended beneficiaries worse off. Of course, this resulting failure is never blamed on the political approach -- on the contrary, failure is taken to mean the government solution was not extravagant enough.

We who have confidence in what free people can achieve have long believed that government should not venture beyond its narrow sphere of providing physical security. It should not attempt to cure every social ill. So it's good to learn that serious scholars have demonstrated that our intuitions are right. Free people, given the chance, solve what many "experts" think are problems that require state intervention.

For that reason, Elinor Ostrom's winning of the Nobel Memorial Prize in Economic Sciences ought to kindle a new interest in freedom. (See my earlier column here.)

Ostrom made her mark through field studies that show people solving one of the more vexing problems: efficient management of a common-pool resource (CPR), such as a pasture or fishery. With an unowned "commons," each individual has an incentive to get the most out of it without putting anything back.

If I take fish from a common fishing area, I benefit completely from those fish. But if I make an investment to increase the future number of fish, others benefit, too. So why should I risk making the investment? I'll wait for others to do it. But everyone else faces the same free-rider incentive. So we end up with a depleted resource and what Garrett Harden called "the tragedy of the commons."

Except, says Ostrom, we often don't. There is also an "opportunity of the commons." While most politicians conclude that, depending on the resource, efficient management requires either privatization or government ownership, Ostrom finds examples of a third way: "self-organizing forms of collective action," as she put it in an interview a few years ago. Her message is to be wary of government promises.

"Field studies in all parts of the world have found that local groups of resource users, sometimes by themselves and sometimes with the assistance of external actors, have created a wide diversity of institutional arrangements for cooperating with common-pool resources."

She has studied, for example, self-governing irrigation systems in Nepal and found successes never anticipated in the textbooks. "Irrigation systems built and governed by the farmers themselves are on average in better repair, deliver more water, and have higher agricultural productivity than those provided and managed by a government agency. ... (F)armers craft their own rules, which frequently offset the perverse incentives they face in their particular physical and cultural settings. These rules may be almost invisible to outsiders. ..."

In "Governing the Commons," she writes about self-governed commons in Switzerland, Japan, the Philippines and elsewhere that date back hundreds of years. For example, in the alpine village of Tobel, Switzerland, herdsmen "tend village cattle on communally owned alpine meadows" under rules of an association created in 1483. The rules govern who has access to the grazing lands and how many cows a herdsman can place there, preventing overgrazing. The cattle owners themselves run the association and handle the monitoring. Sanctions are imposed for violation of the rules, but compliance is high.

Don't mistake the association for government. Rather, it is a private co-op designed for a narrow purpose. "All of the Swiss institutions used to govern commonly owned alpine meadows have one obvious similarity -- the appropriators themselves make all the major decisions about the use of the CPR."

She found something similar in Japanese villages, where residents use private property for some agricultural purposes and self-managed common forests for others.

Solutions imposed by external authority were not necessary -- and usually self-defeating: "Academics, aid donors, international nongovernmental organizations, central governments, and local citizens need to learn and relearn that no government can develop the full array of knowledge, institutions and social capital needed to govern development efficiently and sustainably. ..."

How about that? Freedom works.

John Stossel will soon host "Stossel" on the Fox Business Network. He is the author of Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media (January 2005) as well as Myth, Lies, and Downright Stupidity: Get Out the Shovel — Why Everything You Know Is Wrong (May 2007), which is now available in paperback.

4 comments from readers  

Thanks for spreading the word about Elinor Ostrom; I just ordered one of her books.
Preaching to the choir... Hope this treatise can get more exposure across the interwebz. I'll send a link to my friends.
Fascinating. I had read about this Nobel Prize but didn't know much about it. I had the idea from what I read that she was endorsing government regulation of commons -- I see I was wrong. If it is a scientific study of group membership - private group membership -- then this is indeed very good news. Thank you again John.

Incidentally, when I was young ( a long time ago) my family belonged to a 'Benevolent Society', that is a sort of group insurance with members of the group, in this case, being Jewish people in the north end of Winnipeg. It was a kind of co-op, everyone put money in and the members could draw on it when needed - for extraordinary events such as unemployment, serious illness. I'm sure there were limits, but I don't remember how that worked. I gather there were hundreds of such Societies in the US and Canada, but they've all gone now.

But like a Commons, it was privately regulated and open only to members of a certain group with some shared interest/values.
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Point well taken.

Here in the Florida Keys, 1996, the Federal Government took over our fishing commons and made it into the NOAA National Marine Sanctuary (that sounds so safe and soothing!)

Now, almost 15 years later, we still have fishery problems and NOAA claims it doesn't have the budget to maintain reef monitoring science equipment... but they sure do have some lovely gummint buildings and boats and jobs and "educational" programs which they manage to keep funded!

It really wasn't about saving the resources at all, was it?