Coffee consumption, traffic congestion, fast fashion or groundwater use are all good examples of the Tragedy of the Commons in real-life scenarios. Until now, it may seem that all common goods are natural resources. However, in later papers, Hardin explains that taxpayers’ money funds may also be considered a common good. He explains that in the savings and loans (S&L) crisis of the 1980s and 1990s, depositors (i.e., people keeping their money in banks) worried they would not get their money back. In response, the government set up the Federal Savings and Loan Insurance Corporation (FSLIC), which guaranteed depositor repayment using taxpayers’ money if banks broke. Thereon, taxpayers’ money became a common good that depositors exploited carelessly because they did not have to bear the cost behind using these funds. Eventually, the federal budget underwent significant losses and taxpayers commonly incurred the cost.
Closing thoughts
The Tragedy of the Commons proposes that individuals and collectives will over consume common-pool resources to the point of depletion and devastation. The atmosphere, rivers or fisheries are only some of the victims of the Tragedy of the Commons. Governments and economists have looked at this phenomenon from different angles, whether that was treating it as a market failure or a game theory puzzle. As a consequence of these different perspectives, different solutions have been generated to address and fix the tragedy. Governmental regulatory mechanisms (e.g., quotas and property rights) and collective agreements are only some of the most commonly used mechanisms which enable the more sustained consumption and preservation of the commons.
Further reading on Perlego
To read more about examples of the effects of the Tragedy of the Commons in economies and nations, read ‘Reinventing Collapse’ by Dmitry Orlov
To read more about the influence of population growth on the Tragedy of the Commons, read ‘Peak Everything: Waking Up to the Century of Declines’ by Richard Heinberg
To read about more real-life examples of the Tragedy of Commons, read ‘Economics for the Common’ by Jean Tirole, Steven Rendall
External resources on the Tragedy of the Commons
To read Garrett Hardin’s full paper, ‘Tragedy of the Commons’
To read more about Nobel Prize Winner Elinor Ostrom, ‘Elinor Ostrom’
To read more about the Savings and Loans Crisis, ‘Savings and Loans Crisis’
To read more about real-life collective agreements, ‘Net Zero Coalition’ and ‘Kyoto Protocol’
Bibliography
Hardin, G. (1968). The Tragedy of the Commons. Available from: https://www.jstor.org/stable/1724745
Coyle, D. (2011) The Economics of Enough. Princeton University Press. Available at: https://www.perlego.com/book/735093/the-economics-of-enough-how-to-run-the-economy-as-if-the-future-matters-pdf
Linebaugh, P. (2014) Stop, Thief! PM Press. Available at: https://www.perlego.com/book/2584994/stop-thief-the-commons-enclosures-and-resistance-pdf
Hamilton, A. et al. (2005) The Federalist. Hackett Publishing Company, Inc. Available at: https://www.perlego.com/book/3899109/the-federalist-pdf
Longo, S., Clausen, R. and Clark, B. (2015) The Tragedy of the Commodity. Rutgers University Press. Available at: https://www.perlego.com/book/400677/the-tragedy-of-the-commodity-pdf
Poteete, A., Janssen, M. and Ostrom, E. (2010) Working Together. Princeton University Press. Available at: https://www.perlego.com/book/734864/working-together-collective-action-the-commons-and-multiple-methods-in-practice-pdf
Poteete, A., Janssen, M. and Ostrom, E. (2010) Working Together. [edition unavailable]. Princeton University Press. Available at: https://www.perlego.com/book/734864/working-together-collective-action-the-commons-and-multiple-methods-in-practice-pdf