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Old 10-12-2011, 05:09 PM  
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Originally Posted by YelloJeep View Post
You didn't mention who owns this land. In the scenario you mentioned, with the grazing land, the best option I see is to divide this so called "common grazing land" equally and be done. Later, if one of the herders utilizes his land better and keeps a good balance in the grassand cattle, and as a result does better than the others... Let's say one of the others doesn't and one of his cows dies. I think that it should be fine for the one with "more success" and the one with the dead cow to trade some land for another cow... So, over time, if some manage poorly then maybe eventually one will have most or all of the land and the others have dead cows.

What then??? You going to divide it "evenly" AGAIN??
Your solution is a form of government. It might be the best solution to the most common illustration of the Tragedy of the Commons. It works great, for land or anything else that can be divided. Instead of leaving it all as public land, privatize it - split it up into portions that benefit just one person. Solve the tragedy of the commons by eliminating "The commons".

But the analogy I made was that the working class is the commons, and employers are the herders. That makes labor to be the fattening of the cows, wages to be fertilizer and irrigation purchased by the herder. The labor the worker provides to the employer enriches one employer, just like a fattened cow enriches one herdsman. The wages paid to an employee are akin to a herdsman paying to irrigate the commons; they are costs that will benefit all the herdsmen equally, but that he must pay individually.

Each employer has the same motivation: reduce wages, increase the price of goods. Any employer who increases wages increases the sales revenue of every employer at his own expense.

Applying your "privatize the land" solution, each employer would have exclusive control over and responsibility to his employees. The solution you suggest for land would be called "slavery" if applied to people. A neighboring herder trespassing on your land would be akin to theft; so too would it be theft for a neighboring employer to hire your worker. Obviously, slavery isn't a viable option; obviously the solution for the land can't be applied to the worker; obviously you're not actually advocating slavery. What solutions CAN we work out?

The minimum wage solution doesn't work as it eliminates competitive forces, destroys capitalism, drives inflation... It wasn't an altogether bad idea, but it clearly doesn't work the way it is intended. Same with "living wage", which is generally used as a fancy term for "minimum wage". These solutions don't work because they attempt to define the bottom without defining any other point.

The solution I envision attempts to define a point somewhere in the middle, and requires employers to maintain or raise this middle.

Look at the poverty line, the dollar amount (However you want to define it isn't critical, I'll explain in a minute) Wherever that poverty line is defined, find the percentage of people below that line (the poverty rate). Require employers to meet or beat that rate in their hiring.

So if the line is set at $25,000/year, and 90% of the population in a particular region live above that line, employers must pay at least 90% of their employees at least $25,000/year. The rest can be paid as low as minimum wage. (This is why the dollar amount isn't absolutely critical - if it's set higher, employers have to pay fewer people that amount, and can hire more people below that amount)

Suddenly, every business is now toeing the line. They're all contributing to improving the economy. Back to the "Commons" analogy, every herdsman is now required to pay his fair share of the upkeep of the commons. No herder can benefit at the expense of the others from withholding his share of the cost. But, it maintains the competitive forces at work in both the job market and the market for products. All it eliminates is the exploitative forces at work, the ones that harm all of them eventually, but the exploiter last.
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Old 10-12-2011, 05:32 PM  
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Like Cuba?
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Cuba: a tragedy of the commons

BY JOSE AZEL
jazel@miami.edu

Over half a century ago, the Cuban Revolution abolished all private property rights, pursuing heaven on earth on the communist premise that the entire community would own all property and a ?new man? would emerge that would be communal in outlook and sacrificial for the common good. That experiment turned out as an economically bankrupt dystopian society featuring enormously repressive social control systems and a government with unlimited power over its citizens.

Today, the collapse of the Cuban economy can be clearly traced to its communal ideology and actions against private property rights. The fallacy of communal approaches was vividly described by Garrett Hardin in his influential 1968 scientific article titled: ?The Tragedy of the Commons.? The article describes a dilemma of herders sharing a common pasture on which they are entitled to let their cows graze. The ?tragedy of the commons? is thus a shorthand metaphor for a structural relationship and its consequences; specifically, common versus private property ownership.

Under the common property condition described by Hardin, each herdsman, acting rationally, will try to keep as many cattle as possible on the commons, even if the capacity of the commons is exceeded and it is ultimately depleted to the detriment of all. Individually, each herder receives the benefits from his additional animals, while the damage is shared jointly by the entire group. This asymmetrical division of costs and benefits gives rise to the tragedy of the commons inherent in communal systems devoid of private property rights.

Any resource held in common is owned by everyone and by no one, thus everyone has an incentive to overuse it, and no one has an incentive to preserve it. Aristotle expressed it succinctly, ?For that which is common to the greatest number has the least care bestowed upon it.? Economic history shows that individual owners take better care of their own property than they do of common property. And yet, the utopian chase of the commons and its attendant governmental controls persists.

On the eve of the Cuban Revolution, about 80 percent of Cuba?s arable land was under cultivation (or used for grazing) and domestic production supplied 70 percent of the country?s food consumption. The comparable figures today are 60 percent and 20 percent respectively.

The extraordinary degree of communist Cuba?s unproductivity is most dramatically shown by comparative analyses of purchasing power. A study by the University of Miami?s Institute for Cuban and Cuban American Studies shows for example, that to purchase a 400-gram box (14 ounces) of powdered milk, the average Cuban worker has to work 57.5 hours. To make the same purchase, the average worker in Costa Rica has to work only 1.7 hours. Comparable inefficiencies hold for the other items in the consumer basket analyzed. In contrast, in 1957, Cuba?s income per capita was fourth in Latin America, and real wages in Cuba were higher than any country in Latin America.

Even though Cuba was certainly a corrupt and politically inept republic, many economic and social milestones were achieved, anchored on private property rights during its 56 years as a republic (1902-1958). In the following 52 years, after the abolishment of private property rights, Cuba has descended into its current pauperized and tragic socioeconomic situation. But longstanding beliefs are difficult to shed and private property rights are still vilified.

John Locke, the father of modern political philosophy, argued that people have natural rights, that is, rights that we posses prior to the existence of governments. These rights are not granted by government or any other human. Locke also articulated clearly the idea of property rights: ?Every man has a property in his own person . . . labor of his body, and the work of his hands, we may say are properly his.? The ownership of property is a necessary implication of self-ownership. Indeed, all human rights can be seen as derived from the one fundamental right of self-ownership.

The Cuban tragedy of the commons, rooted in its disdain for private property, and thus for human rights exemplifies, as Karl Popper once noted, how ?the attempts to make heaven on earth invariably produce hell.?

Jos? Azel is a senior scholar at the Institute for Cuban and Cuban-American Studies, University of Miami, and the author of book, Ma?ana in Cuba.

Read more: Cuba: a tragedy of the commons - Other Views - MiamiHerald.com
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Old 10-12-2011, 06:26 PM  
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Originally Posted by Eddie_T View Post
Like Cuba?
The only similarity anything I said has to anything you just posted was that they both used the phrase "Tragedy of the Commons", and even there, we used it to describe completely different concepts. The article you posted attempted to demonstrate that by converting private property to public in Cuba, nobody had an incentive to maintain it. What I posted was that businesses have fewer incentives to increase their workforce/consumer base than they do to exploit that same base. The two ideas are analogous only in that the "shared resource" is being destroyed.

What you posted is completely the opposite of what I'm suggesting. I place no limits on how large a business can get, how much they can pay, who they can pay, or what decisions they can make. I've not suggested transferring private property to public control, I've not suggested forced redistribution of wealth. What I have suggested is a guarantee to businessmen that their competitors will not be permitted to use exploitative methods to gain a temporary competitive advantage. All I have done is defined "exploitation" as "increasing the poverty rate" and explicitly prohibited businesses from doing that.

Frankly, I'm amazed that this isn't already a law, given the number of consumer rights, employee rights, and public assistance laws on the books that this would tend to resolve.
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Old 10-13-2011, 07:01 AM  
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I see what you are saying but I think that setting some type of pay requirement based on average income (or somethinglike that) seems to be no different than telling businesses to price their products based on what people in the area make. Sounds like you are taking supply and demand and throwing it out the window and letting the government replace it. I don't think that works. Goods and services are goods and services whether it is what a business is selling or what a worker is selling (his work/time).
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Old 10-14-2011, 03:59 PM  
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Wall Street protests gets strange:Wall Street Protests Get Strange - YouTube
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Old 10-14-2011, 09:54 PM  
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Quote:
Originally Posted by YelloJeep View Post
I see what you are saying but I think that setting some type of pay requirement based on average income (or somethinglike that) seems to be no different than telling businesses to price their products based on what people in the area make. Sounds like you are taking supply and demand and throwing it out the window and letting the government replace it. I don't think that works. Goods and services are goods and services whether it is what a business is selling or what a worker is selling (his work/time).
Nah, I'm not setting anything anywhere near the average pay, and for good reason. Suppose there is a very high-paying business in the area, so that the average (50th percentile) worker in the area earns $50/hour. If we were to use that figure, and my business were large enough that it would have to comply with this law, I'd have to pay at least 50% of my employees at least $50/hour, while the rest could be paid as low as minimum wage. If my business is a small chain of sandwich shops, I probably won't have *any* employees earning the equivalent of $50/hour.

But, if the poverty level in that same area for a typical individual is the equivalent of $9/hour, and 90% of the population in that area lives at or above the poverty level, I'd have to pay 90% of my employees at least the equivalent of $9/hour, and 10% at least minimum wage.

The charge that I'm throwing supply and demand out the window is completely inaccurate. Nearly everything within the system I proposed is market defined. The only thing that isn't is the actual poverty level (the dollar amount), and even there, the nature of the system I'm proposing is not completely sensitive to that number. If the poverty level is the equivalent of $9/hour, 90% of the population in a particular region may live above it. If the poverty level is higher, a smaller percentage will live above it, say, 80%. If this is the case, employers will have to pay fewer people above that line.

Private enterprise has demonstrated time and time again that it doesn't have adequate incentives to protect employees, especially those employees who are desperate for work. Government's answer has been fiat declarations of the minimum value of a person's time, and various public assistance programs that do nothing but redistribute wealth. These "solutions" suck, and they suck hard, for a whole mess of reasons.

Look up the wiki article for Tragedy of the Commons, consider the working/consumer class "the commons" and businesses as the herdsmen. The answer is not to distribute all the public property to private hands; that answer cannot be applied to non-distributable assets like "free people". It would work under a system of slavery, but obviously, that isn't going to work.

One answer is to come to an arbitrary agreement about who can put how many cattle on the land. The herdsmen arbitrarily decide how many cattle they think the land can support, and allow each of them to put their share of that number on the land. This is NOT a market-based decision. If they make a mistake in the number of cattle the land can support, they will over or under utilize the commons, and they'll have to come back periodically to make arbitrary adjustments. This is (loosely) analogous to the minimum wage system we have now, in that it is arbitrarily defined and not market-based.

Another answer is to redirect the incentives so the market is inherently more balanced. The Tragedy exists where there is an individual incentive to exploit, countered by a shared incentive to not exploit. Each herdsman will receive the benefit of cows fattened on the commons (direct incentive) but each cow he puts out there causes him only 1/n harm (the damage done to his share of the commons), where n is the number of people with access to the commons. He can't control the actions of everyone else, so his best course of action is to maximize his own returns.

If we can redirect the disincentive so that each herdsman causes himself the same amount of harm as he gets in benefit, the market will function properly. Suppose we charged an arbitrary fee per head of cattle, distributed among everyone with access to the commons. Say, $100/head. If everyone puts the same number of cattle on the land, no money will change hands. But, if the commons are over used, nobody's cattle will be fattened acceptably. One of them might decide to put fewer cattle on the land than each of the others, collecting the fee instead of trying to earn a profit on less-valuable beef, and causing less damage to the commons. This solution IS market-based. It balances the market forces sufficiently that it is self-regulating. The actual "fee" isn't completely critical. No, a $1/head fee probably wouldn't be effective, nor would $1,000,0000. But, a fee anywhere between $100 and $1000 would probably work just about as well at achieving the goal of managing the commons. In these ways, this system is (loosely) analogous to what I'm proposing.

Remember: The basic idea is to require each and every business to meet or beat the local poverty rate in its hiring. I'm saying that no business should be permitted to INCREASE the poverty rate through its hiring decisions. Doing so tends to cause harm to the economy as a whole to benefit that one business. That practice must be stopped.
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