Anticommon Sense

This is the fiftieth post in a series on The Harvard Classics; the rest of the posts are available here. (Volume L contains the introduction, reader’s guide, and general index, and will therefore be addressed out of order in the final post of the series.) Volume LI: Lectures

Consider a town with a plot of land dedicated to grazing sheep. Every townsperson has free access to the land, and may graze as many sheep as he has. As ideal as this may sound, the town soon runs into a problem; the grass, it turns out, is a finite resource. The townspeople each realize that they individually reap the benefit of grazing their sheep on the public land, while the cost of doing so (in the form of depleted grass) is borne by everybody. This leads to overgrazing, if only because someone will conclude that overgrazing is inevitable, so he might as well beat his neighbors to it. In the end, the common resource that could have been advantageous to everyone is ruined.

This problem is known as the tragedy of the commons, and is familiar to most people. Because people see what the want to see, it has been used to justify policies ranging from privatizing natural resources, to nationalizing them.

One possible “solution” results in another problem: the tragedy of the anticommons. Suppose the townspeople, worried about overgrazing, change the rules for using the commons. Now, any use of the commons requires unanimous approval from the townspeople. They soon find that some people favor changing the commons from sheep pasture to cattle. Others prefer that the land be used for goats. The town vegans form a bloc to oppose all animal husbandry on the commons. Because there are so many stakeholders, it becomes a practical impossibly to negotiate any use for the commons. Rather than the land being overused, it is now underused because no consensus can be reached.

The Gordon Lightfoot song The Wreck of the Edmund Fitzgerald is an example of the tragedy of the anticommons. When a television producer approached Lightfoot about using the song in an episode of his show, Lightfoot only agreed on the condition that the producer also get the approval of all of the families of the victims of the shipwreck. The producer quickly realized that the transaction costs associated with tracking down and negotiating with 29 families would be prohibitive. Because too many people had a say in the conditions under which the song would be used, the producer wrote a similar song, and The Wreck of the Edmund Fitzgerald did not get used at all.

Beer of the week: Edmund Fitzgerald Porter – This brew from Great Lakes Brewing Co. is anything but a wreck. The aroma is similar to Guinness, but the flavor and mouthfeel are both more substantial. The beer is a little bitter, a little sweet, and a lot delicious.

Reading of the week: Law and Liberty by Roscoe Pound – The lectures included in the Harvard Classics set are almost entirely by then-contemporary Harvard professors. Roscoe Pound was a professor of jurisprudence at the time, but went on to become dean of Harvard Law. As a prominent educator and as a thinker who deeply engaged with the history and philosophy of the law, Pound would arguably have a case for inclusion if the Harvard Classics were to be updated today. This essay discusses the history of law and personal liberty in a way that may be helpful for understanding the conflicting individual and social interests at stake in the case of the commons.

Question for the week: Would a best solution to the problem of the commons include some sort of payment to those townspeople who do not have sheep and, therefore, do not use the commons? Or would would payments to non-shepherds amount to an undesirable incentive to not raise sheep?

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Beer as Water

This is the forty-seventh in a series on The Harvard Classics; the rest of the posts are available here. Volume XLVII: Elizabethan Drama 2

“Let the wine be plentiful as beer, and beer as water. Hang those penny-pinching fathers that cram wealth in innocent lamb-skins.” Thus Simon Eyre, the mayor of London, opens the feast at the end of Thomas Dekker’s The Shoemaker’s Holiday. But very few coffers are deep enough to long sustain such a prodigious flow of libations, and the play is somewhat ambiguous on the virtue of thrift.

Earlier in the play, before Eyre was mayor, he promised his workmen a dozen cans of beer. But when he placed the order, he slyly told the errand boy to purchase only two. When the delivery came up ten cans short of the promised dozen, Eyre feigned surprise, but was clearly glad to get twelve cans’ worth of good cheer from his workers for the price of two.

At the beginning of the play, another character relates how his nephew wasted a veritable fortune, reveling his way across Europe:

A verier unthrift lives not in the world,

Than is my cousin; for I’ll tell you what:

’Tis now almost a year since he requested

To travel countries for experience.

I furnished him with coins, bills of exchange,

Letters of credit, men to wait on him,

Solicited my friends in Italy

Well to respect him. But to see the end:

Scant had he journey’d through half Germany,

But all his coin was spent, his men cast off,

His bills embezzl’d, and my jolly coz,

Asham’d to show his bankrupt presence here,

Became a shoemaker in Wittenberg,

Of course, the time spent as a shoemaker ends up serving the young man very well, but one can hardly argue that carousing to the point of bankruptcy is sound policy.

If The Shoemaker’s Holiday has a lesson regarding thrift, it seems to be that one should be willing to spend money for the sake of enjoyment, particularly the enjoyment of others, but not to live beyond one’s means. Lacy was wrong to waste so much of his uncle’s money in Europe, and Eyre was arguably justified in buying his men less than the dozen beers he promised. But once Eyre’s fortune was made, he quite laudably spent a great deal of it on feasting the shoemakers.

So let the beer be as plentiful as water… so long as you can cover the bar tab.

Beer of the week: Broegel Bock Beer – One way to stretch the beer budget is to buy “store-brand” beer. Aldi grocery stores sell a few beers that appear to be “knock-offs” of better known (and slightly more expensive) beers: Kinroo Blue (Blue Moon), Independence Harbor (Sam Adams)Cerveza Monterey (Corona). Based on the label of Broegel Bock, I assumed that this was simply Aldi’s version of Shiner Bock. The packaging is extremely similar. However, I was pleasantly surprised. Broegel is brewed by Brouwerij Martens NV, a prominent white-label brewery in Belgium. The beer is dark amber with a tan head of very large bubbles. The aroma is of bread and caramel. The flavor matches the smell, with sourdough notes to go with the sweet dark malt. This is a much better beer than Shiner Bock.

Reading of the week: The Shoemaker’s Holiday by Thomas Dekker – To be a minute late to this play would mean missing some very important plot points. The opening conversation establishes the forbidden relationship that drives the action of the play.

Question for the week: The balance between quantity and quality is difficult to establish. Is an $18 six-pack really twice as good as a $9 six-pack?


The Law Revisited

This is the thirty-eighth in a series on The Harvard Classics; the rest of the posts are available here. Volume XXXVIII: Harvey, Jenner, Lister, Pasteur

The label on this week’s beer (pictured below with a pretty sweet lava lamp) makes the same claim as innumerable other German beers. In case you do not read German, bottle says that this beer is brewed in accordance with the Reinheitsgebot, the Bavarian “Beer Purity Law.” I have railed against that law in the past, but there are a few things that I would like to set straight.

For some background, the original Bavarian Reinheitsgebot was enacted in 1516. In short, the law regulated the ingredients allowed in beer. Under the Reinheitsgebot, beer could be made only with water, malted barley, and hops. Ostensibly, the law was intended to protect consumers from beer made with inferior ingredients. In practice, it stifled the innovative use of other sources of fermentable sugars, such as wheat or rye, as well as herbs or spices that could be used as an alternative to hops. It also proved to be an effective barrier to the importation of foreign beers that might include such ingredients.

When I discussed the Reinheitsgebot before, I claimed that the Reinheitsgebot was enacted as part of a scheme of protection for the local bakers’ guild. By reducing the demand for wheat and rye, the law reduced prices for those grains, much to the advantage of the bakers. However, I have also heard that the Duke of Munich owned virtually all of the hops farms in Bavaria. As if monopoly status was not enough, the duke used the law to force brewers to buy from him rather than use other herbs or spices to bitter their beer. Either way, the Reinheitsgebot is economic protectionism disguised as consumer protection. Whether it was for the benefit of the baker’s guild or the hops growing monopoly, it was certainly at the expense of everybody else. This sort of economic law was called “legal plunder” by French economist Frédéric Bastiat.

Additionally, I have asserted that the law is now only a marketing ploy. However, a version of the law does still exist on the books in Germany. It only applies to domestic beer production though, so non-conforming imports are now allowed into the country.  Its value other than as a marketing ploy is totally unclear to me, especially at a time when innovative brewers around the world are experimenting with new styles and ingredients.

Finally, astute readers will have noticed that yeast is not listed as an acceptable ingredient. Back in 1516, yeast was still centuries from being discovered. It was not until Louis Pasteur’s scientific experiments in the middle of the 19th century that we learned that alcoholic fermentation is the product of living yeast cells. Consequently, the modern version of the law lists yeast as a valid ingredient, as well as ground hops and hops extract. Obviously, yeast has always been used in beer making, even if the brewers did not actually know what it was. Hops extract, however is anything but traditional.

I still think that the Reinhietsgebot was a bad law when it was passed and that the current version is no better. I am glad that my own beer choice is not limited by that law.

Beer of the week: Aecht Schlenkerla Rauchbier Märzen – This dark brown rauchbier – German for smoked beer – comes from Bramberg, Germany. The name refers to the fact that the malt is smoked in a kiln over burning beechwood. It pours with plenty of tan head. The aroma is primarily of smoke, as is the flavor. For all the smoke, it is not overbearing. Especially as it warms, Schlenkerla shoes itself to be a very well-balanced brew.

Reading of the week: The Physiological Theory Of Fermentation by Louis Pasteur – For thousands of years before Pasteur’s discoveries, humans have used yeast for brewing and baking. In this excerpt, he describes in part how brewers unknowingly created the ideal conditions for yeast growth and fermentation.

Question for the week: Is yeast really an “ingredient” in beer? Usually, it is added to the wort, where it multiplies and ferments the sugars, and then it is filtered out. That makes it seem more like a process than an ingredient.


Justice Delayed

This is the tenth in a series on The Harvard Classics; the rest of the posts are available here. Volume X: Wealth of Nations

A popular measure of the quality of an individual judge or an entire court system is the speed with which cases are disposed. Where accused criminals must wait in jail for extended periods before their cases are tried, or where civil litigants cannot get finality on their claims in a timely manner, there is a problem. In the words of William Penn, “to delay Justice is Injustice.” And “delays have been more injurious than direct Injustice.”

Adam Smith, in his Wealth of Nations, even recommended a system whereby judges would be paid only at the conclusion of each case. “By not being paid to the judges till the process was determined, [the judges’ fees] might be some incitement to the diligence of the court in examining and deciding it.”

But there is more to an efficient judiciary than disposition rate. At the extreme, a judge could summarily convict every accused without taking the time to consider the evidence. That would be a very timely method, but not a just one.

To be sure, courts should be accessible and efficient and speedy in their distribution of justice. But to judge a court entirely, or even primarily, on its disposition rate is to miss the mark. Some cases require a long, deliberate consideration. Other cases benefit from the parties having ample time to develop their theories and evidence, and to explore a negotiated resolution. Justice delayed is justice denied, but justice rushed is no justice either.

Beer of the week: Home Grown American Lager – This is a tasty brew from Victory Brewing Company in Pennsylvania. It is brewed with six varieties of hops, and they impart plenty of juicy flavor. This pours pale and cloudy lager is quite nice.

Reading of the week: Wealth of Nations by Adam Smith – Wealth of Nations is best known as a glowing recommendation of free markets. But this excerpt discusses a couple of services that, Smith argues, must be provided by the sovereign rather than the market: national defense and courts of justice.

Question of the week: Smith goes on to point out that when attorneys are paid by the page for their legal writing, they tend to “have contrived to multiply words beyond all necessity, to the corruption of the law language.” What is the best method for determining attorney’s fees?


Marginal Value

A reader recently asked me what price she should be willing to pay for cheap beer by the case. When buying beer at the liquor store (or “beer distributor” if I happen to be in Pennsylvania) I expect “sub-premium” beers (such as Hamm’sPBR, Miller High Life, Keystone, etc.) to be about $15.00 per 30 before tax. When buying slightly better beers, I regard it as a good deal if I can get beers at under $1.00 each. And, of course, one must be willing to pay more for better beers.

But it bears repeating that value is not intrinsic. So I repeat, in the words of Ludwig von Mises: “Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment.” We may attempt to assign value to something, but those values mean nothing without human action. Either we buy at a given price or we do not. If we say “Pabst is not worth $25.00 per 30” but then still make that purchase, we are clearly mistaken. It is only the act of the sale that tells us anything concrete about value.

What’s more, values change relative to each other based on each individual’s hierarchy of wants. “If a man is faced with the alternative of giving up either one unit of his supply of a or one unit of his supply of b, he does not compare the total value of his total stock of a with the total value of his stock of b. He compares the marginal values both of a and of b. Although he may value the total supply of a higher than the total supply of b, the marginal value of b may be higher than the marginal value of a.” This helps shed light on the classic question of why gold is more prized than water, even though water is essential for human survival while gold is not. The answer lies in the fact that under most circumstances, the marginal value of a unit of water is less than the marginal value of a unit of gold. This is because water is generally plentiful enough to supply our basic needs. But it is equally true that in the severest drought, one would not part with a unit of water for any amount of gold; the marginal value of each has changed with the circumstances.

Beer of the week: Casablanca Premium Lager – Among the many conditions that factor into valuing beer is location. In Morocco one may expect to pay slightly more for a beer than one might expect given the prevailing exchange rates. The marginal value of the stock of beer is somewhat higher for its relative scarcity. (That is not to say that it is hard to get beer in Morocco; it is just a smaller market.) Casablanca, Morocco is one of the largest economic centers of Africa. It is also the source of this aptly named beer. Casablanca lager is clear and pale, with a very faint and dry aroma. It is a very standard micro, but plenty refreshing.

Reading of the week: Human Action by Ludwig von Mises – Later in this, his chef d’oeuvre, Mises writes: “The moralists’ and sermonizers’ critique of profits misses the point. It is not the fault of the entrepreneurs that the consumers–the people, the common man–prefer liquor to Bibles and detective stories to serious books, and that governments prefer guns to butter. The entrepreneur does not make greater profits in selling “bad” things than in selling “good” things. His profits are the greater the better he succeeds in providing the consumers with those things they ask for most intensely.”

Question for the week: Do the common people truly prefer liquor to Bibles and detective stories to serious books? Is it not simply true that the marginal value of a second Bible is quite low compared to the marginal value of a second drink?


Gifts are for the Givers

Christmastime is the season of giving. It is the season of charity. It is the season of gifts. But it is not the season of “pure altruism.” That is because, like Santa Claus, pure altruism is not real.

In both charity and gift-giving, the giver always gives to get something in return. We know this because all human action is a choice between alternatives and every action, as Aristotle teaches, “is thought to aim at some good; and for this reason the good has rightly been declared to be that at which all things aim.” So no charitable act is committed for its own sake, but with an aim at some good.

Only a cynic would opine that the good aimed at by giving gifts is getting gifts in return. And that explanation could scarcely account for charity, especially anonymous charity. One could certainly argue that the good aimed at is the good of the recipient of the gift. But that does not appear to be a satisfactory answer. Economic principles are applicable to all human action, as has been shown by a number of philosophers. And no voluntary transaction is conducted at an absolute loss, because there would is no incentive to do so. (Of course, parties occasionally make a bad deal and lose. And occasionally parties will take a loss now in the hopes of gaining more later.)

As Ludwig von Mises points out, every action is a form of exchange. Barter between individuals is an exchange of the most obvious type, but there are also “autistic exchanges.” An “autistic exchange” is one that an individual makes with himself. For example, if I go to the gym, I exchange my time and energy for perceived health benefits. Gift-giving and charity are other examples of an autistic exchange. “Where there is no intentional mutuality, where an action is performed without any design of being benefited by a concomitant action of other men, there is no interpersonal exchange, but autistic exchange.” The value of the gift is exchanged for the good feelings that come from making other people happy.

Like all exchanges, the autistic exchanges are only undertaken where the participants perceive that the value received is commensurate with the value given. I go to the gym because I perceive that that time and effort is worth the health benefits. I smoke a cigar because I perceive the health hazards and cost are worth the pleasure. I give a gift because I perceive the pleasure of gift-giving (and, to the extent that I expect anything in return, the possibility of gratitude and/or reciprocation) to be commensurate with the thought and value of the gift. Gift-giving, like all other human action, is essentially selfish.

And that’s ok! This is not an indictment of giving or of charity. Quite the opposite. It is in our best interest to give generously. We rightfully perceive that we get value from giving, even when we do not expect a gift in return. Gifts are for the givers, so be a giver this Christmas!
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Beer of the week: Fistmas Holiday Ale – This winter seasonal offering from Chicago’s Revolution Brewing Company is a real treat. This pretty amber brew has hints of ginger and cinnamon, without being over-spiced as many spiced winter beers are.

Reading of the week: The Errors of Santa Claus by Stephen Leacock – As noted last week, Leacock is one of the greatest gifts that Canada has given to the literary world. Whether he wrote for money or for his own pleasure makes no difference to us. (In the words of Mises, “a genius may perform his task for himself, not for the crowd; however, he is an outstanding benefactor of mankind.”) This cute little story shows another way in which gifts are given for the sake of the givers.

Question for the week: This economic analysis works for gift giving, but seems to fall apart at self-sacrifice, even to the point of death. Does such self-sacrifice revive the notion of altruism?


I Spy

“The American of today, in fact, probably enjoys less personal liberty than any other man of Christendom, and even his political liberty is fast succumbing to the new dogma that certain theories of government are virtuous and lawful, and others abhorrent and felonious. Laws limiting the radius of his free activity multiply year by year: It is now practically impossible for him to exhibit anything describable as genuine individuality, either in action or in thought, without running afoul of some harsh and unintelligible penalty. It would surprise no impartial observer if the motto “In God we trust” were one day expunged from the coins of the republic by the Junkers at Washington, and the far more appropriate word, “verboten,” substituted. Nor would it astound any save the most romantic if, at the same time, the goddess of liberty were taken off the silver dollars to make room for a bas-relief of a policeman in a spiked helmet. Moreover, this gradual (and, of late, rapidly progressive) decay of freedom goes almost without challenge; the American has grown so accustomed to the denial of his constitutional rights and to the minute regulation of his conduct by swarms of spies, letter-openers, informers and agents provocateurs that he no longer makes any serious protest.” – The American Credo (1920)

In the nearly 90 years since George Jean Nathan and H. L. Mencken published The American Credo, the country has changed quite considerably. It seems worthwhile to make note of some of the ways that their predictions have turned out:

  • “[T]he dogma that certain theories of government are virtuous and lawful, and others abhorrent and felonious” has been a staple of American foreign policy since the book was published. The whole of the Cold War was dedicated to the proposition that American-style “democracy” is morally superior to Soviet-style “communism”. Our latest military adventures have likewise been sold as “spreading democracy” to countries that have “bad” governments. (Even as the United States has actively participated in propping up violent dictators, so long as they were adequately pro-American, if not pro-democratic.)
  • It is more true than ever that virtually all actions violate some law or other. Federal laws alone are now so numerous that literally nobody can say how many there actually are. Additionally, many federal regulatory bodies have the power to enact rules and regulations that carry criminal penalties. So while there may be as many as 4,500 federal criminal laws, there may also be as many as 300,000 federal regulations with criminal penalties. Consequently, it remains nearly impossible to do anything “without running afoul of some harsh and unintelligible penalty.”
  • “In God we trust” is subject to more or less constant attacks, but so far without any success.
  • The goddess of liberty has been removed from our dollar coins. Her first replacement was Dwight Eisenhower, former general and chief executive. Not quite a “policeman in a spiked helmet,” but not too different either. Eisenhower gave way to more peaceful images of Susan B. Anthony and then Sacagawea. Now we are back to the presidents, although the mint now has such an insane supply that they have stopped releasing new presidential dollar coins into circulation. More important than the image on the coins, however, is the fact that in the middle of the 1960’s the United States officially reneged on the promise to pay silver on demand for its notes, paving the way for unprecedented manipulations of the supply of money.
  • The “swarms of spies, letter-openers, informants and agents provocateurs” are still at work in this country, but with more power than ever. Whistle-blowers such as Edward Snowden have helped to highlight just how vast and pervasive American government spying is. And, true to Mencken’s observations, the vast majority of Americans do not put up any real protest.

The more things change, so they say, the more they stay the same. But it is hard to believe that even Mencken and Nathan could have been so cynical as to foresee the world as it is today. Surely the constant, and actually accelerating, decay of freedom must have a breaking point. How vast our freedom must have been if we are able to have lost so much.

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Beer of the Week: Zlatý Bažant (Golden Pheasant) – Although I have been aware of this Slovakian beer for quite a while, I never tried it until now. When I saw Golden Pheasant for sale in the past, it was always brewed under contract in the Czech Republic. This bottle, however, is the real deal from Hurbanovo, Slovak Republic. The beer is pretty and golden, with a nice white head that leaves decent lacing. It seems very much like any Czech lager, but there is something about it that seems a bit off, particularly in the aftertaste. It really is an ok beer, but there is just something about the Golden Pheasant that I don’t care for.

Reading of the week: The Spy by Svetozár Hurban-Vajanský – Hurbanovo, Slovakia, as it turns out, is named for Jozef Miloslav Hurban, a prominent Slovak freedom-fighter against the oppressive Hungarian regime. His son Svetozár Hurban-Vajanský was a poet and also a prominent Slovak nationalist. So a Hurban-Vajanský poem seems like a good pairing for Golden Pheasant. — The extensive use of spies and secret police against citizens is a sure sign of trouble for all freedom-loving peoples. It has been repeated through history, and the rulers who use those tactics number among the most notorious names in the annals of human society. This poem is a parody of the creation of man from Genesis. The devil forms a body of clay (and spit) and breathes life into it. And the result is not an ordinary man, but something far more evil: a spy.

Question of the week: There is an expression, the origin of which I cannot locate: “agent provocateur is a job so despicable that there is no word for it in the English language.” Do you know who said that? And is the agent provocateur really the worst sort of spy?