40. The Tragedy of the Commons: The Sin That Got Us Here

Demographic Doom Podcast

April 18, 2020 — The Tragedy of the Commons is an economic dilemma first described in 1822. If a village uses a common plot of land to graze its animals, the incentive of each villager is to graze as many animals there as possible, but if everyone in the village does this, the land is denuded and all the animals starve. The only way to preserve the Commons is some form of government regulation limiting the grazing rights of each villager. This analogy applies to all manner of shared resources, like lakes and rivers, as well as financial instruments and the money supply. Governments have been successful in managing real-time resources like grasslands but have been less successful regulating secondary markets involving future resources. When villagers start buying and selling their future grazing rights, it can lead to bubbles where more rights are sold than the future Commons can actually support. That's the condition of our whole economy right now. More debts and promises are being traded than the real economy can ever fulfill. In this episode, Glenn Campbell looks at the new Tragedy of the Commons arising from too much debt and undisciplined monetary policy. — Website: DemographicDoom.com — Instagram & Twitter: @DemographicDoom — See the video version of this episode for notes, comments & corrections: j.mp/dd_commons [ep 40, 18 April 2020]