The True Cost of 'Free Economics': Uncovering the Tragedy of the Commons
At the University of Freenomics, "freenomics" is defined as "Free economics." This concept raises fascinating questions, such as whether air can be considered a form of freenomics. In a true free market economy, regulations and subsidies would be abolished. However, the reality is far more complex, as this article will explore.
The Ideal of a Market Without Regulations
A free market economy would ostensibly govern without the need for restrictive economic regulations. On the surface, this seems like an attractive vision, where corporations and businesses thrive without government interference. However, there are significant limitations to this ideal.
Without regulation, corporations could exploit loopholes and seek special benefits, privileges, and exemptions. This dynamic is not sustainable in the long term. In reality, the government would still play a role in ensuring economic stability, but the role would be different. It would not actively promote or impede growth through subsidies or regulations. Instead, it would stand aside and let the market forces dictate.
Regulation: A Double-Edged Sword
The ideal of a completely free market economy seems to negate the need for regulation. However, this is a misconception. Governments still have a crucial role in maintaining the environment, public health, and overall economic stability. Let's explore how we pay for these services and what they entail.
Air: The Hidden Costs
Air is often considered free because it is available to everyone without a direct cost. But the illusion of free air is grounded in the reality of hidden costs. You pay taxes to maintain air quality. The Environmental Protection Agency (EPA) monitors air quality, wildfire fighters and smokestack scrubbers are funded regionally, and the land in Brazil that is kept wild to allow Americans to breathe is not free. These all come at a cost.
If you don't pay for air, your property values may decline based on the air pollution, your industrial development suffers, and your medical costs increase. The costs of maintaining these commons are shared, but the benefits are not. This is the essence of the tragedy of the commons.
The Commons and Shared Resources
The term "commons" refers to resources that are held or experienced in common by a group. While the concept of "free" seems appealing, it often leads to neglect. Traditionally, social institutions have maintained commons, but liberal economics discourage such contributions. As more services are internalized, the result is often the tragedy of the commons.
Examples of the Tragedy of the Commons
Consider water, another resource that is often thought of as "free." Water is not freely available for consumption due to pollution. Amoebae from animal husbandry, factory runoff, and acid rain make it unsafe for human consumption. Despite being polluted, water remains available due to the control of its distribution by a few entities. Trickling down into bottles and labeled as "filtered" or "spring water," it can command higher prices.
Similarly, views and scenic beauty are compromised. Light pollution has eliminated star watching for the vast majority of the world, and even where efforts are made to control light pollution, smoke from wildfires can contaminate the views. Many jurisdictions face lawsuits over individual development projects that impact communal resources.
Conclusion
While the concept of freenomics is captivating, the reality is that nothing in life is truly free. What appears to be free is often simply a result of unaddressed market failures or governmental oversight. The tragedy of the commons is a powerful illustration of this fact. By recognizing the true costs involved in maintaining our shared resources, we can work towards more sustainable and equitable solutions.
Ultimately, the pursuit of a free market economy must be balanced with the recognition of the inherent costs of commons. This understanding is crucial for creating a truly sustainable and equitable society.