Two “nobel” choices
Brent Tantillo • November 6, 2009 • Uncategorized
Not everything coming from the Nobel Committee has a left-wing bias. The winners of the Nobel prize for economics this year — Elinor Ostrom of Indiana University and Oliver Williamson of Berkeley — show a respect for the “invisible hand” of the market and its organic manner of coming to the best decisions over time to solve problems such as the “tragedy of the commons”, rather than the heavy hand of government tinkering through regulation to control how communities fix such problems. The Economist provides one such example from Ostrom’s work:
But in 40 years of studying how common resources—from lobster fisheries in Maine to irrigation systems in Nepal—are actually managed by communities, Ms Ostrom found that people often devise rather sophisticated systems of governance to ensure that these resources are not overused. These systems involve explicit rules about what people can use, what their responsibilities are, and how they will be punished if they break the rules. In particular, she found that self-governance often worked much better than an ill-informed government taking over and imposing sometimes clumsy, and often ineffective, rules.
The human temptation — particularly for policymakers worried about their next election – is to control and manage our economic problems for the short-run. However as Ostrum’s research shows, in the long term, left to its own devices, the market will come to the best solution. As Washington continues to focus on short-run solutions to “stimulate” the economy, our policymakers are failing to recognize this general rule.
Comments
Leave a Reply
