Federalism

Success of the Commons

“Tragedy of the commons” is the more familiar argument when it comes to measuring the public good, which is a measure of gaming (testing) the level of tolerance.

It is not readily apparent, but the tragedy of utilizing resources for a common purpose strongly correlates with the concept of Pareto Optimality.

Remember, Pareto’s measure of optimality is controversial because it measures utility against current value. If I have ten things and you have one, and in the common interest I lose two so you have three, not everybody is a winner. The distribution of the aggregate value is then considered to be Weak Pareto Optimal (WPO). There is a measurable, mathematical difference, but whether it is actually beneficial to everybody (Strong Pareto Optimal) is a matter of arguing the effect in the futures.

Having lost 20% of my wealth for you to gain by more than 60% seems intuitively unfair, but the argument is that it serves the general welfare, having an indivisible (or commonly divisible) benefit. Even though I still have eight things to your three, the loss is a tragedy of the commons.

The measurable difference becomes an arbitrage argument. There is a real price to be paid (the rent) actualized in the futures on demand, and there’s an “ap” for that. It’s called the futures markets where buying and selling the debt is optioned (contractually obligated over time, which inherently occupies your space and mine) depending on the strength of the argument being “made” (i.e., the story being told that values the risk).

The results are tragically common. In fact, it is so common, and potentially tragic, that central bankers refer to it as “the big risk.”

In the US we have the Federal Reserve Bank to manage the “big” risk, which also manages the risk for the little people, as well (occupying your space and mine by default).

The risk of default is cause for a whole lot of angst. For the “little people” especially, it is dramatically compounded by the debt proportion that allows you to have one thing to my ten things, less 20% so that you can have three things with a whole lot of debt!

(Remember now, not taking on debt is to “make” a sacrifice…for me to have a lot more things than you…to the point of default. Where is the optimality in that!)

Optimizing the risk in a TBTF proportion has been modernized (the CFTMA). We now use “innovative financial instruments” to derive the risk and distribute it on demand (in the form of debt), using derivatives markets.

Risk is managed by the high priests (occupying your space and mine) in the inner sanctum of “dark markets.” Since it occupies everybody’s space it is, by definition, common. The risk, however, is not commonly distributed, just like Alexander Hamilton and the Federalists said it should be.

When General Petraeus said we needed to install a federalist system in Iraq, he is referring to a bottom-up legitimacy of power. This means that “the little people” have a direct stake in the formation of the government–something worth fighting for.

So, what happened!

Occupying space over time, what is the common tragedy here that measures success, and what is the expected outcome (the categorical imperative) in all the futures?

Existentialists want to know!

What is the level of angst and, more important, what does it actually measure?

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About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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