WHY DO SOME SOCIETIES MAKE DISASTROUS DECISIONS?: JARED DIAMOND (p5)

One particular form of such clashes of interest has received the name "tragedy of commons." That refers to a situation in which many consumers are harvesting a communally owned resource (such as fish in the ocean, or grass in common pastures), and in which there is no effective regulation of how much of the resource each consumer can draw off. Under those circumstances, each consumer can correctly reason "If I don't catch that fish or graze that grass, some other fisherman or herder will anyway, so it makes no sense for me to be careful about overfishing or overharvesting." The correct rational behavior is to harvest before the next consumer can, even though the end result is depletion or extinction of the resource, and hence harm for society as a whole.

Rational behavior involving clashes of interest also arises when the consumer has no long-term stake in preserving the resource. For example, much commercial harvesting of tropical rainforests today is carried out by international logging companies, which lease land in one country, cut down all the rainforest in that country, and then move on to the next country. The international loggers have correctly perceived that, once they have paid for the lease, their interests are best served by clear-cutting the rainforest on their leased land. In that way, loggers have destroyed most of the forest of the Malay Peninsula, then of Borneo, then of the Solomon Islands and Sumatra, now of the Philippines, and coming up soon of New Guinea, the Amazon, and the Congo Basin. In that case, the bad consequences are borne by the next generation, but that next generation cannot vote or complain.

A further situation involving rational behavior and conflicts of interest arises when the interests of the decision-making elite in power conflict with the interests of the rest of society. The elite are particularly likely to do things that profit them but hurt everybody else, if the elite are able to insulate themselves from the consequences of their actions. Such clashes are increasingly frequent in the modern U.S., where rich people tend to live within their gated compounds and to drink bottled water. For example, executives of Enron correctly calculated that they could gain huge sums of money for themselves by looting the company coffers and harming the rest of society, and that they were likely to get away with their gamble.

Failure to solve perceived problems because of conflicts of interest between the elite and the rest of society are much less likely in societies where the elite cannot insulate themselves from the consequences of their actions. For example, the modern country of which the highest proportions of its citizens belong to environmental organizations is the Netherlands. I never understood why until I was visiting the Netherlands a few years ago and raised this question to my Dutch colleagues as were driving through the countryside. My Dutch friends answered, "Just look around you and you will see the reason. The land where we are now is 22 feet below sea level. Like much of the area of Holland it was once a shallow bay of the sea that we Dutch people surrounded by dikes and then drained with pumps to create low-lying land that we call a polder. We have pumps to pump out the water that is continually leaking into our polders through the dikes. If the dikes burst, of course the people in the polder drown. But it is not the case that the rich Dutch live on top of the dikes, while the poor Dutch are living down in the polders. If the dikes burst, everybody drowns, regardless of whether they are rich or poor. That was what happened in the terrible floods of February 1, 1953, when high tides and storms drove water inland over the polders of Zeeland Province and nearly 2000 Dutch people drowned. After that disaster, we all swore, 'Never again!' and spent billions of dollars building reinforced barriers against the water. In the Netherlands the decision-makers know that they cannot insulate themselves from their mistakes, and that they have to make compromise decisions that will be good for as many people as possible."

Those examples illustrate situations in which a society fails to solve perceived problems because the maintenance of the problem is good for some people. In contrast to that so-called rational behavior, there are also failures to attempt to solve perceived problems that economists consider "irrational behavior": that is, the behavior is harmful for everybody. Such irrational behavior often arises when all of us are torn by clashes of values within each person. We may be strongly attached to a bad status quo because it is favored by some deeply held value that we admire. Religious values are especially deeply held and hence frequent causes of disastrous behavior. For example, much of the deforestation of Easter Island had a religious motivation, to obtain logs to transport and erect the giant stone statues that were the basis of Easter Island religious cults. In modern times a reason why Montanans have been so reluctant to solve the obvious problems now accumulating from mining, logging, and ranching in Montana is that these three industries were formerly the pillars of the Montana economy, and that they became bound up with the pioneer spirit and with Montanan self-identity.

Irrational failures to try to solve perceived problems also frequently arise from clashes between short-term and long-term motives of the same individual. Billions of people in the world today are desperately poor and able to think only of food for the next day. Poor fishermen in tropical reef areas use dynamite and cyanide to kill and catch reef fish, in full knowledge that they are destroying their future livelihood, but they feel that they have no choice because of their desperate short term need to obtain food for their children today. Governments, too, regularly operate on a short-term focus: they feel overwhelmed by imminent disasters, and pay attention only to those problems on the verge of explosion and feel that they lack time or resources to devote to long-term problems. For example, a friend of mine who is closely connected to the current federal administration in Washington, D.C. told me that, when he visited Washington for the first time after the year-2000 national elections, the leaders of our government had what he termed a "90-day focus": they talked about only those problems with the potential to cause a disaster within the next 90 days. Economists rationally justify these irrational focuses on short-term profits by "discounting" future profits. That is, they argue that it may be better to harvest a resource today than to leave some of the resource for harvesting tomorrow, because the profits from today's harvest could be invested, and the accumulated interest between now and a harvest of exactly that same quantity of resource in the future would make today's harvest more valuable than the future harvest.