The Common Good and the Free Rider; M. Tanner

But how does one determine what is the common good and the general welfare? Let's look at a simple situation that tells us something about how and why humans cooperate and how we determine the com mon good. AI and Bart Two men are fishing. Both fishermen are reasonably competent and each can expect to catch three fish by fishing alone. An economist will tell us the expected Gross Group Income is six fish, but neither fish ermanwillthinkaboutthat. Eachindividual is only interested in the three fish he expects to catch. Suppose that each man knows that if the two of them cooperate (share. knowledge about where the best fishing spots are, Mr. Tanner, who lives in Moscow, Idaho, is a retired American diplomat and freelance writer. watch each other's lines, help net the fish when one is caught, and so on), they can expect to catch four fish apiece. That results in a Gross Group Income of eight fish, a net gain of two fish.

The expected group gain is not the num ber that will guarantee that the two men cooperate. They cooperate because of the expected individual gain-the bonus of one fish each will catch because of their coop eration. They cooperate not for the common good, but for their own selfish benefit. But suppose fisherman Al is a very good fisherman, and fisherman Bart doesn't have the foggiest idea about how to catch fish. Fishing by himself, Al can expect to catch four fish while Bart will catch no fish. How ever, if Al helps Bart, then Bart will catch two fish, but Al willcatch only three fish. (AI will reduce his own catch because of the time he spends teaching Bart how to hook a worm, cast a line, and playa hooked fish.) The Gross Group Income jumps from four to five fish as a result of the cooperation. If you are one who judges success by what the group does rather than what the individual receives, and if you insist that each individ ual must serve the interests of the group rather than his own selfish interest, then Al must help Bart because that willincrease the Gross Group Income even though it reduces the personal income of Al by one. Al must serve the common good even though that requires him to sacrifice a part of his own good.

397 398 THE FREEMAN • OCTOBER 1993 This is socialism reduced to the level of just two people. The advocates of socialism will tell us that Al should happily join in with the cooperative effort because all humans have a moral obligation to serve the com mon good rather than their own selfish wants. If you try to build a peaceful society on that principle, you are doomed to failure. If Al is a self-interested individual, and every one is, he could care less what the Gross Group Income is. If Al gains no reward for helping Bart but pays a price for doing so, and if given a free choice, Al will catch four fish working for himself, while Bart catches none. Other Rewards But a day of fishing may offer more in the way of rewards than just the number of fish caught. Al may be a vain and proud man who will enjoy the praise and thanks he will receive from Bart for his help; Al could be lonely and want the company and good fellowship he gets from helping Bart; or Bart might be a great hunter and Al will need some help in that line come fall. Al could also believe in a religion that teaches him he will receive a heavenly reward for helping Bart learn how to fish.

It's also possible that Bart looks mean, ugly, and hungry, and Al is afraid that if he doesn't help Bart, Bart willsteal the four fish Al expects to catch. So Al appeases his own fears by teaching Bart to fish. In each of these situations, Al gets a reward for his cooperation that he believes is worth more than the fish he loses by cooperating with Bart. If fisherman Al were an economist he might put the situation into a formula: Four fish minus one fish (cost of cooperation) plus pleasure (reward of coop eration) is greater than four fish. The Gross Group Income doesn't increase just by two fish but by two fish plus AI's pleasure (or more probably by two fish plus AI's pleasure plus Bart's pleasure because Bart also gets a kick out of learning how to fish and the extra good fellowship). Neither individual will worry about whether the Gross Group Income increases or decreases, nor for that matter, whether the other person gets more out of the coop eration than they do. Each person makes his decision based strictly on his own wants and his own perception of what he gains from cooperation. The two fishermen will only cooperate if both men believe they are going to get more out of the cooperation than they would earn by acting alone. On the other hand, no matter how much one party could benefit from the cooperation, the coopera tion will not take place if the second party doesn't get some kind of reward that makes the cooperation worth his time and effort.

While it is easy to count fish, it's impos sible to put quantitative values on the re wards of friendship, hope of heaven, family love, loss of fear, and self-pride. Each personal decision to cooperate or not will be a highly subjective one with a dozen or more variables at play. Because each individual only will cooperate when he believes the total profit of his cooperation exceeds the price of cooperation, a voluntary coopera tive effort willalways result in an increase of the Gross Group Income-provided one includes both material and intangible bene fits in figuring income. It's impossible to determine mathemati cally which of the group members is getting a fair share of the Gross Group Income or who is putting more than afair share into the group effort and taking less than afair share out because it's impossible to determine how any single individual subjectively mea sures the non-material income he earns by participating in a cooperative effort.

Any measurement of Gross Group In come that includes only the material gains or losses will be a false measure. For example, several fishermen in a party might catch fewer total fish than each of them could have caught by fishing alone, but they will all consider the day highly successful because of the fun and fellowship they harvested. (This is a situation that gives the central economic planners nightmares. Their statis tics will show declining profits and no doubt the politicians will campaign on a promise of how they will increase the profits from THE COMMON GOOD AND THE FREE RIDER 399 fishing if they are elected. Yet, each of the individual fisherman in the group will resist every effort that increases the catch at the cost of reducing the fun.) The Common Good The only way to judge whether or not the common good is served by a cooperative effort is to observe whether or not every single individual in the group continues to cooperate voluntarily to achieve the tar geted goal. If even a single individual refuses to cooperate, then the goal cannot be pro claimed to be in the common good of ev eryone but only in' the common good of those who want to participate voluntarily.

If fisherman Al doesn't want to cooperate with fisherman Bart, Bart may get Al to change his mind by upping the rewards that Al will get out of the cooperation. Bart can offer Al a greater share of the catch or offer to pay Al with some other commodity for his help. He might also remind Al of the rewards of heaven for good behavior. Other than that, Bart's only choices are either to forgo the cooperation or to force Al to cooperate. Bart may be in such dire straits because of his lack of fishing skills that he decides he has no choice but to force Al to help him fish. The forced cooperation may result in a situation where the two men together catch more fish than they would have caught with each fishing alone. But Bart cannot claim that he used force in behalf of the common good. He used force in his own self-interest, and he exploited Al in doing so. How much cooperation can Bart really expect to get out of Al by forcing Al to cooperate? At best, Al will only give the minimum amount of cooperation he can get by with. Rather than teaching Bart what he knows about catching fish, Al will catch the minimum amount offish necessary to satisfy Bart.

The most damaging thing that happens may be the loss to both men of the pleasure rewards of voluntary cooperation. Fishing will no longer be a fun activity but a drudg ery that one is forced to work at while the other must stand guard to make sure the work gets done. Al will look for a chance to escape or take his revenge on Bart, and Bart will wait in fear for that to happen. While the central planner's figures that measure only the number of fish caught may well show a greater Gross Group Income because of the forced cooperative effort, the emotional profit of cooperation which cannot be mea sured will disappear. The Lesson Applied This same basic formula controls the decision-making process if there are three people, four people, forty people, or forty million people. No matter how large the group, voluntary cooperation will always occur if every single member of the group perceives that he is getting more benefit out of the cooperation than the cost of cooper ating. If every member of the group doesn't get more benefit out of cooperation than what he puts in, the only way to achieve cooperation is to force the unwilling to cooperate.

Should a few selfish people be permitted to prevent a large group from achieving a common goal by their refusal to participate? It seldom happens that way. What happens in real-life voluntary cooperation is that the group excludes the defector from the re wards while the rest of the members con tinue to cooperate. Each remaining member will continue his cooperation for as long as he makes the subjective judgment that co operation serves his needs and desires bet ter than going it alone. The voluntary cooperative community is always a self-policing community. Each par ticipant will be constantly re-evaluating his own position in terms of deciding whether or not he or she should continue to cooperate. The free-rider dilemma will be self-correct ing. Free riders will either be shamed into making a fair contribution or will be ejected from the group so that they can no longer participate in the rewards.

If too many people start to free ride, then the producing members will stop producing and the group will dissolve. The work either will not get done, which means it was not in 400 THE FREEMAN • OCTOBER 1993 the common good, or new, smaller volun tary groups will form and make a new try at the endeavor. The Free Riders What about those who don't participate but who continue to benefit from the work of the group-say someone who refuses to contribute money and volunteer service to a volunteer fire department because he knows the fire department will have to put out a fire at his house in order to save the surrounding houses? Shouldn't such free riders be re quired to pay their fair share in such cases? The answer can be found in another question. Why do the firemen put out the fire at the house of the free rider? Is it because they care about the free rider? Of course not. Indeed, the free rider could want his house to burn down so he can collect the insurance. All the volunteer fire men care about is protecting their own homes. They put out the fire for the same reason they would put out a grass or forest fire that threatened the town. Every member of the volunteer group still achieves the common goal of the group, the protection of their own homes.

In the real-life situation, the members of the community who are cooperating may do every peaceful thing possible to encourage the free rider to do his fair share, but giving a few free rides in such situations like fire fighting, crime prevention, or defense from enemy attack is part of the price we must be willing to pay to keep the voluntary group effort going. Majorities and Minorities What if the majority of the people in a community agree that they must cooperate to achieve some common good, but they cannot achieve the good unless they also have the help of those who refuse.to coop erate? Doesn't the majority have the right to force the minority to go along? That's exactly the argument that the so cialist and the welfare statist make. They tell us that just as we must use force to prevent the criminal from destroying the goals of the cooperating community, the community may also have to use force or threat offorce in order to ensure that everyone does his fair share of the work in achieving the common good. That's what socialism and state wel farism are all about.

Their argument is based on logical falla cies that are demonstrated with the tale of two fishermen. What a majority wants and even insists it needs cannot be described as the common good if it can be achieved only by forcing a minority to put more into the endeavor than it will collect in profit. It may indeed be for the common good of the majority, but not for the whole community. No matter how noble, productive, or nec essary for survival the goal of the majority might be, if the majority forces the minority to contribute involuntarily, the majority is exploiting the minority. In an imperfect world, there will be rare times when members of a community con.. front a threat so dangerous to survival that they find they have no choice but to force an objecting minority to do the will of the majority. However, given the price of vio lence, such action should be reserved for only the most extreme cases. In most situ ations that confront· any community, the majority is better advised to cooperate on a voluntary basis in resolving all the commu nity's problems.

While the free-rider dilemma is self correcting in a voluntary cooperative effort, it magnifies itself in an involuntary effort. If all must cooperate, no one will have any good reason to contribute anything more than the absolute minimum; everyone will be trying to take out as much of the profit as he possibly can. The shrewdest members of the group will find it more productive to wield control through the political process rather than working to increase economic production. Rather than choosing to be entrepreneurs who figure out ways to increase production, they will seek to become the central plan ners so they can cut themselves a bigger piece of a shrinking pie. Those working in a system in which THE COMMON GOOD AND THE FREE RIDER 401 cooperation is forced rather than voluntary are neither more nor less inherently selfish than those working in a voluntary system. But those depending on the voluntary con tribution of others quickly learn that they must satisfy the demands of others in order to satisfy their own demands. Those work ing within an involuntary system learn that what counts is who controls the force.

A voluntary cooperative group which fails to provide the rewards that each of its members wants either self-corrects or dis bands. If the leaders fail the group, they are quickly defrocked and cast aside as a certain television evangelist and the director of a national charity recently learned. But those trapped in an involuntary effort have no choice but to continue to participate no matter how much their leaders fail them nor how many of the other members of the group decide the smart money is on the free ride. The collapse of the socialist powers of Eastern Europe has proved with great hu man tragedy how forced "cooperation" is never in the common good. But those who think the West's kinder, gentler form of forced cooperation via taxation has been declared the winner need to look at what is really happening in the welfare state democ racies. With the politicians and bureaucrats con trolling growing amounts of money that have been forcibly collected in taxes, every citizen does everything possible to reduce the taxes he pays and to increase the benefits derived from the treasury. It's a lot easier in America these days to join the free riders and pile onto the entitlements bandwagon than it is to engage in productive activity and then see forty percent or more of one's income taken in taxes and given to other people. The central planners never serve the common good; they always serve the good of those who are clever enough to work the system to their own advantage. The winners are always the politicians, the bureaucrats, and those who learn to manipulate the system by spending money in the right places.

Even the most committed supporters of the democratic welfare state are beginning to recognize that something has gone wrong, that the money that was supposed to take care of the poor, the sick, the unemployed, and the helpless is instead being sopped up by politicians, government employees, the most successful farmers, the rich business men who are protected by subsidies and tariffs, much of the legal profession, and the well-fixed retired. Once the decision is made to take money from some voters and give it to other voters, the worst and the brightest will manipulate the election system to ensure that they get a cut of the Gross Group Income that is greater than the amount they are forced to contribute. The interventionist society is a political war of all against all. D THEFREEMAN IDEASON LIBERTY WHY ADAM SMITH BURNED HIS CLOTHES by Edwin G. West N ever before, it seems, have candidates for high office in government been sub jected to so much scrutiny. And this is not just the result of a new-found zeal in thejoint party committees that review appointments.