The Ostrom Workshop loses its way

I’m a fan of the work of Vincent and Elinor Ostrom, who were known for developing and exploring models of polycentric governance and their Institutional Analysis and Development (IAD) framework

They were also co-founders of the Public Choice school of thought, i.e., that the personal beliefs and biases of public administrators will affect the decisions they make.*

For me, their most important work was on the governance of common pool resources, whose complexity requires an interdisciplinary mix of perspectives as well as respect for the subtle power of local institutions. (I’ve written several papers on this topic.)

I’m thus surprised and saddened to see their Workshop (founded in 1973) stray from their original and useful ideas.

A few weeks ago, I went looking on the Workshop’s site (to find the 1971 paper I discuss in the footnote below) and found that things had changed since the Ostroms died in 2014. A quick look at the website shows that new leadership has re-directed the workshop towards conventional themes such as governance, cyber-security (!), and natural resources. The “public choice” of pursuing these me-too themes (see the footnote for the irony) is not only a failure for its probable failure against stronger competition; it’s also a failure for abandoning a unique and powerful line of interdisciplinary work on managing the commons and polycentric governance. Although I would like to blame conspiracy for this change of direction, I think — knowing the New Institutional Economists who are now in change of the Workshop — that it’s the result of limited comprehension of the Ostrom’s work rather than malice.

As exhibit #1 of my claim that the Workshop may not deserve the Ostrom’s name, I will note that the Ostrom’s work is archived under “legacy” rather than “essential” readings.

For exhibit #2, I note that Terry Anderson gave the first “lecture on environmental policy” in 2017. I know Anderson because I spent the summer of 2010 at his free-market environmentalism think tank (PERC), and because he “banned” me as ungrateful in 2014 for questioning PERC’s analysis of Cadiz, a dubious (and probably fraudulent) private groundwater company in California. (All comments are gone.) Folks like Anderson want to “fix the commons” by privatization rather than using the collective solutions that the Ostroms spent decades exploring and explaining. I’m all for diverse opinions, but I can’t think of a worse-qualified speaker on the Ostrom’s work and legacy.

My one-handed opinion is that the Ostrom Workshop may not deserve that name for much longer. It seems that we will have to rely on a spontaneous growth of polycentric circles of researchers to carry forward the Ostrom’s work.

Addendum (25 June pm): I ran into someone from the “new management” at WCERE today. They said that some of the programming is indeed new, while other programming does continue to focus on the governance of natural resources. 

* Anyone interested in this school of thought, which provides insights into many government and bureaucratic failures, can read their 1971 paper here [pdf]. In it, they define the bureaucrat as decision maker:

Our “man: the decision maker” will confront certain opportunities and possibilities in the world of events and will pursue his relative advantage within the strategic opportunities afforded by different types of decision rules or decision-making arrangements.

Many people do not understand the implications of their observation when they “leave it to the experts” and get bad results. Such cautions do not mean we should have no government or switch to laissez faire. They mean that bureaucrats much be accountable and engage the public in their deliberations (points made powerfully around the same time by Jane Jacobs).  Later in the paper, the Ostroms caution against concentration of power in the hands of the few, i.e., 

Expected external costs [negative spillovers onto unsuspecting victims] will be at their highest point where any one person can take action on behalf of the entire collectivity. Such costs would decline as the proportion of mem- bers participating in collective decision making increases. Expected external costs would reach zero where all were required to agree prior to collective action under a rule of unanimity.

They explicitly link this “rule” to the Buchannan and Tullock’s work on constitutional design, a connection that pleased me greatly, as I have read their foundational work on this topic 🙂

Later on in the paper (I filled my copy with notes and highlights), the Ostroms explain how bureaucratic cost-benefit analysis might take spending and revenue into account, but perhaps ignore impacts on users, which is why we often hear about “budgetary savings” that cost citizens hours of extra waiting. 

In the end, their paper provides a fascinating preview of their theory of polycentric governance, i.e., a system of overlapping governance jurisdictions that might confuse those who “See Like a State” but perform admirably due to each circle being fit for task. Read this pdf to learn more of how they developed that theory in the 1970s.

Weekend reading

  1. Illiberal democracy seems to mean that Hungarian politicians can sell residency for cash
  2. Power is diffusing. Thus, there’s a need for more governance, at all levels of society
  3. The geography (rural vs urban vs suburban) of America’s divisions
  4. Surfers, property rights, the commons and gentrification in San Francisco
  5. What’s killing Americans? A primer on fentanyl
  6. Cooperation varies as water does, as a solid, liquid or vapor
  7. Sure, “try everything” to counter climate change, but not every idea is a good one
  8. The IMF has a special issue on digitalization and crypto (including this gem to “tax crypto”, this history of the pros/cons of fiat money, and LaGuarde’s wisdom on wait and see.
  9. Saving Curitiba and Vancouver from [excess] cars and roads
  10. A long look at Coke’s attempt to be “water neutral.” I think the journalist is a little too harsh on the company, given the massive issues with water management at larger scales, but it’s a good exposé of corporate and activist failures to understand water’s complexity. One big mistake: blaming Coke for the footprint of its supply chain when the real blame for “water use” falls with the consumers of the products.

Is the glass half empty or half full?

For years I dismissed this question (which tends to focus on whether you’re pessimistic or optimistic, respectively) with “I’m a realist, it is what it is,” but it turns out I’m a glass-half-empty kind of person. 

I realized that when I was worrying in ways like this:

  • “My shares in this company are worth $x. That sucks compared to their value of $2x not so long ago” without remembering that I bought them for 0.5x.
  • “Awww damn, it’s raining so I’m going to hunch over” while forgetting that hunching doesn’t keep me dry, I’ll be home (to dry clothes) in 10 minutes, and rain is part of Amsterdam’s glory.
  • “If I give my girlfriend this piece, then she’ll have more than me, and I’m hungry” without remembering that there are more pieces to eat, that a piece that’s half a bite larger isn’t going to fill me up, and — no duh — it’s my girlfriend who I’m sharing with. (wtf?)

How does this happen?

Academics have thought about these ideas, which go deeper than optimistic and pessimistic. We know that “framing” a question or idea affects the way people perceive it. We’re happier getting an “gift” with  our purchase than having it included in the price, for example. A related concept  — anchoring — depends on a reference point. People are often happier getting a 50% discount on a $10 book than paying the “full price” of $5 for the same book. 

How can these perspectives co-exist?

I think there are pros and cons to each perspective, so one never displaces the other. A half-empty perspective might drive you to save food and thus avoid starving. A half-full perspective might lead you to take a chance and thus find a new food source.

Which one is better?

Neither. For the half-empty perspective, you might worry without need on many occasions (con) but predict — and thus avoid — “surprises” (pro). Half-empty probably means short-term stress but long-term success. 

From the half-full perspective, you’re going to be surprised by occasional disasters (con) but life a care-free life (pro). My father’s optimism has helped him enjoy 85 years, but he’s a bit behind on his retirement planning. 

What’s to be done?

In general, I’d consider the half-full perspective if you’re a half-empty kind of person (and vice-versa). Such contrarian thinking (which requires type 2 effort) will increase short-term happiness for the half-empty personality and long-term successful for the half-full type.

Personally, I try to remember how many things are going well in my life, trust statistics (“this plane in unlikely to crash”), or put the topic aside. Sometimes it will come back for attention and sometimes not, but there’s no sense in worrying until and unless I must.

What do you think about this question of perspective? Are you a half-full or half-empty kind of person? Do you have a good technique to balance your over- or under-optimism?

Weekend reading

I read a lot, and I think you may enjoy reading these:

  1. Stuff your agenda, and you will lose time. Leave space to breathe.
  2. The Big Four accounting firms: “too few to fail, but definitely failing investors
  3. The Russian mafia are growing in America, often with help from Trump and his cronies
  4. Some options for privatization in Saudi Arabia [pdf] discusses water, oil, etc.
  5. How to Build a Smart City (an insightful podcast)
  6. Rich kids do better on the marshmallow test because their homes are calmer
  7. I watched “Downsizing,” a Matt Damon movie who’s plot revolves around some subtle discussions of sustainability and community. Recommended.
  8. Tech-culture: Customer feedback is worthless and longing for community 
  9. The decline of the Fourth Estate (reporters too lazy to check sources or find stories)
  10. Logic is hard.
  11. These villagers have kept their hand pumps working, with local rules of use

H/T to ED

The end of the beginning

So I’ve been thinking of changing my blogging style, to be a bit more strident, a bit more aggressive, a bit more useful to people who want it straight.

It’s with this feeling in mind that I bought this URL a few years ago. My original plan was to write a book, one chapter at a time, on this blog. Each chapter was going to deal with a basic topic (taxes, children, etc.) and discuss the obvious and/or important insights that economics has on that topic.

The title of this blog refers to an old story of President Harry Truman demanding to talk with a one-handed economist… because all the other economists kept saying “one the one hand you can do this, on the other, you can do that…” So my goal here is to give you opinions that are strong but useful, insightful (perhaps) but clear.

I thought that I would do 12 chapters in 12 months, with lots of input from you readers, but then I changed my mind about the schedule (not the need for input!) and decided to take the process a little more slowly, first because what’s the hurry, and second because I’m not really sure what the chapters would be, and I’d prefer to get some ideas from you.

I’ve got a lot more to say (this is only the end of the beginning — there’s a long way yet to go!), but that’s where I am at the moment. Oh — one more thing: I am going to really avoid “going social” with this blog, so I won’t be using twitter, etc. to promote it. Instead, I am hoping to make it a destination worthy of your time, something that you “pull” towards yourself rather than have “pushed” into your inbox, feed or stream.

So let’s step out of the stream, come ashore and relax to think a bit.