50 Economics Ideas You Really Need to Know by Edmund Conway

Author:Edmund Conway [Conway, Edmund]
Language: eng
Format: epub, mobi, pdf
Tags: Business & Investing, Popular Economics
ISBN: 9781623651824
Google: dho_C2SH81gC
Amazon: B005ELU01Y
Barnesnoble: B005ELU01Y
Publisher: Quercus
Published: 2009-09-02T23:00:00+00:00

The tragedy of the commons Poor or insufficient property rights can greatly damage an economy. Granting people legal ownership rights frees them to invest more in their property, in the hope of adding to its value. You are far more likely to spend some cash and time painting your apartment if you own it, as opposed to merely squatting in it. The alternative scenario is the ‘tragedy of the commons’ – a situation where people abuse a resource because they do not own it (see The invisible hand).

When Western economists visited the Soviet Union during communism they discovered that despite the country suffering major food crises, farmers would allow their fertile land to lie fallow, and crops to waste in the fields or warehouses. The problem was that under a communist system they had no direct property rights over their crops, and so far less incentive to work the fields harder and produce more food. Part of the reason that vast stretches of northern Africa are deserts is not merely because of climate or soil conditions – with some hard work and investment such areas could be returned to grassland. It is because the land is used by nomads and their herds, who have little incentive to look after the land as after a while they will move on. The result is often overgrazing.

Governments, then, must ensure not only that people respect their laws and contracts, but also that they put in place the right laws to ensure people contribute to a thriving economy. At the same time, they must ensure that certain inalienable standards – of weights, lengths and other measures – remain in place.

the condensed idea

The irreplaceable foundations of society

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