Fishing in the Federal Pond

If I were to suggest we meet at City Hall, and for every Twenty dollar bill you take from your wallet and burn, you can also burn one of mine, you would think me an idiot for making the offer and yourself a bigger idiot if you accepted. Yet we do this every day in pursuit of Federal funds. It’s really not so different from fishing. Economists recognize the paradox of the Tragedy of the Commons, a set of adverse incentives that interplay in the sharing of a common, finite, resource. Though the name derives from shared pasture land, the more common example is a number of fishermen exploiting the same lake.  From the standpoint of each fisherman, it makes sense to catch as many fish as he can. Of course, the fish population of the lake cannot sustain such a heavy harvest, and the fishing in the lake soon declines.

The fishermen are not stupid, they know what is happening, but each also knows that if he alone restricts his catch, the others will catch all the available fish anyway and he will only suffer more, and sooner, than the others.

The same thing happens with matching Federal funds. We do all sorts of silly things, like Light Rail, which we would never do if we had to fund them locally, because by making a small local investment we can reap a large cache of Federal funds.  Of course, those Federal funds are our tax money too, so we are paying for it anyway, but like those fish in the lake, if we don’t catch those Federal dollars, some other locality will. Being responsible with Federal funds in our district will not have a noticeable effect on overall Federal spending, so even politicians who are in favor of responsible spending will seek every matching dollar and earmark they can get, otherwise, at election time, their opponents will blast them for not getting their district or city’s “fair share.”

So, overspending at the local, State and Federal level are in a positive feedback loop, out of control until, like that fish population, collapse occurs, unless the fishermen are wise enough to establish mutual, enforceable limits.  But with overspending on autopilot at all levels of government, who is going to be the Game Warden who enforces the limits?

Article I section 8 of the Constitution and the 10th Amendment should prevent this problem by discreetly designating those powers for which the Federal government can raise taxes and leaving the remainder to the States. But over time, those limits have faded and we mix Federal, State and local taxation to combined purposes. Lax, or even fanciful, interpretations of the Necessary and Proper, General Welfare and Commerce clauses have allowed the Federal government to fund and control entirely local projects. This has not worked out well.

Appointing justices to the Supreme Court unimpaired by a degree in law might help, but at this point, fixing the problem may well require a Constitutional Amendment specifically and narrowly defining those terms as originally intended.

But left as it is, we’re going to run out of fish.

http://tinyurl.com/federalpond

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