2.4: Collective Action Problems

The purpose of government is to make decisions for a group when it would be impractical to let each group member decide for himself or herself. Tribal migration and traffic laws are two examples of situations where group decision-making is desirable, but we can also generalize from them to define more broadly the kinds of decisions governments make.

Human societies establish governments to provide public goods. A public good is a benefit that can be enjoyed by all group members. National security, law and order, transportation infrastructure, fire departments, and clean air are all examples of public goods provided by the American government. Public goods differ from private goods, like the sandwich you had for lunch, because anyone can enjoy a public good without diminishing anyone else’s enjoyment of it. You can legally prevent someone else from eating your sandwich (it is yours, after all), and you probably will, because the more of it they eat the less of it there will be for you to eat. By contrast, you cannot legally prevent someone else from breathing the same clean air you breathe, but their enjoyment of that clean air does not prevent you from enjoying it as well.

Public goods can be expensive. As shown in Figure 2.2 below, each year the American government spends trillions of dollars on public goods which most of us would be unable to obtain individually. This is one of the main reasons why humans form groups: to be able to enjoy public goods which they could not enjoy otherwise. Almost no American could afford to pay for a military large enough to protect him or her from foreign invasion, but all Americans working together can chip in enough money to fund a military capable of protecting them all. This is the primary purpose of taxes: to collect enough money for the government to provide expensive public goods.

Figure 2.2: U.S. federal budget outlays, Fiscal Year 2022 (Source: Congressional Budget Office)

The tricky part about public goods is that people do not have to contribute to them in order to enjoy them. With private goods, only those who pay for the good get the benefit (unless they choose to give it to someone else for free). Public goods are different. If you were to stop paying your taxes — that is, if you decided to become a free rider, someone who benefits from a public good without contributing to it — you would not suddenly be denied the enjoyment of tax-funded public goods. The air you breathe would be just as clean, the roads you drive on just as well-maintained, the home you live in just as safe from foreign invaders. Even if the government wanted to deny free riders those public goods, it couldn’t, because public goods are by definition enjoyable by those who do not contribute to them.

“Hoodoos” — rocky spires — abound in Utah’s Bryce Canyon National Park, part of the National Park Service, one of many public goods provided by the American government.

If the number of free riders in a group is small, there will probably still be enough contributors to provide public goods. The trouble is that everyone has an incentive to free-ride, because it is preferable to enjoy a public good without contributing to it. When the number of free riders becomes too large, the group will no longer have enough contributors to provide the public good. This is known as a collective action problem: the group and all of its members benefit if the public good is provided, but each individual member would prefer to free-ride instead of contributing.

Government solves collective action problems mainly through coercion: they force citizens to contribute instead of free-riding. Few people would freely choose to pay the taxes on which the government relies to provide public goods, which is why the government does not give them that choice. If you decide not to pay your taxes, the government will attempt to change your mind. They might begin by asking nicely, but if you continue to refuse their requests will become increasingly demanding. Eventually, people with guns will come to your home to arrest you and confiscate the money you owe in unpaid taxes, plus an additional amount for the trouble you’ve caused. If you resist even then (perhaps with a gun of your own), they will use deadly force against you, possibly even killing you, all because you refused to pay your taxes.

Coercion is not pleasant, so most of the time we try not to think about it. We prefer to imagine that a good, free, democratic America works by everyone just asking nicely and everyone else responding in kind. Indeed, most Americans pay taxes, obey laws, and heed the instructions of police officers without having to be asked twice. However, they do so because they recognize that refusing to follow the rules comes with harsh penalties, up to and including the government’s use of deadly force to ensure their compliance. If governments did not have the option to use violence as a last resort, they would be unable to solve collective action problems and provide public goods. Every government, democratic or otherwise, is predicated on its ability to bring violence to bear against its own citizens if necessary.