The details change, but the underlying situation is the same. There are two games of chicken being played in Europe at the moment. One is the game between Greece and the rest of the eurozone. The Greeks believe, or at least they are doing their best to pretend to believe, that a Greek exit for the eurozone will be so catastrophic that in the end the EU will have no choice but to offer the Greeks substantially better terms than are now on offer. The eurozone authorities, on the other hand, believe, or at least they are doing their best to pretend to believe, that the consequences of a Greek exit can be managed for Europe as a whole, but that the devastation in Greece will be so great that the Greeks will have no choice in the end but to comply with the agreements they have already signed.
The other game of chicken is the contest between Germany and France. The Germans swear up and down that whatever happens they will never, never, never accept the ‘mutualization of eurozone debt’ or the ‘politicization of European monetary policy.’ They won’t bail out the debts of the Club Med countries and they won’t accept the classically Latin form of currency management in which the currency’s value is manipulated (generally downward) by the political elite. The French (politely and deferentially in the Sarkozy era and more confrontationally under Hollande) point out that this German policy will lead Europe into an interminable series of financial crises, and at each crisis point the Germans will have to accept new bail outs and new debt guarantees in order to stave off a general European financial collapse.
Property Rights and the Tragedy of the Commons - Jonathan H. Adler
One thing that Hardin overlooked is that the political process often replicates the same economic dynamic that encourages the tragedy of the commons -- a dynamic fostered by the ability to capture concentrated benefits while dispersing the costs. Like the herder who has an incentive to put out yet one more animal to graze, each interest group has every incentive to seek special benefits through the political process, while dispersing the costs of providing those benefits to the public at large. Just as no herder has adequate incentive to withhold from grazing one more animal, no interest group has adequate incentive to forego its turn to obtain concentrated benefits at public expense. No interest group has adequate incentive to put the interests of the whole ahead of the interests of the few. The logic of collective action discourages investments in sound public policy just as it discourages investments in sound ecological stewardship. This, in addition to the pervasiveness of special-interest rent seeking, explains many of the failings of centralized regulation. So despite the environmental gains of the past half-century, real challenges remain, and the tragedy of the commons is still with us.
