YU Club Funds: Almost a Tragedy
Our YU clubs mirror a political and economic tragedy: the “tragedy of the commons.”
The student council as a whole currently commands a budget well over $100,000. Sound like a lot of money? Not only was it significantly reduced since the recession, but the council occasionally starts a new year loaded with deficits from the previous one. Times are tough right now for the student budget and there isn’t enough money to go around.
The student body’s desire for events hasn’t gone down, however, only the funds available. As a result, quality programs, as speaking events, social activities, and trips that could otherwise secure funding may never see the light of day. It also means student government has to spend more wisely.
The big question is: are we spending our club funds wisely? Let’s consider the incentives involved. Anytime you have money available to the public, in this case the student body, everyone will naturally try and use as much of it as possible in order to further their personal goals. The Neurological Society will try to siphon funds for its speakers, the Debate team for transportation, the Israel and political clubs for their own events, everyone for pizza…and Students for Liberty is no exception. We all want the maximum funds possible for our own events.
Don’t we know that it’s limited? At first glance it almost seems selfish to request large amounts of money, as it ostensibly comes directly from other societies. If I take X more amount of money, then you get X less amount of money. A closer look, however, reveals that it might actually be rational for student societies to suck their sources of money dry. We approximate a situation more commonly encountered in government and environmental policy known as the “tragedy of the commons”.
What is the Tragedy? Just as in the case with the YC Student Council, it is where there exists a large, “non-privately owned” pool of resources and private individuals who wish to use it. Imagine a factory polluting the environment. The atmosphere, with its clean air, is a large non-private resource that we all use free of charge. As a result of the atmosphere’s enormity, however, the individual factory that pollutes acts not only within moral bounds, but in accordance with ration as well. Even if it dumped large amounts of smog into the air it couldn’t by itself make a dent in the health of the regional environment. Indeed, the negative cost of an individual factory’s pollution spreads out over the entire environment and is, therefore, for all intents and purposes, insignificant. Yet the benefit derived from running the factory can be enormous and will be concentrated on the factory. Thus, the factory reasons, it makes sense to keep operating. The benefit is high and the cost negligible.
The problem is when too many factories act on this individually rational cost-benefit calculation. In that case, the combined pollution can ruin the environment, a public good, for not only the factory but also the rest of society. There is, however, no specific culprit and no victim who has been especially hurt by any individual factory. Their acts – taken individually – were insignificant.
Let’s take this example and apply it to YU clubs. For us, the student government funds are a public resource. When a club requests extra pizza for an event, it’s not "selfish" at all. Not only does it think the money is going to a good place, and that the amount for a couple extra pies (compared to $100,000) is relatively insignificant, but the loss of, say, $150 dollars worth of pizza for the other clubs is spread out amongst them. If the use of these funds by Students for Liberty all came from the Israel club, then such actions might breed contention. When there are 30 other clubs, however, a mere $150 split between them makes no difference. Thus, without the student council’s attempts to allocate money effectively, and without the expectation of clubs that the student council will deny exorbitant requests, the “Tragedy” suggests each club might indulge on as much money as it could find ways to spend. This places a tremendous responsibility on the council, and illustrates how careful they must be in the allocation of our “non-private resource”.
In the larger world, the American government is the equivalent of our student council. The pool of money they control is our tax money, and the “clubs” are equivalent to special interest groups. The deal is the same: each special interest rationally tries to secure the maximum resources to advance its mission, though the groups’ combined efforts hurts everyone overall – especially us taxpayers. The benefit is centered on the special interest, while the losses are spread out over the taxpayers, so taxpayers have no cost-benefit incentive to fight special interests. Even if they gain a billion dollars of our money in underhanded backroom deals, it’s only a couple of dollars of our individual taxes – which isn’t worth our individual time fighting. With no particular incentive to fight them, the losses imposed by special interests swiftly accrue and rob us of our wealth and liberty.
If the student council can combat the effects of student special interests, can politicians do the equivalent in Washington? Not at all. Politicians are remarkably poor at acting above the influences of special interests. They rely on the special interests’ monetary donations and political support, and can even use their projects as points on a campaign trail. Indeed, it is far more powerful to point to the environmental group you funded or the grandmother whose house you saved then point at an abstract spread out economic benefit produced by refusing to fund them. Imagine a similar situation in YU, where the club presidents had an influence over the pay, career success, and public image that all student council members could expect over their lives. Wouldn’t that place the members in a conflict of interests?
Besides, politicians may recognize the taxpayer apathy towards special interest spending. “What’s a million dollars or another regulation between friends?” they might reason. “The taxpayer won’t feel a thing.” Thus, they will neither feel guilt nor fear political backlash from assisting a special interest. This is why any large company spends millions of dollars on lobbying. It pays off.
As the Tragedy shows, if we do not act swiftly to cap the funds available to special interests, then they will continue to suck up our taxes. They are rationally grabbing for our money, and politicians have no incentive to stop them.
The solution? Take away the non-privately owned resource. Take the confiscated taxpayer money and return it to the taxpayer – ie. the individuals who produced it. That way, it can be used to its greatest effect in the free market where we as individuals choose our own products and companies to support with our resources, as opposed to the resources being bandied about by politicians in a politically charged bazaar. Though this option is not appropriate for YU, as the money was voluntarily paid to the University in the first place, in the public sector it can prevent our money from being handed out by politicians to destructive (though not immoral) special interests. An unnecessary tragedy can be avoided by understanding the “tragedy of the commons.”