Tragedy of the Commons: The basics of the economy

By Owen Linderholm | Small Business

This is the fifth of our blog posts connecting the basics of the economy to small business. We are taking the popular series of basic economic videas called ‘We the Economy’ and connecting them to the way your small business (or prospective small business idea) operate. Over the next twenty or so weeks we are going to take a regular look at the very basics of our complex global economy and once a week we will present one of the videos from the series and try to add a little context, especially for anyone who is thinking about taking a tiny step toward being a more direct and powerful cog in the enormous economic machinery by starting their own business.

Tragedy of the Commons

First, go watch the video below. Depending on your political views, beliefs and other factors, you will react very differently to it but please bear with us. Our mandate here at Yahoo Small Business Advisor is to encourage and support small business owners. And typically that means VERY small businesses. Like under 5 employees small. How is that relevant? Well the question is what does our global pool of natural resources have to do with you? The answer is actually not very much. You may or may not make use of them in a small way as part fo the resources going in to your business. But no matter what they are somewhere between meaning nothing to you and meaning a very small amount to you in terms of your business.

So what do you care?

The answer lies in hidden competitive costs to you and your business. The reality is that no matter what the rhetoric and regulation coming out of federal government, state government, local government and international government, most of those regulations are not aimed at you but you take the brunt anyway. And big companies have the resources to get around regulations and use that global pool of natural resources without paying their fair share to keep them available to all. Again, why does that matter to you? Because the taxes and regulations that you carry are higher and costlier because some of those big businesses are doing their best to avoid complying. They are in effect, as described in the video, stealing from you. Again, so what? You may feel that they have the right, just like you, to avoid what they see as onerous regulation and taxation.

And there is the catch. As a very small business you do not have the lawyers and accountants and business strategists to come up with ways to avoid paying your share and cleaning up after yourself. So you end up paying to clean up after them.

It boils down to an issue of fairness. Why should a big business that pays for lobbyists and campaigns for laws to make its life easier have it any easier than your small business? It shouldn't. There's a reason society asks for many of these regulations around our global shared property. It's to make the companies and nations that behave badly clean up their act so you have to do less to clean up after them.

In truth, small business really does drive more innovation, creativity, growth, jobs and the economy. So smaller businesses should get MORE breaks, not fewer. But they don't. That's the REAL tragedy of the commons.



Want your fair opportunity to build a business and a life for yourself? Think positively. Take a look at our previous episodes, 'Cave-o-nomics', 'Supply-and-Dance', 'GDP Smackdown' and 'Lemonade Wars' and also check the links below for more information about getting started on your own business idea.

Is It Time To Start Up That Startup Business?

How You Compete Matters More Than Winning Or Losing

10 Ways Small Business Can Compete in a Big Business World!

Compete on Value, Not Price

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