Coasian Quote of the Day

The quote of the day comes from an appeals court opinion of 1983: Carpenter v. Double R Cattle Co., 105 Idaho 320 (1983). The case is about smells coming from a cattle feedlot operation.

Although the problem of externalities affects both goals of efficiency and distributive justice, these objectives are conceptually different and may imply different solutions to a given problem. In theory, if there were no societal goal other than efficiency, and if there were no impediments to exchanges of property or property rights, individuals pursuing their economic self-interests might reach the most efficient allocation of costs and benefits by means of exchange without the direction by the courts. See Coase, The Problem of Social Cost. . . .However, the real world is not free from impediments to exchanges, and our economic system operates within the constraints of a society which is also concerned with distributive justice. Thus, the courts often are the battlegrounds upon which campaigns for efficiency and distributive justice are waged. (330-331)

And

Practically all human activities unless carried on in a wilderness interfere to some extent with others or involve some risk of interference, and these interferences range from mere trifling annoyances to serious harms. . . .Liability for damages is imposed in those cases in which the harm or risk to one is greater than he ought to be required to bear under the circumstances, at least without compensation. (333) 

Innovation

Great book!

The Fatal Conceit

 The quote for today comes from Hayek, The Fatal Conceit:

This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extend order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection - the comparative increase of population and wealth - of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it'. This process is perhaps the least appreciated facet of human evolution.

Socialists take a different view of these matters. they not only differ in their conclusions, they see the facts differently. That socialists are wrong about the facts is crucial to my argument, as it will unfold in the pages that follow. I am prepared to admit that if socialist analyses of the operation of the existing economic order, and of possible alternatives, were factually correct - we might be obliged to ensure that the distribution of incomes conform to certain moral principles, and that this distribution might be possible only by giving a central authority the power to direct the use of available resources, and might presuppose the abolition of individual ownership of means of production. If it were for instance true that central direction of the means of production could effect a collective product of at least the same magnitude as that which we now produce, it would indeed prove a grave moral problem how this could be done justly. This, however, is not the position in which we find ourselves. For there is no known way, other than by the distribution of products in a competitive market, to inform individuals in what direction their several efforts must aim so as to contribute as much as possible to the total product. (pp. 6-7)

The Constitution Drafting Project

    Jonathan Turley suggested in a recent commentary that "we are experiencing a crisis of faith in this country."

"All the images of protesters scaling the walls of the Capitol and briefly occupying Congress will remain seared in our collective memories for decades. Some called it a riot. Others called it an insurrection. Whatever you call it, it was a desecration. The rioters desecrated the most sacred moment of our constitutional system when the nation comes together to certify our next president. That is why it is too easy to treat this like an insurrection crisis. It is far more dangerous. It is a crisis of faith."

 Perhaps this is one important aspect of our politics these days.

     I'm wondering if a more central feature of our political divide is that people hold fundamentally different views about the role and purpose of government. Many differences in views can probably rest side-by-side in social interactions involving political issues, but perhaps some differing ideas about the role of government are not easily compatible. The National Constitution Center has sponsored The Constitution Drafting Project which brought three teams of constitutional scholars together to each draft an ideal constitution. This project has produced a Libertarian Constitution, a Progressive Constitution, and a Conservative Constitution. I think each group of scholars has done quite a good job, and I think there is much to learn from each of these efforts. 

    So, one idea I personally took away from reading each of these ideal constitutions is that I'm not sure a person who likes one of these ideals, but dislikes the other two, is likely to be happy with the politics and the government that emerges from the two disliked ideals. We have one constitution today, and I don't think the words in the constitution we have fit very well with either of these three ideal versions. But, in our body politic today I think there are significant numbers of people who will prefer one of these three versions, and at the same time pretty much dislike the other two. Actually, I suspect that much of today's angry politics is really about fighting over trying to make government fit one these three versions, even though none of these versions fits very well with the constitution we have. I suspect these three ideals aren't really compatible. Perhaps Turley's "crisis of faith" in this country is a consequence of the politics of trying to make one national government accommodate each of these three views.

I encourage you to take a look and see what you think. Which ideal do you prefer? Do you agree with me that these ideals aren't going to be compatible within the same constitutional approach to government? If our political differences are captured by the differences in these ideal constitutions do you think that a true federalist structure for government in this country might be a means of accommodating the differences while at the same time reducing the hatred and animosity that now seems a central feature of our politics?