Who's Your Economic Crush?

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Who's Your Economic Crush?

Midget Faded Rattlesnake · June 26, 2012 at 11:37pm

Y'all remember Hayek Girl, right? So in love with Friederich Hayek she thinks they both should share milkshakes and a kayak. In that spirit, Ricochetoiseerians, who's your latest economic crush?

Me, it's Ronald Coase. This is a guy who won a Nobel prize not, as I understand it, for any fancy equation, but for a history of showing other economists, over and over again, that assumptions they had long taken for granted were simply wrong.

Take Pigovian taxes, for example. Pigou's theory of externalities was accepted by practically everybody... until one night in 1960, when Coase managed to convince 13 top economists at the University of Chicago, including Aaron Director and Milton Friedman, that Pigou was just... wrong. Not bad for an after-dinner conversation, eh?

Or take lighthouses. It had long been part of economic lore that it must be impossible to operate lighthouses privately. Lighthouses were the example of a canonical government service. Until Coase investigated English history and found that, oops, English lighthouses were privately owned and operated (and worked just fine) long before they were incorporated into a government service.

But what I love most about Coase is his dry sense of humor. Perhaps it's dry enough that many folks would miss it, but it manages to produce loud peals of merriment in Mr. Rattlesnake and me. For example:

Most economists seem to be unaware of all this [the long history of legislatures granting firms regulatory immunity from common-law nuisance complaints]. When they are prevented from sleeping at night by the roar of jet planes overhead (publicly authorized and perhaps publicly operated), are unable to think (or rest) in the day because of the noise and vibration from passing trains (publicly authorized and perhaps publicly operated), find it difficult to breathe because of the odour from the local sewage farm (publicly authorized and perhaps publicly operated), and are unable to escape because their driveways are blocked by a road obstruction (without any doubt, publicly devised), their nerves frayed and their mental balance disturbed, they proceed to declaim about the disadvantages of private enterprise and the need for governmental regulation.
-- The Firm, The Market, and the Law, p 131 (The Problem of Social Cost)

Poor economists! Driven too crazy to think straight. My husband and I love this passage.

What Coase has to say about the Coase Theorem is also entertaining (he's not as enthusiastic about it as you might suppose, considering that it's named after him), but I'll save that passage for another day. The Reason archives have an excellent (and also entertaining) interview with Coase here, and you can listen to Coase (he's still alive!) on EconTalk here. Coase's collection of essays entitled The Firm, The Market, and the Law is also a ripping good read.

But enough about Midge's economic fantasy life. Tell us about yours. The decent bits, that is.