Wednesday, September 4, 2013

Notable Comments

A comment from "Gerald Quinn" in response to an essay by Kenneth Minogue (ht: Alberto Mingardi at econlog):
It surprises me that self-interest ever needs defending. It’s a bit like defending gravity. I’m also surprised that smart people like Professor Minogue who have taken the trouble to defend it seldom point out that self is flexible and conditional.

Self includes a series of interests that start with the contents of one’s skin, and proceed outward through family, home, friends, neighborhood, country, and beyond, to whatever cause, identity, or belief one chooses to own. It changes through experiences and external circumstances.

To me, the strangest thing about it is how self manages to enlist truth and justice as patrons. Anything that Self claims as its own almost always becomes true and just. And therein lies the challenge: a bigger self is often a better self, but when we reach to embrace more than what makes sense for us as in pathological empathy, the truth of a thing is lost and unthinking ideology is takes over.

A comment from "nobody.really" in response to another comment regarding a tribute to the recently deceased Nobel laureate Ronald Coase by Steven Landsburg:

"In the case of the rabbit/lettuce farmers, is the conflict really symmetrical though? After all the rabbit farmer damages the property of the lettuce farmer and not vice versa. Would you say that this is exactly counterweighted be the implicit damage dealt to the rabbit farmer for not being able to have rabbits run freely on his property? How do property rights figure into Coase’s argument?"
Excellent question!
The classic example in Law and Economics is the fence out/fence in controversy, illustrated in song and story: If your cow damages my crop, what remedy? Cue the song “The Farmer and the Cowman should be Friends.”
In the wide open spaces of the West, a farmer who failed to put up strong fences around his crops had no claim against the owner of the cow. But as more farmers arrived, gradually the laws would change to impose the liability on the owner of the cow to control his cattle – that is, a duty to fence the cattle in. Cue the song “Don’t Fence Me In.” I’m told you can trace the settlement of the American West by the dates that the laws change from Fence Out to Fence In.
But gosh, doesn’t it just seem intuitive that the farmer has the better property rights claim? Intuition is a funny thing. How long ago was it that my right to smoke was deemed intuitive, and your preference to breathe smoke-free air was deemed an unreasonable intrusion on my right?
The “Coase Theorem” states that where transaction costs are low, socially optimal results derive from having clear property rights, even if the rights are assigned arbitrarily. But in a world where transaction costs are high – especially a world when the number of parties to a potential transaction is almost infinite – the allocation of property rights influences the ability to achieve socially optimal outcomes. Consider fee simple ownership of land: If I value consent over use of force, how many parties would I need to contract with to secure “property rights” to a piece of land? Answer: All parties – both now and into an indefinite future. That’s a big transaction cost. Thus the philosophically arbitrary choice to recognize property rights in land – to privilege the claims of one person to exclude others – has huge social benefits. The alternative choice – to recognize everyone’s equal claim to use a piece of land – has the advantage of egalitarianism; it also leads to the Tragedy of the Commons.
The moral is 1) property rights are socially defined, not received from heaven, and 2) people who build their moral philosophies on the idea the property rights are sacrosanct are building on a foundation of sand. (Which is not to say that other moral philosophies have a firmer foundation….) 

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