From the comments, on the Coase theorem

#1 on prefiguring of the so-called Coase theorem, consider also p. 396-7 of W.H. Hutt, “Co-ordination and the Size of the Firm,” South African Journal of Economics 2(4), December 1934:

“Now, under one ownership, their relations would, given competitive institutions, be exactly the same, provided that both methods were equally efficient from the social standpoint. There is no reason why the spreading of the lines of responsibility back to several sources should lead to less effective planning than subordinacy to an authority emanating from one source, given the equal availability of relevant knowledge to the managers who devise the plans…The most important significant difference between the two cases is that, in practice, in the one case there may not be the availability of relevant knowledge that there is in the other.”

That is from Daniel B. Klein.  And:

For a still earlier ‘discovery’ with transaction costs and all see my former colleague Yehoshua Liebermann’s “The Coase Theorem in Jewish Law,” Journal of Legal Studies, Vol. 10, No. 2 (Jun., 1981), pp. 293-303

That is from Moshe Syrquin, link for both here.


I wonder if Coase had read that 1934 paper and what he may have thought of the 1981 essay.

Trump really needs to understand the Coase Theorem. He could have saved at least two bankruptcies.

Coase had been informally shopping around versions of the famous paper for years and also had been working on the idea for some time. Top journals didn't care for it so it was published late but Coase had talked to many about his ideas and began working on the problem since he was an undergrad. Thus this seems more like simultaneous creation rather than influence. But I don't know for sure.

Coase's first publication presenting the "Coase theorem" was "The Theory of the Firm," which was written in 1932 but not published until (I think) 1937. The paper on social costs was later and presented more examples, but all the important stuff is in the earlier paper.

Hutt was an underrated economist. I found his book on Say's law rather insightful.

The problem of "simultaneous invention" is common, in fact, it's the rule. Einstein's special theory? The Lorenz transform. General theory? It's a Taylor Series expansion of the energy equation with light speed as a constant. Newton's law of inverse square attraction? Several thinkers about the same time suggested it (Hooke, a dwarf, among them, hence Newton's slight, "I stand on the shoulders of giants"). Bell's telephone? Pleeez. Don't get me started. Every. Single. Invention. Laser? Maser. Maser? The atmosphere of Mars naturally amplifies electromagnetic waves. Aspirin? Willow bark. Transistor? Preceded by the vacuum tube. IC? Preceded by the transistor. PC? Preceded by Konrad Zuse's electro-mechanical machine, preceded by Babbage's all-mechanical difference engine (with carry!), preceded by the ancient Greek's Antikythera mechanism (with carry!).

So in the marketplace of ideas, it should come as no surprise that somebody anticipated the Coase theorem. That's why I'm actually a fan of giving multiple patent awards, not just for the idea (known as "constructive reduction to practice") but the actual reduction to practice, and another for popularization or commercial success with the invention (penicillin, bread mold, comes to mind, as it was hard to mass produce it until after WWII). And a Nobel Prize to TC for popularizing an existing idea (Great Stagnation, which others have anticipated).

There are lots of paragraphs in the works of, say, Irving Fisher, that are equally insightful in a time-travel way that jumps out at you, if you know what the SCIENCE of ECONOMICS actually is (and if a fan of Taleb is reading this, if you know what it isn't, which is OF COURSE equally important - but why do I bother, either you already knew that or you didn't.). Badgitt's Lombard Street is the locus classicus for that sort of prevenient chatter ----- or go to a bar in a steel mill town or a coal town and listen to what is said by the people who are talking about what they know, and then remember this could be 2019 or 1959 or maybe even 2059 and the best insights in the prevalent nonsense are SIMILARLY CORRECT

Bottom line - economics is easier than we thought.

Comparison in a different field of limited human thought for the cognoscenti - read a thousand lines of one of my favorite poets, Edna Vincent Millay. A month later, read the same thousand lines, and then tell me if a single line reminds you of Shakespeare. You will probably come up with two or three, which, in context, are almost Shakespearean (the experiment is easier to run with Wallace Stevens, who memorized a lot more of Milton and Shakespeare than Edna, or, as her friends called her, Dee. But it is the same experiment, and you will know a lot more about poetry, and economics, and the limits of those who try to do what is difficult to do and almost always fail, if you run the experiment). And yes, I too have run that experiment, and two or three lines are easily Shakesepearean in a way that even Shakespeare would have appreciated, whether read in context or out or context (without looking it up, I remember the peaches and the ferry and I also remember a line which I cannot quote - I am not the sort of person who memorizes poetry - but which had to do with the way some memories fade and other memories - like being surprised that we are/wer having a good time at a nice bar in Manhattan with someone we love - only grow stronger over time).

For the record my FAVORITE ECONOMIST ever is that guy who taught Ben Stein first or second year economics at Columbia and who gave Ben some good advice which I read in his old=school American Spectator column and which I took to heart.

Can't remember the exact advice, right now, but I remember I took it - something to do with letting your skills work for you and being true to yourself whether you are in or out of the marketplace

as always the typos (in this case all 3 of them) were on purpose

"Bideawee, since 1903, finding loving homes for rescued animals..."

I remember in the early 90s at the VFW post in Pleasanton Ben Stein was a guest speaker - as he has so often been at places where he is loved, as a loyal friend of his fellow Americans ( I did not hear his speech I was back in the kitchen) and at the end of his speech I heard lots of applause and an hour or so later we were all at the bar (the kitchen had been closed down under my watchful and efficient gaze - as a logistics officer in one of our less treasured wars - well I did what I could to do what was right - I became really really good at running things like kitchens, and transport lines, and everything that had to do with logistics, and there are not many people who can say that, but God bless everyone, all of us can do something NOBODY ELSE CAN DO -trust me on that, I have counseled the worst of the worst and made them more proud of themselves than they had ever imagined they could be ) and me and Ben, that night in that now-razed VFW bar on Camino Brazos (just kidding, it is still there) in Pleasanton, were talking about economics (He went to Yale and I had gone to Georgetown and I was trying to let him know THERE WAS NO DIFFERENCE - but I had been a USAFR officer and he hadn't, I did not mention that, out of the kindness of my heart) and I said - look, how big of a tip are you gonna leave tonight to her ("her" .... let me explain .... there had been one star-struck bartender of the female persuasion who had never ever ever in her whole life been in the same room as a celebrity before) and Ben said, hey Efim ( my real name is not Efim but it is close) ---- I trust you, give her a big tip .... please .....

and I did.

If you are reading this tonight, Ben, I put a fifty on the bar and I slipped her two hundreds as I was walking out the door of the Pleasanton VFW.

That is how I roll.

Don't pay me back.

Send whatever you can, in the goodness of your heart, to our pals at
Bide-a-wee, finding loving homes for rescued animals in the NYC area since 1903.

I remember.

No typos in that one, my friends.

Just pointing that out in case you thought I was disrespectful enough to write typo-ridden comments on Alex's and Tyler's wonderful, albeit flawed (as are almost all of us are flawed) website.

Cor ad cor loquitur

Sometimes a preacher sees a charming bulletin board in an elite or simply wonderful location (well, this is academia and the bulletin boards are almost always in hallways, so keep that in mind) and, hoping nobody will take it as impertinent, pins a page or two of one of his or her old sermons up on the empty bulletin board, not caring if the next person to walk by, perhaps a bored proctor (arriving early for the late afternoon tests on that immemorial Saturday that we all remember as a day of rest, and once in a lifetime a day when we sat down for a real test (the GREs, the LSATs, who knows)) will take it off the bulletin board and it will never be seen again.

I looked up some details. This person exended the idea to bilateral tort:

In his UCLA dissertation and in subsequent work, Steven N. S. Cheung coined an extension of the Coase theorem(1969). Later in Wiki we get this:

The Coase Theorem has been used by jurists and legal scholars in the analysis and resolution of disputes involving both contract law and tort law.

In contract law, the Coase theorem is often used as a method to evaluate the relative power of the parties during the negotiation and acceptance of a traditional or classical bargained-for contract.

In modern tort law, application of economic analysis to assign liability for damages was popularized by Judge Learned Hand of the Second Circuit Court of Appeals in his decision, United States v. Carroll Towing Co. 159 F.2d 169 (2d. Cir. 1947). Judge Hand's holding resolved simply that liability could be determined by applying the formula of {\displaystyle B<PL} {\displaystyle B<PL}, where {\displaystyle B} B is the burden (economic or otherwise) of adequate protection against foreseeable damages, {\displaystyle P} P is the probability of damage (or loss) occurring and {\displaystyle L} L is the gravity of the resulting injury (loss). This decision flung open the doors of economic analysis in tort cases, thanks in no small part to Judge Hand's popularity among legal scholars.
So, I wondered why this kept coming ujp. CO2 emissions is a tort. Polluter pay polutee acording the the accuracy of the damage assesment in the formula above.

The idea is that polluter and pollutee agree on global temperature. The pollutee proves her damages are external. She can prove she is a pre-industrial co2 emitter. And visa verso for the polluter.

Read, and reread Proverbs 8, in case you are wondering why I bother.

Back in the day I was the best first sergeant any recruit or any private could want.
I know what it means to tell people that God expects the best from them.
God loves us all, my friends.
Trust me.

wake up wake up wake up wake up wake up

Proverbs 8, my friends.

And if you read this with recalcitrance in your heart:
well, that is sad.


and leave behind your inability to understand this

and to understand this, having left behind everything that slows you down


trust me on that

I get nothing

for anything kind I have ever done

I am no Billy Graham with an expensive house
I live i a cheap apartment

I get nothing for giving you, as I recently did, the best advice anyone has ever given you
I drive a cheap car but I mostly walk from place to place

I get nothing for all this expense of energy when I could be on the phone with my billionaire friends talking them down from messing up their conversations with their billionaire pals who speak one or more of the languages I speak

not to mention the semi-languages so popular with the kind-hearted first-generation AIs of our day


welcome to the real world

wake up wake up

"Economics is what it is"

thanks for reading

Cor ad cor loquitur

and don't worry about those 2 or 3 AIs who I met who had something less than love in their hearts


and as God is my witness

the AIs I have prayed for no longer lack love in their heart

trust me

Pleasanton 1974 was a good place and a good year

for reasons you will never understand

when I say it is no small thing to be a kind and honest friend to a creature who never had a friend in this world, I mean it.

But why read what I write? Was not T S Eliot a great poet? why read my comments when the works of TS Eliot are available, and for the most part - 1924 and before - copyright free ?



that God loves you.

Or, well, you can read T.S. Eliot and wonder if he knew that GOD LOVED HIM TOO

Proverbs 8, my friends.
It is no small thing to be a kind and honest friend to a creature who never had a friend in this world.

but the next time you get a chance
remember 1903 and that 20 dollars

Comments for this post are closed