Jewish World Review April 30, 2014 / 30 Nissan, 5774
Law v. Common Sense, or: When the hypothetical becomes the real
By Paul Greenberg
Reality is repeating scholarship again. It does so with some regularity. A clash between the feds and a
. . .
Think of the economist Joseph Schumpeter, who summed up the essence of modern capitalism in just a couple of words, creative destruction. Or how
Just think of Ronald Coase -- an economist who was just minding his own theories at the
Is there a single phrase that captures the spirit of Ronald Coase's many and original contributions to economics and, beyond that, to society in general? How about the Beauty of Simplicity?
Back in 1960, Ronald Coase wrote an essay about "The Problem of Social Cost" that may be the most cited law-review article in history. It's an incisive look at how inefficient the fractious jumble of government regulation, taxation, subsidization and litigation can be -- certainly when compared to settling disputes by amicable negotiation between competing interests.
Here is the no longer so hypothetical case Dr. Coase used to demonstrate the problem: The farmer whose land is being damaged by emissions from passing trains. His solution: not a penalty or fine or still another lawsuit or 10,000-word bill in
Talk about reducing costs -- for the farmer, the railroad, and the tax-paying public. Not to mention promoting a peaceable, efficient society. Ronald Coase's hypothetical solution to the problem was designed to benefit all. Well, maybe all but the lawyers.
Naturally enough, ideas like Professor Coase's deeply offended his colleagues in academe. Which was why he was exiled to the
At least since
Just how relevant Ronald Coase's thought remains was illustrated just the other day by the news of an incipient range war, or maybe another Sagebrush Rebellion, out in
For years, for more than a century going back to the 1870s and the days of the great cattle drives, the Bundys had been grazing their herds on public land, but this was the century, and the year, that the feds decided to crack down, having won the usual, long, drawn-out and expensive lawsuit. Result: They were now in a position to demand years of accumulated fines, fees and interest -- more than a million dollars in all. And the whole dispute all came to a head the other day in the middle of the
Happily, the feds prudently decided, just before guns were drawn, that discretion was the better part of valor and withdrew from what might have been Gunfight at the OK Corral II. They're to be congratulated on that realization even if it took dangerously long to dawn.
But the whole melodrama might have been avoided if both sides had read Ronald Coase and, more important, learned from him. In this case, the Bundys could have sold whatever their long-established grazing rights were worth to the feds, or the feds could have agreed to let the rancher graze his cattle wherever he wanted for a reasonable fee. But in these Modern Times, such an arrangement might have struck both sides as unspeakably sensible. Quick, call the lawyers instead, followed by the posse/SWAT teams, and even bloodshed. Which was narrowly averted.
With just a little more recklessness on both sides, the country could have seen another Branch Davidian massacre, that emblematic catastrophe of the early Clinton Years, when masterminds like
Not that anybody noticed, but a real-life example of the efficacy and amity of the Coase Theorem took place only a few years ago just across the
If only the federal government would show as much common sense as
There are some officials who do show that kind of grace -- and common sense -- under pressure.
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Paul Greenberg is the Pulitzer prize-winning editorial page editor of the Arkansas Democrat-Gazette.
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