Coase Quotes

If you torture the data long enough, it will confess.

if you torture the data long enough, it will confess to anything

But a theory is not like an airline or bus timetable. We are not interested simply in the accuracy of its predictions. A theory also serves as a base for thinking. It helps us to understand what is going on by enabling us to organize our thoughts. Faced with a choice between a theory which predicts well but gives us little insight into how the system works and one which gives us this insight but predicts badly, I would choose the latter, and I am inclined to think that most economists would do the same.

And that's the real reason the powerful fear open systems and networks. If anyone can set up a free voicecall to anyone else in the world, using the net, then we can all communicate with the same ease that's standard for the high and mighty. [...] And if any worker, anywhere, can communicate with any other worker, anywhere, for free, instantaneously, without the boss's permission, then, brother, look out, because the Coase cost of demanding better pay, better working conditions and a slice of the pie just got a *lot* cheaper. And the people who have the power aren't going to sit still and let a bunch of grunts take it away from them.

Doctore, mi-am fracturat sufletul, s-a impiedicat de o privire ascuţită, s-a răsucit în toată dragostea lui şi şi-a frânt o aripă! Hai, pune atele sau coasele cu sfoară ce-a mai rămas! Coase! Nu mă lăsa infirmă, nu mă rupe de mine! Coase şi spune-mi cine în mine se revarsă prin ochi, fără anestezie? Cum am ajuns să-mi fiu străină mie şi cine m-a smuls din mine, doctore?

Maandag stierf hij, 102 jaar oud: Ronald Coase, de man die zijn afkeer van de wiskundige modellen in de economie aldus formuleerde: 'Als je de gegevens maar lang genoeg martelt, zullen ze toegeven'.

An important reason may be that government at the present time is so large that it has reached the stage of negative marginal productivity, which means that any additional function it takes on will probably result in more harm than good…. If a federal program were established to give financial assistance to Boy Scouts to enable them to help old ladies cross busy intersections, we could be sure that not all the money would go to Boy Scouts, that some of those they helped would be neither old nor ladies, that part of the program would be devoted to preventing old ladies from crossing busy intersections, and that many of them would be killed because they would now cross at places where, unsupervised, they were at least permitted to cross.

The time has surely gone in which economists could analyze in great detail two individuals exchanging nuts for berries on the edge of the forest and then feel that their analysis of the process of exchange was complete, illuminating though this analysis may be in certain respects.

These negative-sum games of coercion and extortion lead to highly inefficient outcomes, and they can only be avoided by carefully crafting the ex ante rules to avoid such coercion and extortion. These coercive threats that make negative-sum games possible, and that decrease the payoffs of positive-sum games, cannot be neatly distinguished in practice from innocent externalities: any act or omission of one party that harms another, i.e. any externality, doubles as a threat, whether a tiny threat or a large threat, from which an extortion premium, its size depending on the size of the threat, can be extracted. In order to try to distinguish coercion, and the extortion it gives rise to, from an "innocent" externality that can be cured by efficient bargaining, there are ways to exclude some of these extreme possibilities from the prior allocation of rights. And indeed criminal and tort law do this: they distinguish purposeful behavior from negligent, and negligent from the mere unfortunate accident. But any such ex ante distiction contradicts the claim that the Coase Theorem applies to any prior allocation of rights. Voluntary bargaining cannnot give rise to tort and criminal law. Quite the opposite is true: at least a basic tort law is necessary to make voluntary bargaining possible. Tort law (and the associated property law which defines boundaries for the tort of trespass) is logically prior to contract law: good contracts depend on good tort and property law. Without a good tort law already in place, nobody, including the "protection firms" posited by anarcho-capitalism, can engage in the voluntary bargains that are necessary for efficient outcomes. This is not to claim that the polar opposite of anarcho-capitalism must be true, i.e. that "the government" along the lines we are familiar with is necessary. Instead, a system of political property rights that is unbundled and decentralized is possible, and may give rise to many of the benefits (e.g. peaceful competition between jurisdictions) promised by anarcho-capitalism. But political property rights are not based on a Rothbardian assumption of voluntary agreement -- instead, in these systems the procedural law of political property rights, as well as much of substantive property rights and tort law, is prior to contract law, and their origin necessarily involves some degree of coercion. Political and legal systems have not, do not, and cannot originate solely from voluntary contract. Both traditional "social contract" justifications of the state and the Rothbardian idea that contracts can substitute for the state are false: in all cases coercion is involved, both at the origin and in the ongoing practice of legal procedure. In both cases the term "contract" is used, implying voluntary agreement, when the term "treaty", a kind of agreement often forced by coercion, would far more accurately describe the reality. The real task for libertarians and other defenders of sound economics and law is not to try to devise law from purely voluntary origins, an impossible task, but to make sure the ex ante laws make voluntary bargaining possible and discourage coercion and extortion (by any party, including political property rights holders or governments) as much as possible.

Nu înţelegea cum Sousse Anne rămăsese în golf în tot acest timp. Ce e aia o „întâlnire care durează de şaptesprezece ani”? Un sirop! Dovadă că fiecare femeie îşi coase poveştile după cum se pricepe. A ei reuşise, ea avea un bestseller!

The famous Coase theorem,27 thanks to the Nobel Prize-winning economist Ronald Coase, shows that when the pie grows, it’s always possible to find a way of compensating those whose slices would otherwise fall, so that no member loses and at least one benefits.

Mintea mea zboară tot mai departe de-a lungul acestei șosele înguste, mânată de curiozitate, strălucind de acceptare, tot mai departe, ca un cârlig cu pene, aruncat cu măiestrie și înfipt adânc în lumina de deasupra pârâului. Undeva, unde eu nu pot ajunge și unde nu mai am control, cârligul se îndreaptă și devine suliță, sulița se scurtează și devine ac, iar acul coase lumea la un loc.

Los mercados eficientes requieren un gobierno que no sólo especifique y haga cumplir una serie de derechos de propiedad sino que también disminuya los costos de transacción hacia el ideal de Coase, y que opere dentro de un marco de actitudes hacia la honestidad, la integridad, la rectitud y la justicia que haga posible disminuir los costos de transacción por unidad de intercambio.

Ronald Coase won the 1991 Nobel Prize in Economics for his theory that larger companies do better because they aggregate assets under one roof and, as a result, enjoy lower transaction costs. Two decades later, the reach delivered by the information revolution has negated the need to aggregate assets in the first place.

In 1951, the Columbia University sociologist C. Wright Mills published a study titled White Collar: The American Middle Classes.26 Like Ronald Coase, Mills was fascinated by the rise of large managerial corporations. He argued that these firms, in their pursuit of scale and efficiency, had created a vast tier of workers who carried out repetitive, mechanistic tasks that stifled their imagination and, ultimately, their ability to fully participate in society. In short, Mills argued, the typical corporate worker was alienated. For many, that alienation was captured in the warning printed on the Hollerith punch cards that, thanks to IBM and other data processing firms, became ubiquitous symbols and agents of bureaucratized life during the 1950s and 1960s: “Do Not Fold, Spindle, or Mutilate.

Tal vez, si ésta fuese una empresa realizada según el modelo Coase, hubiésemos encontrado y contratado algunos de primera categoría (los profesionales ya en ejercicio en su campo). Pero con toda seguridad se nos hubiese escapado el pastelero, el artista gráfico trabajando para una agencia de publicidad brasileña, el chico italiano que se encarga de la empresa de ambulancias por radio, el propietario jubilado de un concesionario de automóviles, el español que trabaja para una empresa de energía en las islas Canarias y todos los demás que pusieron su pasión en el proyecto, incluso si sus trayectorias profesionales los habían llevado por otros derroteros.

Ronald Coase cynically observed that, “If you torture the data long enough, it will confess.

The data always tells you the story you want to hear. “If you torture the data long enough, it will confess to anything,” according to economist Ronald Coase.

In the first place, Coase specified three crucial conditions for his conclusion to hold. These were: a legal framework establishing liability for actions, presumably supported by governmental authority; perfect information; and zero transaction costs (including organization costs and the costs of making side-payments). It is absolutely clear that none of these conditions is met in world politics. World government does not exist, making property rights and rules of legal liability fragile; information is extremely costly and often held unequally by different actors; transaction costs, including costs of organization and side-payments, are often very high. Thus an inversion of the Coase theorem would seem more appropriate to our subject. In the absence of the conditions that Coase specified, coordination will often be thwarted by dilemmas of collective action.

A recognition of the impossibility of exact perfection lay behind the work of a few economists, such as Herbert Simon’s satisficing, Ronald Coase’s transaction costs, George Shackle’s and Israel Kirzner’s reaffirmation of the old Yogi Berra jest: it’s hard to predict, especially about the future.

As the Nobel prize-winning economist Ronald Coase pointed out, the reason companies exist is to cut down on transaction costs—and in many cases, such savings proved attractive enough to warrant bringing together an extremely varied collection of business activities under one corporate roof.5 This was the impulse that gave rise to conglomerates.

In this chapter we discuss this stillbirth of the Virginia School by focusing on two of the approaches developed in Virginia at that time. We label one the Coasian institutionalist approach (named after Ronald Coase). We see this particular methodology as a clear attempt to maintain the sort of Classical Liberal thought fashioned in an earlier period by Frank Knight. The other, which we denote as the Buchanan political economy approach (named for James Buchanan), also had a stronger commitment to Classical Liberal methodology than did the Stigler/Friedman/Director version rapidly spreading within the Chicago campus.

Platforms combine characteristics of traditional organizations and markets. A platform is essentially a synthesis of Coase’s firm and Hayek’s market. The firm no longer invests in production but rather in building the infrastructure and tools to support and grow a networked marketplace or community.

Ronald Coase won the Nobel Prize in economics in 1991 in part for what has become known as the Coase theorem, essentially a description of how a natural marketplace can internalize a negative externality.

In any situation where you can spot spillover effects (like a polluting factory), look for an externality (like bad health effects) lurking nearby. Fixing it will require intervention either by fiat (like government regulation) or by setting up a marketplace system according to the Coase theorem (like cap and trade).

I believe that human preferences came to be what they are in those millions of years in which our ancestors (whether or not they can be classified as human) lived in hunting bands and were those preferences which, in such conditions, were conducive to survival. It may be, therefore, that ultimately the work of sociobiologists (and their critics) will enable us to construct a picture of human nature in such detail that we can derive the set of preferences with which economists start. And if this result is achieved, it will enable us to refine our analysis of consumer demand and of other kinds of behaviour in the economic sphere.

Coase fue además el primero en explicar por qué existen las empresas. Según él, la negociación de los contratos puede ser muy onerosa debido a los costes que entraña esta transacción; la solución es integrar tu negocio y contratar empleados con tareas laborales bien definidas, porque no te puedes permitir el coste legal y organizativo que supondría negociar con cada uno de tus empleados. En un mercado libre, todas las fuerzas intervinientes actúan en pro de la especialización, y la información disponible se transmite por la vía de los precios; pero dentro de una empresa este efecto se disipa porque los costes que ocasiona gestionar todas esas fuerzas son muy superiores a los beneficios que pueden obtenerse. Por lo tanto, son las propias fuerzas del mercado las que obligan a la empresa a buscar la proporción óptima de empleados y proveedores externos en su organización.

Economist Ronald Coase presented his views on why the firm existed in a lecture in Dundee in 1932, when he was just 21 years old. He argued that the firm was created and still exists because going to market for the resources was more expensive than hiring those resources internally. More specifically, the firm exists to lower transaction costs. The search for resources, their coordination, contracting, and the establishing trust was easier inside the walls of the firm. He further argued that these transaction costs tended to grow as the enterprises grew. His insights were dismissed and ignored for decades, but he was eventually awarded a Nobel Prize in 1991.