Coase Colored Glasses


Archive for January 11th, 2011


Finding my booty

As I began reading The Invisible Hook I was reminded of another book written by economists that drew strange analogies and made odd comparisons, Freakonomics. I must admit that I am quite interested in pursuing a Pirate life, but the cost benefit analysis has always prevented me from following said dreams. I had always assumed that the tails of riches and booty were rarities in the pirate life, but Leeson diffused those doubts with a few quick examples of pirates making a lifetimes wages in one haul. I also always assumed that the Captain of the pirate ship was cruel and abusive. Little did I know that a merchant ship Captain could be much worse and protected by the law. All these facts have only made the pirates life more appealing to me. Knowing what I know now, joining a Pirate Crew would almost be the most rational decision I have ever made! Open seas, brotherhood, and booty, what more could a 22 year old male with little life direction desire?

But alas, the rational self-interest theory holds true. Not only is this decision far to risky economically, modern day pirates now have to deal with satellite tracking, automatic weapons, and aircraft armed with heat seeking missiles, making a it a far more dangerous profession. And while I would stand to gain some excellent stories to recount to young lads of my seafaring days, the risk of death and poverty far out-weigh my salty dreams. It would seem I must confine myself to the safe route of schooling and a professional career, and seek my booty elsewhere from the high seas.

Economics?

As I began to read David D. Friedman’s Law’s Order I quickly realized that I know absolutely nothing about economics. I have taken many a political science course, however I am completely clueless when it comes to economics. As I delved further into Law’s Order the idea of applying economics to law started to make a little more sense, however do still have a few questions. The first being, it seems that applying economy theories to potential laws to try to predict what the consequences of that law will be is fundamentally just a bunch of guess work, correct? It appears to me that although the economist can construct all of the conceivable outcomes, if he cannot possibly know every individual “well enough to incorporate their irrationalities into his analysis of the effect of legal rules on their behavior”, then why does it matter? Humans are unpredictable in their behaviors so why are we trying to generalize them all into one lump sum? How is this beneficial to the practice of law in the real world? The second question I had is that of exactly what economics is? Being new to the economic scene I always believed that it is about money, however on pg 21 of Law’s Order, Friedman states that economics is not about money. This simple sentence leaves me to conclude that economics therefore must be about value, furthermore not even actual value but even how much one person values an particular object versus how much value another person sees in that same object. Is my assumption true?

People try to avoid costs and capture benefits

I am not exactly sure what approach I should take on my writings in this class and in particularly this specific writing. But I find it interesting that someone would write a book comparing pirates to economics.  As I read the preface to the book I was beginning to think that this book was going to contain weak comparisons because he asked his girlfriend to marry him through his book.  Sounds like even Peter Leeson had an alternative motive in writing this book.  He used other people’s resources to hopefully benefit from a “yes! I will marry you.”

As I began the first chapter, the rickety wheels in my head started thinking about how other notorious criminals could relate their ways of thinking to economics.  I first thought of the mob, and how they keep themselves in check.  I want to believe that the idea of “rational choice” keeps pirates, mobs, Al-Qaeda, and any other self-interest group that the majority of society views as “Opposers and Violaters of all laws, Humane and Divine.” In each of these groups, they respond to incentives that get each of them to act. Al-Qaeda differs from the other two in the fact that they are not greatly motivated by riches, or power. They are motivated to rid the world of non-Muslim influences and restore Islamic practices. In that context, they are acting in rational choice.

People try to avoid costs and capture benefits

I am not exactly sure what approach I should take on my writings in this class and in particularly this specific writing. But I find it interesting that someone would write a book comparing pirates to economics.  As I read the preface to the book I was beginning to think that this book was going to contain weak comparisons because he asked his girlfriend to marry him through his book.  Sounds like even Peter Leeson had an alternative motive in writing this book.  He used other people’s resources to hopefully benefit from a “yes! I will marry you.”

As I began the first chapter, the rickety wheels in my head started thinking about how other notorious criminals could relate their ways of thinking to economics.  I first thought of the mob, and how they keep themselves in check.  I want to believe that the idea of “rational choice” keeps pirates, mobs, Al-Qaeda, and any other self-interest group that the majority of society views as “Opposers and Violaters of all laws, Humane and Divine.” In each of these groups, they respond to incentives that get each of them to act. Al-Qaeda differs from the other two in the fact that they are not greatly motivated by riches, or power. They are motivated to rid the world of non-Muslim influences and restore Islamic practices. In that context, they are acting in rational choice.