Coase Colored Glasses

Meta Post

It seemed like the majority of my posts were written about things that I read that resonated with me or things that I didn’t quite agree with. I noticed that many times I tried to tie in my own examples from my life in an attempt to better understand the subject matter and relate it to myself. I wouldn’t say that there are broad themes or concerns reoccurring in my readings. It does seem though that many times I get stuck on something that I read at the beginning of the chapter that seems to catch my attention and I have a hard time letting it go for the rest of the post. Over the last weeks my posts seem to have gotten more content based. I feel like initially it was difficult for me to come up with things for myself to really talk about and discuss because im not learned in the art of Economics and many days I felt that the other posts by the other students were so much better than mine. I feel like over the last couple of weeks I have been able to really start to understand the subject matter and focus on being able to somewhat think critically of the information although that sometimes didn’t translate into great writing. While I was rereading my work I was actually really surprised by how much filler I use in each of my posts. I never noticed that I was really just trying to take up space when I was writing but when I was reading it I had the impression that I maybe didn’t feel very confident in my abilities as an economist. Some of the ideas that I see as worth revisiting I actually have already revisited several times. In one of my posts I talked about how public use policy is really just an awesome way for the government to just take whatever they want from me and that is something that I have actually been reading a lot of lately. I have enjoyed looking up other cases of people that have been through those problems with the government. I noticed that some things excited me more than others. I loved learning new concepts and seemed to really enjoy talking about the things that I learned more than the controversy and things I disagreed with. I value the time to put my thoughts in ink. I seriously think that writing blogs helps you to think critically about the information that you are reading and that has been invaluable. I think it shows in my excitement in a lot of my blogs. I think I may have used the most words like “wow, awesome, etc.” there were a lot of different times that I was excited to learn and when I had those epiphanies it was really neat to see and reread later as well!

meta post

This second half of the semester has been an interesting one; it has been full of interesting application of the basic economics that we learned in the first half of the semester. Looking at my posts over the second half of the semester, I think that the overall quality of my posts has gone up, considering that was one of my main goals for this second half I’m very happy with that. The content of my posts didn’t seem to change; I spent a lot of time talking about costs and economics efficiency. That to me makes sense. I have been taking economic classes for four years now and those two points have been ground into me in every single class. I’m ok with that, I think that if people understand the bases for economic efficiency then they will be able to make better economically efficient decisions.

The natures of my posts have only changed slightly over the past half of the semester. Like I stated before I think that they have become a higher quality, but I did notice that they did start to focus on more of the law side of things. This is something that I was happy to see, this is a law and economics class and I didn’t feel like that I was getting the law side of the class. Now after critically reading my posts I can see that the law is much more applicable to economics then I originally thought. I think the reason that my posts are changing in this way is just because the class readings were headed in that direction. They focused much more on the system of law and applications of certain laws, mainly involving property rights.

In my posts there are a few things that I would consider revisiting. My post about welfare encouraging people to remain in poverty could be a very interesting graduate thesis, I think that it is something that is very measurable, and we can directly link economic incentives to people working harder to get out of poverty. If those incentives aren’t there then people aren’t going to try and change. Another thing that is worth revisiting would be out legal system encouraging rent seeking behavior. It would be a very interesting study on our legal system to see what would happen if punitive damages we done away with. I think that it would save out government a lot of money in not having to support bogus claims of damages with judicial resources. People would only bring legal action to the courts for things that they would hold as much more valuable to them.

The main part that I valued in doing the weekly blogging is that I game me incentive to read the books and come to class educated on what was to be discussed. Most of the time I do reading as an afterthought, or to study for a test. With this system in place I was forced to know what was going on before the teacher taught it. I believe that this was one of the reasons that I was able to make much better contributions to the class in the discussions.

Overall I think that the blogging became more of an applicable way to aid in the teaching of this class. It gave us another perspective on what was being taught that we wouldn’t have gotten otherwise. I’m happy to have taken this class this semester, it has given me an opportunity to use my economic training in a different field that I was never that I would do. It has really opened my eyes on how economics really come to play in every decision that we make, not just in the models that we learn.

Final Meta Post

As I read through my blog posts since the midterm I was pleasantly surprised. I often feel as if I don’t know really know anything about economic theory. Throughout the duration of this class I have been acting under the impression that everybody seemed to be learning much, much more than myself. But as I was reading through my posts I became a little bit proud of myself. This class has been the most difficult class for me this semester. I have really struggled with understanding the concepts and I most of the lectures have gone right over my head. But as it turns out a few of my posts actually make it look like I might know a little something about economic theory. My posts might not be as detailed and nuanced as my fellow students, but I am still happy with my posts.

One thing that I noticed about my posts is that I began to pull more outside information to help support my posts. I believe that all of the information that I used was completely relevant to the situation. An example of using outside resources was my post about executive agencies. When I wrote that post I had been watching C-Span around the clock. It was just around the time that there was the debate going on about whether the government should shut down or not. This example illustrated just how inefficient the executive agencies have become especially because of the huge amounts of money being thrown at them.

As I read through my posts I also discovered another commonality, the fact that I hardly ever understand Friedman. I am definitely a newbie when it comes to economics and I am not sure that reading Law’s Order by David Friedman helped me out at all. It seemed that every time I would open up his book my brain would just get more and more confused. I have never enjoyed people that talk in riddles and David Friedman is the master of it! A lot of my posts were my explanation of my deep confusion. The biggest problem that I have with Friedman’s writing is his use of examples to illustrate his point. In my 14 years of educational experience I have noticed that whenever a teacher, writer, or any other type of instructor is trying to make a concept clearer to the class they take advantage of the use of examples. However whenever Friedman uses examples the only result is that I ended up even more baffled than I already was. Perhaps this is an unintended consequence of his use of horribly tangled examples, or it was his goal to leave the reader confused. Either way I did not enjoy reading his book at all. In one of my blog posts I discussed one the scenarios that I found particularly puzzling. In the chapter about tort law Friedman tries to clarify exactly what Causation is. He uses the examples of two hunters that accidentally shoot a third hunter. I cannot get past the fact that if situation was actually to occur, it most definitely would not be dealt with by using tort law. This situation is definitely a criminal situation. It doesn’t matter if the killing is accidental or not, the fact is these two hunters (or at least one of them) killed a man and they should be tried in criminal court.

Overall I just flat out did not enjoy blogging. Unfortunately I feel like my distaste for blogging could be seen in my blog posts. A few of the posts may have seemed like I put very little effort into them, but that is only because I put very little effort into them. I think that whenever I got frustrated with the reading or my inability to fully grasp a concept I sort of just gave up. Looking back on my blogging has actually helped me to realize what I can do better in any class. Perhaps from now on whenever I don’t understand an idea in a class, instead of letting myself get frustrated and give up, I need to calm down, reread, and then seek out help. So although I did not enjoy blogging in least, it has really given me and idea as to what I can work on to become a better student for the rest of my educational career.

Tony’s Metapost II

Since midterms, my posts have changed. There were a few things that I promised myself I would do better on, and I have. A few negative things were also dragged along in my posts as I attempted to get better, and learn more about law and economics. I was much more creative and original in my thoughts, arguments, and titles this time around. I also, unfortunately, used a whole lot of bad rhetorical questions, and my creativity sometimes got in the way of being heavily involved with the readings. Last semester I developed the ability to spark my own thoughts from the readings. This semester I learned to develop those sparked thoughts. Another skill I learned this semester that I did not use previously was using material from other relevant classes. There do not seen to be themes that prevailed heavily in my work, although it looks as if I purposely wrote about economic concepts that were not in the subject matter for the week, and ended up writing about them some other time. What I talked about diversified greatly from last semester. I improved, but there’s still room for improvement.

The creativity in my posts was really nice until the last few posts. This may be narcissistic but I love the titles I came up with. They are pretty funny I think. I even forgot why I called “Tasty Decisions” what I called it until I realized that I was talking about preference in the market and not food. Other good titles were “Monoplease…” and, “McDarrrrnlds.” “The Unguided Criminal” may be the most original post I wrote. It is about what our system would be like if we rewarded good behavior as well as punished bad behavior. I was pleased with my writing style and reaching the goals I wanted.

In my posts, materials from classes I’m either taking now, or took a semester ago was popping up. I saw a lot of ideas from Machiavelli this go around, and many other ideas from political theory. I’ve also used contemporary American history information (which is my major) to argue against authors, like in “Monoplease…” This is probably not a good strategy for someone who is an amateur economist, but I did it anyway.

I also encountered a few problems. Because I was trying to amp up my style, I used a lot of rhetorical questions. A lot. I think I have them in most posts, right near the end, without answering them. That is a bad writing strategy because it frustrates the reader, and discredits the writer for not completing thoughts. Along with rhetorical questions, I made some bad arguments. In “Monoplease…” I argued that legislatures are under contract with voters, but I did not consider the trustee model. The argument would have been stronger if I had at least tried to discredit that model. In “Tort(ure) by Liability” I completely set myself up to make a great argument on how taste and culture effects liability rules, but ended up making an argument that was weak about people who automatically assume responsibility no matter what law says.

The subject matter of my posts this half of the semester was broader than the last (which I count to be a good thing). I did tend to talk about incentives for politicians a few times, because I feel that that is important to consider as a participant in society. I also compared the government to a business many times, which reveals my skepticism. Overall, the subject matter was better this semester. I ranted about free market institutions in what seemed like every other post last semester. I didn’t even get bored re-reading my posts this time.

This half of the semester saw blogging progression. I was able to be more creative and original in my posts. I had some trouble with writing lots of rhetorical questions and weak arguments. I diversified my gambit of writing subjects unlike sticking to a single theme by accident like last time. I really enjoy the books we used for class and for the most part, enjoyed writing the blogs.

The Advancement of Social Welfare

It was strangely fitting for me to read Epstien’s conclusion at the end of our semester. I was intrigued by his idea that his arguments were made to show that property rights are necessary for as he puts it the ‘advancement of social welfare’. That statement caught my idea. Because in the midst of all the talk of the ‘reasoning’ behind the choices that are being made in legislature, government, judiciary, relationships, pirates ships is the idea that somewhere, somehow, this  understanding of these principles, specifically the analysis of public choice and another economic ideas, will benefit us.

Everything that we have learned we must realize is being learned selfishly, for one self interest or another we put in the effort to read, go to class, analyze and discuss these ideas. We don’t do it just for the ideas sake, we do it because we stand to gain something. Some sort of welfare or utility is being gained by our actions.

That’s the biggest thing that I’ve come to realize is that my actions are entirely selfish. Even the ones that I deem as entirely unselfish are somehow and in someway helping me to gain utility. I don’t give money to a charity because I’m just charitable, however much I’d like to think that is the case, I give it because I get a ‘good feeling’ or I get some sort of utility for my efforts.

Now this isn’t a new idea to any of us, so you might be wondering, what’s my point? Well, Epstien mentions ‘social welfare’ which relates to maximizing utility over a large group of people. As I thought about this I realized that the reason a rational person would care about the welfare of a group only if there was some advantage for them in the long run. Wither they be decreased costs in the long run which then mean a greater utility gained over a long period of time, or an increase in utility the only reason a rational being would maximize social welfare would be if there own personal welfare would increase.

Which leads me to wondering, what increase in welfare was Epstien hoping to gain by writing about property rights. Putting the idea that he as writing purely to gain money aside, we can assume that he was writing because he believes with increased property rights would come somehow to him an increase in his overall welfare.

But the interesting thing is even if his idea was wrong, say completely wrong, like, he thinks Barak Obama isn’t a natural born citizen wrong, he can still make a ‘rational’ decision to write about about his idea if he perceives that he would benefited from it.

Reality then doesn’t matter as much as perception of reality does. What we perceive to be true in a sense becomes our truth and the basis for which we make rational decisions. If I perceive something to be true then any attempt to maximize my utility can indeed increase my utility because I get some benefit, real or imaged, out of my effort.

This was especially clear to me when I was looking at the coverage of Barak Obama’s birth certificate. Because in reality the effectiveness of these tactics would be minimal. You wouldn’t get him removed from office, but somehow people get utility from trying. The effort is what gives them utility.

Utility. That’s what its all about. Maximizing it personally is what everything we’ve learned is about.

Judges or Economists?

Friedman seemed to write his last chapter differently than the rest of the book. It seems he finally came to terms with the “real world” versus the economically ideal feeling instilled in me that I often had after reading Laws Order. To begin, I believe that it is completely correct for judges to care about things such as “justice or “fairness”. Although they may be not be economically effiecient all of the time their is nothing wrong with that. Judges are NOT economists, nor should they be. Although I happed to find myself on the efficiency side of the ailse often, their are times when other things take priority. Judges should be allowed to do the job they were designed to do.

As Kelsey already pointed out, a key passage is on pg. 299 where Friedman explains that the market is unable to correct poor decisions judges may make through natural feedback, “No comparable mechanism exists to push judges toward efficiency.” Exactly! Are judges and the United States judiciary in general not created specifically to be insulted from outside pressures and forces? Nearly every aspect of our high-level judicial appointments–lifetime tenure for good behavior, nominated not elected, private and secretive nature, informal code of coduct, dress, and behavior–are in place specifically to counterbalance the whims of the people, and I would argue, the market. While Friedman is completely correct in saying that one important judge can do “an enourmous amount of damage…billions of dollars down the drain”, how would increased market pressure effect this?

First I ask exactly what kind of market feedback would create outcome that are more efficient in our judiciary. Second, how can we structure such feedback in a way that only allows it to fix ineffiecent and harmful judicial precedents without opening up the judiciary to every form of political and societal pressure the  plagues the other branches of government. Our congress is closely alligned to the people will, especially on issues that approach consensus, and yet they seem to be consistently not trusted and even demonized. My vote, leave one branch insulated. Unfortuneatly, as my post last week points out, we currently have two insulated branches–the judiciary and the bureaucracy.

I conclude by quoting Friedman, “A more serious problem with testing the thesis [Posner’s] is that often we simply do not know what the efficient rule is.” Ah, its never been better stated. I would classify myself as at least a relatively intelligient and informed individual yet I am never certain my choices are efficient according to my own rationality. Do we seriously expect the courts to divine efficient outcomes every time? Even economist disagree on the “right” solutions. Ultimately, i applaud continued efforts to apply economics to our world for it own betterment yet I am content with the fact that our judges are allowed to use the common law to rule, or better yet, judge, on each case individually occasionally.

Judicial rationality

What is the motivation for a judicial decision? Is a judge going to base his decision on popularity, the judges personal ideology or based off of the chance that a judgement will be overturned by a higher court?

I felt that the others for these chapters spent a lot of time beating around the bushes. Whether that was on purpose or not it has yet to be determined. I found a few factors that they discussed that seemed to put together more of a base to prediction of what judicial decision making.

First, a judge is only going to make a ruling if he feels that his decision may stick most of the time. There may be an exception where a judge may choose to pass a ruling that they know will be overturned for reasons that are not normal. Some examples of non-normal motives would be a strong ideological drive, the popularity that may be gained from being edgy and controversial, etc. For the most part I feel that it would be in a majority of cases to base decisions within the reason. As a judge is higher up the hierarchical ladder we may see him making more decisions based off of ideology, but probably not popularity due to the fact that they will probably not receive a promotion or pay increase.

Secondly, if a judge as in our system is removed from lobbying and election pressures, anyone judge will make a decision based on moral ideology. I would have put constitutional or precedence loyalty in the same category, but both seem subject to the views of the individual. A judge may feel that stare decisis is not a legitimate reason for changing a decision based on a change in judgement circumstances, the terrible ruling of a case or possible wanting to create waves. Motive is based off of personal ideology and preference, but only placed in check when the danger of an overturning is possible.

I do know that this doesn’t necessarily happen to make pediction much easier, but it is necessary to state that judicial decision making because of its immunity to most outside pressure is to be based with the complex nature of each individual.

Epstein is a smart dude

Reading Epstein’s last reflections of his book was not what I was expecting.  Instead of summing up everything he had written about and giving his opinion about property rights and whatnot, he asked questions and left the conclusion open for the readers to figure out.  Personally this book really made me think about which side of the fence I sit on about these issues.  At the beginning of the book I could see why zoning laws were believed to protect citizens’ property values.  If industrial, commercial, and residential areas are all mixed together it would create a lot of nuisance and property values could plummet for residents.  I suppose that defining what is industrial, commercial, and residential property is the bigger issue.  Also the takings clause that allows the government to take one’s property and return a just compensation.  The Founding Fathers weren’t incredibly specific on what just compensation meant and on what grounds the government could take it.  I can agree with taking a run-down neighborhood and turning it into parks or something, but should they have the authority to take property and give it to companies because of the economic benefits?  It may be efficient, but is it right or just?  I don’t think so.  I think efficiency can be sacrificed to preserve justice and morals.  Some may argue that efficiency creates societal norms and mores, or that norms and mores create efficient outcomes.  But I’m gonna pissed if the government forces me to give up my land or property to a steel factory or something.  It just isn’t right.


I recently read a book (“The Future and Its Enemies” by Virginia Postrel) with one central point: We need a dynamic society, and dynamism is evolution through variation, feedback, and adaptation. The opposite of being dynamic is being static. On page 299, Friedman notes the difference between the assumption that executives of firms will act efficiently and that judges will act efficiently. The crucial difference is, “The market provides feedback, positive and negative reinforcement, to guide business firms toward efficient behavior. No comparable mechanism exists to push judges toward efficiency.” BAM. There you have it – the big difference between applying economic principles to the economy and applying them to government and law. The market is great at giving feedback – if left to itself. But government gets in the way of market feedback. That’s why I think there should be as little government intervention as possible in the economy; because I believe in the power of feedback and adaptation leading to progress. So government and law is really a static system. Is this a problem? If it is a problem, how do we implement variation, feedback, and adaptation? As others have mentioned, perhaps consistency is law’s highest virtue. However, consistency isn’t very good if we are consistently inefficient or unjust. Besides, with a lack of feedback, we wont have as clear of signals telling us in which direction to move to better society. As much as I hear people complain about the evils of money, it serves as a pretty good mechanism signaling information. And let it be known that that is one of my biggest pet peeves – people who go on and on about how evil money is. Well guess what, if you want to do good in the world, you have to have money. So hate business all you want, but if there weren’t those of us interested in making a profit, there would be no one to support the charities. Don’t bite the hand that feeds you.

On an unrelated note, isn’t reading Friedman entertaining? My favorite bits from tonight:

“The direct use of force is so poor a solution to the problem of limited resources and diverse ends that it is rarely employed save by small children and great nations.” (pg. 309)

“…creating an olfactory externality…” (pg. 306)

Activate the Mechanism.

Friedman restates in his last chapter what he’s been proving throughout his book: “Determining what legal rules are economically efficient can be a hard problem” (299).  We don’t expect all judges to be economists, and “even if judges know enough economics to realize that they ought to be making efficient rules, it does not follow that they know enough to do it.”

I, for one, have often felt like Friedman’s arguments were circular and sometimes anything but conclusive.  Friedman now confesses that one problem is the “often we simply do not know what the efficient rule is” (304).  So if we can’t expect judges to know economics well enough to make efficient laws (Friedman rhetorically asks how we can expect average judges to do better than Posner, one of the most intellectually able and economically sophisticated judges of this century), what are we to do?

The answer lies somewhere in the analysis of the free market and its comparison to government and law.  That’s the premise of law and economics.  Friedman says “The market provides feedback, positive and negative reinforcement, to guide business firms toward efficiency.  No comparable mechanism exists to push judges toward efficiency” (299).  What if there was?  That’s the answer to the problem of quote unquote ignorant judges, right?  If there was a way that judges received positive and negative reinforcement, they would also be guided toward efficiency.  What could this mechanism be?  I submit that the answer is not as simple as ‘the Coase Theorem” or “a free market” or “common law.”  Common law, after all, is what Friedman is arguing is inefficient.

This ‘mechanism’ must be somewhere in the legislative process.  Friedman “offered intellectual property law as evidence in favor of efficiency,” which is legislated law.  What could provide feedback for legislators and judges?  Here’s all I could think of: a panel of economists who have to approve legislation and judges’ decisions.  I don’t think that’s right, though.