November 2014

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In the linked interview, Coase stated that he was in disagreement with some of the work of Buchanan and Tullock in Public Choice. What aspects of New Institutional economics might be in tension with Buchanan-style public choice? I would be interested in some explanation about the points of possible disagreement.

The economic minimalist strives to have the greatest insight with the least theory possible, while the maximalist has very little insight for a lot of theoretical mumbo-jumbo.

This is a great point that should probably be emphasized in its own blog post (unless it already has, and I've missed it). A "simple" understanding of basic economic law reveals a lot about the real world, and many an economist either lacks or ignores such understanding.

It reminds me of Lerner's "Boulevard of Broken Dreams," a book I've recently had the opportunity to read in order to review a Swedish translation, in which the author argues that entrepreneurship in many countries is dependent on government support. According to the book, many government programs for entrepreneurship fail, but it is because they do the wrong things - and, consequently, we can get more out of these expensive programs if we use economic research to make them "better."

I've been through the whole book, but there is not a single mention of opportunity cost of such government investments, not a single reference to that which is not seen. I find it shocking that economists make such blatant errors and argue in a scientific-sounding way for what can best be described as central planning - without even considering alternatives.

The basic assumption for Lerner, his starting point, is that we need "more" entrepreneurship and that it cannot happen without government support. But what about government-created obstacles to entrepreneurship? What about consumer wants and producing real value? No mention of those. They are obviously unimportant in modern "analysis." Scary.

This is a fine tribute to a great thinker. Although as a student at U.Va. law school I heard a lot more about the Coase Theorem than I cared for at the time, I'm pleased to have had the privilege to learn from people under the unfluence of so fine a scholar.

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