Thursday, April 17, 2008
Coase Theorem Smackdown
Kudos to Mike Moffatt for doing a whole series of articles debunking the validity of the oft cited Coase "Theorem." I shouldn't really call it a theorem since a theorem, in it's most used definition, is an idea or set of ideas that can be shown to be logically true that has value outside of itself. But as Mike makes clear, the theorem basically assumes the answer it wants, and then of course arrives at the answer. The Coase theorem is a crock and is based on a series of loose assumptions that mainstream (re: conservative) economists use to try to defend perfectly free market capitalism.