UGADawg wrote:

Sure, e.g. see Coase's classic article The Problem of Social Cost. Briefly, Coase examines the implications of negative externalities given a false assumption (i.e. zero transaction costs) to determine the empirical significance of transaction costs in the real world, in particular with respect to policies aimed at alleviating negative externalities.

And does he solve the problem of social cost at least? Because, even without reading the article, I can tell he doesn't solve the issue of being descriptive to his own subject matter. I would bet he doesn't even address this issue.

You are full of references, but the references should preferably have relevance.

ETA: Since I have time, let's take a look. The second page,

Coase wrote:

[Concerning e.g. factory smoke over neighbourhood, t]he  traditional approach has  tended to obscure the  nature of the choice that has to be made. The question is commonly thought of as one in which A inflicts harm on B and what has to be decided is:  how should we restrain A? But this is wrong. We are dealing with a problem of a reciprocal nature. To avoid the harm to B would inflict harm on A. The real question that has to be decided is: should A be allowed to harm B or should B be allowed to harm A?

Here I can agree with the first part: If "the traditional approach" formulates the whole issue as how should we restrain A (the factory)? then this is of course wrong. However, I am pretty sure it's Coase himself obscuring "the traditional approach". As a minimum, I would like to see a reference to who represents this alleged traditional approach. Come on, this is an academic article.

Next, Coase himself formulates the whole issue wrong another way. "The real question" is not should A be allowed to harm B or should B be allowed to harm A? When the factory is not allowed to poison the neighbourhood, how is this a harm inflicted on the factory? Unless of course you think that the essence of economic activity is to inflict harm (on others, so as to gain benefits to oneself, presumably). But is it? I say it's an absurd premise.

The real question (the real real question, according to me now) is: Does the factory have to be there in the first place? What purpose does it serve? (i.e. if it's not an economic purpose, then what is this article talking about?)

If the factory('s operation and production) can be said to benefit the neighbourhood (either the immediate neighbourhood or the country at large), only then the cost-benefit analysis acquires relevance and becomes a (socio-)economic question. As long as this real real question is not formulated, we are dabbling in nonsense. It's nonsense because Coase's questions (both "the traditional approach" and his own "real" one) do not even pertain to economics; they are not questions that economics should or could answer; they are not questions about an economic relation between the factory and the neighbourhood.

Again, it's absolutely appalling what passes for economics. It's a freak and a bastard among sciences, seriously. You are calling this article a classic, but I don't see what insights there could be if I read any further.

Last edited by seigneur (4/05/2018 8:54 am)

UGADawg wrote:

Why the dramatic performance? I wasn't aware there was an audience.

This is a forum. Have you given a thought to what the word means?

UGADawg wrote:

Since I'm sure you'll be quite upset if I don't provide at least some evidence of this...

Spot on.

UGADawg wrote:

I'll just point out to you that one of your concerns ("... When the factory is not allowed to poison the neighbourhood, how is this a harm inflicted on the factory? Unless of course you think ...") is directly addressed in the article, and in fact one of Coase's primary insights is that taxing externalities, such as pollution from a factory, can reduce net social product.

This is not good enough. After everything that has been pointed out, it takes a bit more to show that there really is any insight in the article.

The first two pages warp the issue (of social cost, which is a real socio-economic issue) in a way that I was actually expecting your stated outcome (namely the alleged insight that taxing externalities can reduce net social product) without reading, simply based on my knowledge of ideologies. This is absolutely the worst a prized economist can do - ideological bias rather than science. (Well, they can do worse - they can suggest policies based on their ideology saying that it's science.)

Anyway, in principle, how do you get an insight from unsound premises that display no awareness of what the topic of the discussion is? Now, maybe Coase indeed knows what he is talking about, but you clearly have no clue what we (you and I) are talking about. Reminder: We are talking about issues named in the OP.

Last edited by seigneur (4/05/2018 1:13 pm)

UGADawg wrote:

Is there supposed to be a substantive point here? This isn't a reasoned engagement with the article or any of the ideas therein; it's pure hand waving.[/color]

My substantive point is that you have made an irrelevant argument from authority. You have not shown how it ties to the topic (economics).

Coase's article either is not economics or, if it is, it represents economics as an ideology, not as a science. Warped premises (as described by me) make it an ideology, and the false assumption (of zero transaction costs, as described by you) annul any possible scientific value it might have: If it starts off with wrong math, it will necessarily end up with wrong math.

On the very last point, it is your job to show that this is how economics needs to operate and that the results thus achieved are sound, insightful, and worthy of scientific respect. Do this to stay on topic.

Last edited by seigneur (4/05/2018 2:15 pm)

UGADawg wrote:

And in response, rather than showing the analysis was wrong...

The issue here is that the analysis is wrong as admitted by yourself - it starts off wrong. Show me why I should assume that it might end up right.

And please don't reduce the issue. I'm not talking only about the assumption of zero transaction costs. I am talking about framing the whole topic. From my point of view, the absurd framing that Coase sets up is more alarming than any of the details of the analysis. The framing is not relevant to economics to begin with. It starts off framed in a way that makes it NOT subject to economics! Who is "liable" and who should be "allowed to harm" who are not questions for economics.

In any other science, when you admit that your assumptions are "unrealistic" (more properly, absurd and insane), then whatever follows has no scientific value. To salvage this, one can claim "That was a thought experiment/just a hypothesis." But this is not what you are claiming. You are still claiming Coase (and economists in general) are doing science, presumably dealing with evidence and arriving at proofs.

In any other science, this is not how science works. What makes economics special, pray tell?

UGADawg wrote:

(additionally I have no clue how you think he didn't identify the 'traditional' approach he was arguing against, as he refers to Pigou and standard neoclassical welfare economics throughout the article numerous times).

I wonder about your reading comprehension.

Coase wrote:

...economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analysis seems to have led most economists is that it would be desirable to...

Is Coase talking about Pigou or about unnamed "most economists" who allegedly follow up on Pigou?

And the conclusion he attributes to those "most economists" (or to Pigou, if you insist) is so absurd that I emphatically refuse to believe he is doing justice to the "traditional approach". He is not giving a direct quote or reference, so preliminarily I suspect that he is simply making it up. I have seen economists do it often enough. It's fairly common in their mainstream and this is why I say their science is in a sorry state, it hardly even qualifies as a science.

Last edited by seigneur (4/06/2018 4:13 am)

Jeremy Taylor wrote:

I do think that Seigneur is making generalisations too sweeping, given the support he gives them.

I will correct my attitude as soon as I find an economist who can be taken seriously, someone who holds water philosophically and scientifically speaking. Thus far my own browsing of literature and contacts with economics-trained people have yielded no positive results.

It would be a relief for me if someone could prove that my impression of economics is mistaken. It would give back some hope and faith in humanity.