It has taken me many, many months of my retirement time, but I have just finished building my new Medicine Cabinet.
I don't know about you, but I think it was well worth the time and expense.
It has taken me many, many months of my retirement time, but I have just finished building my new Medicine Cabinet.
I don't know about you, but I think it was well worth the time and expense.
Over the holidays, my older son (David Ricardo Palmer) told us that if we put a circle on the floor, the cat where we were all chatting would go sit in it. He showed us all the images here of cats sitting in circles or hexagons.
So we decided to try it. We got some duct tape and put a hexagon on the carpet.
The cat at that place would have nothing to do with the hexagon. It may have sniffed at it once or twice, but that was about it.
However, the daughter of my younger son (Adam Smith Palmer) went right to the hexagon and stood in the middle:
We all had a good laugh about how the hexagon was more of a toddler trap than a cat trap.
But the laughing stopped when they finally got around to lifting the tape a few days later. Much of the adhesive was stuck to the carpet and the adhesive residue began collecting dirt. :-( You can see the outline in this photo.
Fortunately it looks as if several goes at the adhesive with GooGone has cleaned it up pretty well.
So if you're going to try cat circles on your own, maybe use a rope or something.... or at least remove the tape before people have walked on it for several days.
The evidence that rent controls are harmful is overwhelming. They:
Imagine my shock when I read this piece at the Washington Post blog. The piece begins harmlessly enough, explaining how the "pencil" highrises (tall, narrow buildings) that are popping up all over Manhattan and Washington, DC, are emerging as a solution to increased demand for housing in major urban centres. But suddenly it concluded,
The pencil tower isn't a pretty solution to the problem of exorbitant housing costs, or an elegant one -- rent controls or a more redistributive tax code would help urban residents more directly -- but it is a straightforward way of addressing the housing shortage that is causing financial hardship for so many Americans.
Huh? Rent controls? Really?
The evidence is overwhelming that rent controls, over the long haul, lead to reduced supply of housing, in part because developers hesitate to build rentals units if they think rent controls will be slapped on them. Also, in the face of rent control, many landlords convert their units to condos.
Rent controls might be good for those who pass through the filters and screens and get a nice unit at a low rent. But they also make many people who are disadvantaged worse off by leading to a reduction in the supply of affordable housing.
Ted Frank runs the Centre for Class Action Fairness. His general target is the attorneys who make massive fees while winning pitifully trivial awards for the members of the class. And then he took on the settlements that allowed the defendants to make big donations to charity in lieu of providing awards for members of the class (while attorneys for boths sides rake in the fees and the defendants just shift their charitable giving).
Here is a recent quote about Ted from this site:
"We'll admit it: After describing him as a scourge of the class action plaintiffs bar, a class action gadfly, a crusader, and a serial settlement objector, we're running out of nifty shorthands for Theodore Frank of the Center for Class Action Fairness. Let's just say he gets really fired up by class action settlements he thinks are unfair. And he's got a knack for blowing them apart in the courts."
And at this site, Ted explains the reasoning behind his latest victory:
For years, parties have used cy pres—the practice of giving settlement money to charity instead of the class—in abusive ways. When proposed by defendants, cy pres can be used to create the illusion of relief to justify greater attorneys' fees at the expense of the class when in fact all that is happening is that the defendant is changing accounting entries on charitable donations it would have made anyway. When cy pres is used to justify attorneys' fees, it takes away the incentive of class counsel to prioritize direct recovery to the class: after all, it's much more satisfying to hold a ceremony giving away an oversized $3 million check to a local charity run by a friend than to issue a million $3 checks to ungrateful class members.
Over the past few months, the C.D. Howe Institute has published a number of studies outlining the fiscal difficulties (or crises!) facing Canada's provinces over the next few decades. The problem, neatly put, is that as more people age and as more medical procedures become technically feasible, the demands on the health care system will become much greater than can be supported by current and projected revenue streams.
In terms of the graph below, picture the demand curve shifting to the right much faster than the supply curve does, exacerbating the problem of excess quantity demanded:
and the problem is there, in varying degrees for each province. A summary of the C.D. Howe studies is here, along with links to their individual provincial studies.
Their studies refer to a "fiscal glacier".
Canada’s provinces face a common challenge in managing the rising cost of healthcare for an aging population, and ensuring that demographic change does not compromise other major government programs, manageable tax rates, and debt control. The challenge is not identical everywhere, however. Some provinces are aging faster than others, some are more vulnerable to age-related increases in spending than others, and some will see more robust growth of their tax base than others – so the urgency and appropriate responses differ across the country.
[T]he authors focus on each province in turn, starting with Ontario, projecting population growth and the impact of demographic change on government revenues and programs. They delineate the coming fiscal squeeze for each province and make recommendations on how each can prepare for it.
Raising taxes and broadening tax bases will most certainly be necessary if the provinces wish to maintain some superficial form of universal health care. But at the same time, policies must be considered that will reduce the quantities demanded (e.g. with co-pays) and increase the supply.
Numerous cartoonists have reacted to Islamic terrorist murder of the staff at a French publication that wrote satire, criticizing Islamic extremists. Many are summarized in the Washington Post.
My favourite captures the essence of the attacks on "Freedom of Expression".
From this site (ht Rondi)
The assailants are as yet at liberty. I hope they’ll be dead by the time you read this. But if not:. You want me too? Come get me. Because nothing short of killing me — and many more of my kind — will ever shut us up.
And if you don’t believe that now, you’ll believe it very soon. Because there are more of us willing to die for that freedom than those of you eager to take it from us. And soon you will find out that those of us willing to die for that freedom are also much better at killing than you.
So come and get me. Je suis Charlie.
Since I began blogging nearly a decade ago, I have argued that freedom of expression must take precedence when it conflicts with freedom of (or from) religion. Perhaps it is because I'm an academic; perhaps it is because I am mostly non-religious. But whenever I see any religious group try to stifle expression, including satire of their religion or their leader, I am upset and concerned.
The latest incident involves murders of at least 12 people in France because of cartoons like this and the proposed issue making fun of sharia law:
"100 lashes if you don't die of laughter" is what some people say is the proper translation.
Hooded gunmen shot dead at least 12 people at the Paris offices of Charlie Hebdo, a satirical publication firebombed in the past after publishing images lampooning Muslim leaders, in the worst militant attack on French soil in recent decades.
Another 20 people were injured, including five critically, in the incident. Police union official Rocco Contento described the scene inside the offices as "carnage."
At Econlib today, Bryan Caplan cites a review which highlights the differences in ways that my left-wing (elitist interventionist) friends need to consider:
[T[he observed relationship between intelligence and conservatism largely depends on how conservatism is operationalized. Social conservatism correlates with lower cognitive ability test scores, but economic conservatism correlates with higher scores (Iyer, Koleva, Graham, Ditto, & Haidt, 2012; Kemmelmeier 2008). Similarly, Feldman and Johnston (2014) find in multiple nationally representative samples that social conservatism negatively predicted educational attainment, whereas economic conservatism positively predicted educational attainment.
With such differences between the economic conservatives who tend to be classical liberals and the social conservatives, I see the old Reform party (and now the Progressive Conservatives) in Canada and the Republicans in the US as very tenuous coalitions between very different groups with very different social agendas.
Lately on Facebook, I have seen a number of repostings of a video in which some people quickly set up a fake gravesite on someone's lawn and proceed with a religious ceremony. The video includes the shocked and puzzled reactions of the homeowners. [No, I will NOT post a link to the video.]
It is all a variation on the old theme of Candid Camera: do something mean or cruel to unsuspecting people and watch (laugh at) their reactions.
I always felt uneasy about Candid Camera and didn't much care for it.
It is a sick form of humour. It is a power play that says, "I can do something to you and laugh at you."
It is a low form of humour that gets its jollies from putting other people down or putting them on the spot.
And it isn't funny.
Last year I wrote about borrowing umbrellas, sweaters, or water bottles from the lost-and-found at a university.
... I wrote to some people at The University of Regina and asked them to go to the lost and found to collect a couple of water bottles for me. ... They were somewhat taken aback, and then they realized I wasn't serious. Their plan, in response to my request, was to get all the water bottles and put them on my desk. Too bad it didn't work out; it would have been funny.
Three things dominate the lost-and-found inventory: water bottles, sweaters, and notebooks.
Anyone need/want a sweater?
Why do we feel such reluctance to do these things? Is it perceived as stealing? Or is it just too embarrassing to lie and say you lost something that isn't yours? In a way that's too bad because it might make more sense to borrow things from the lost and found now and then rather than inventory them ourselves.
Here is someone who recommends using the lost-and-found boxes at hotels if you forgot to take a charger with you for your phone, tablet, or laptop [via Jack]:
Inevitably, you wind up in some hotel without the charger or adapter you need. You forgot to pack it. You left it somewhere.
The great thing is that you’re not the first person to leave a charger or cable behind. Lots of people have left theirs behind — in the exact same hotel where you are!
So hie thee down to the front desk and ask. They’ll offer you a lost-and-found box of iPhone chargers, micro-USB cables (for Android phones, ebook readers, some cameras), and even laptop adapters of every description. Borrow the one you need.
Excellent advice. I wouldn't want to rely exclusively on lost-and-found boxes to provide me with chargers when I am traveling; the risk that they might not have one is too great for me to want to rely on them as a source.
But the odds are good that they can help you out pretty frequently. What's better is they are cheaper and more convenient than an emergency trip to an electronics supply store.
I used to love shopping during the holidays. People always seemed in such good spirits.
I'd often make of point of going out on December 24th even if I didn't want anything just to exchange smiles and chuckles. At first I thought I'd just laugh at all the people who had put off buying their gifts, but actually it looked to me as if most of those folks were having a good time too.
And it has become a family tradition for me to go out to Walmart and the malls with my older son, David Ricardo Palmer, and his daughters as soon as the stores open on Boxing Day (December 26th). We rarely buy much. We have all the Christmas decorations and paraphenalia we want, and there isn't much else we're keen on fighting over. So we go out, wander through the stores, and have lots of fun shopping and laughing together.
This year two things have been different:
I love shopping, especially when other shoppers are in good spirits.
Before our two granddaughters from Texas arrived, we bought a couple of inexpensive toys for them to play with before Christmas. Among the toys we bought were two of these tops:
Three dollars each, and they come with an extra set of 2032 batteries. We couldn't find anything like them on Amazon.
You start to spin them, and they automagically stabilize themselves and spin for hours before the batteries wear down. And they flash lights, too.
I don't know how excited the girls were about the tops, but the adults were really intrigued by them.
So on Christmas Eve, Ms. Eclectic and I went back to the neighbourhood Dollarama and bought out their inventory for extra gifts for everyone. Here they are, along with the two our granddaughters already have. Amazing things!
Geez it's fun having the family around for the holidays.
In Canada we have a health care system with devastatingly long wait times for many services. At a zero price, the quantity demanded greatly exceeds the quantity supplied. The standard supply and demand graph illustrating the problem:
Excess quantity demand at a zero price means the scarce goods and services must be allocated using some other mechanism. As often happens, queuing (waiting) becomes a common allocative mechanism. But people have incentives to try to jump the queue, thus leading to such practices as favouritism, side payments (implicit or otherwise), medical tourism, and death panels (i.e. bureaucratic rules and decisions about who should receive the goods and services).
When I first moved to Canada over 40 years ago, we had a reasonably workable health care system with very short wait periods, despite the gubmnt provision of health insurance. What was different then?
If these facts are even close to correct, there are several options for reducing wait times.
The suggestions I'm offering involve two things:
These two changes are shown here:
Admittedly the above figure is stylized. Nevertheless, the directions of the changes are correct and would greatly help reduce wait times for health care in Canada.
Recently the CDHowe Institute pubished studies (see this) about the fiscal glacier (their term) facing Saskatchewan and Alberta (and probably others). These suggestions that I'm offering will not do so much to help with the fiscal glacier. The first one might, but the second one would be costly.
Once many years ago I read the hypothesis that methane from dinosaur farts caused climate change. Here's a link suggesting the same thing.
Now recent research tells us that the growing population of beavers in marshes is also contributing to greenhouse gases [via Jack]:
“It has long been known the release of methane from beaver ponds is more intense than for other types of wetlands. With the species’ re-establishment and population growth in regions where beavers have been introduced, we set out to quantify whether the methane produced would be large enough to be significant...”
“We found that valuable habitat area has been established by beavers over the last century,” Mr. Whitfield said.
“While this habitat contributes to the global methane gas emissions, the magnitude of this methane source is lower than many other natural sources and unlikely to be a dominant climate change driver.”
Contributing? Yes, but not much apparently.
The Arts Project will be hosting a solo exhibition of my photographic art February 23 - March 7, 2015. It is a HUGE exhibition gallery, and I have been given access to the entire space.
I have tentatively titled the exhibition, "It's Only the Beginning..." after the title piece that I'll be showing:
The "slightly pretentious" artist's statement:
The theme of new beginnings runs through life. We think, we study, and we phenomenologize about our existence and our relationships. We strive to look forward in learning as well as emotionally, as we continue to grow. It is seen in our careers and career changes, our families and other relationships, and as we die but leave a legacy for others who carry on. It's only a beginning...
Or, to put it differently, as all good economists would say,
- Sunk costs are sunk.
- Costs emerge because we must make choices, and
- All costs are future costs.
Over the past few days, I have been reading The No. 1 Ladies Detective Agency. I should have checked before I started it because based on the title, I was expecting a book about some Brit female detectives.
Was I ever wrong. It is a very touching novel about the life of a woman in Botswana who opened her own detective agency. The problems she solved as a detective were mostly straightforward, and the approach to solving them was quite systematic.
But the novel describes much about the evolution of society and the economy of Botswana and is fascinating. I'm glad I stumbled across it.
On rare occasions, the heroine engages in some nostalgia:
Mma Ramotswe was a realist, who inhabited the present, but one nostalgic thought she allowed herself, one indulgence, was to imagine her Daddy walking through the door and greeting her again, and smiling at her, and saying: “My Precious! You have done well! I am proud of you!” And she imagined driving him round Gaborone in her tiny white van and showing him the progress that had been made, and she smiled at the pride he would have felt. But she could not allow herself to think like this too often, for it ended in tears, for all that was passed, and for all the love that she had within her.
That really struck a chord with me. I spent a day, back in my early 30s, sitting at my desk, imagining I was talking with my father (who had died with I was 15). I imagined conversations about politics, life, relationships, goals, etc. I hadn't thought about that day until this past summer when I came across some of his letters written to my mother before they were married.
And now this passage brought it all back. I guess old(er) folks like to reminisce.
It seems I am not the only person to think "Socks are the new neckties". [Also see this]. Apparently the sales of socks are going through the roof this Christmas season. From the NatPost [ht Brian Ferguson],
Unwrapping a pair of socks is no longer met with suspiciously overwrought squeals of excitement and half-hearted thank yous. The stigma is gone: go forth and stuff your stockings with mountains of colourful socks. ...
Some thoughts on design from the article:
Aesthetically, designs should be bright, able to match with a variety of outfits and instantly recognizable.
“Bacon-print socks were very popular this year, but some of them aren’t at all identifiable. That’s a problem,” Wright says.
“We keep in mind that people on the street don’t see the entire sock — just that small space on the ankle. The colours in that area have to be to be bold and prints have to be iconic,” Cohen explains.
Moreover, patterns that appear great laying flat don’t always look so hot on actual feet and ankles. “The design process takes anywhere from three to four months. You have to get your head around the fact that the socks are going to be cylindrical.” Kogan says. “Making socks is unlike any other form of design.”
One of several photos from the article:
From my own collection:
With the price of oil having plummeted, there has been considerable discussion in the media and elsewhere about what will happen to the quantity supplied (pedantic note for colleagues and students: quantity supplied, NOT supply) of oil in the short run and in the long run.
This article in Slate has it almost right. The average costs per barrel of oil include considerable sunk costs that are unrecoverable. If the price of oil is expected to stay below these expected long-run average costs, then no more new wells will be started in those oil fields.
In general, if the price of oil is expected to remain below $65/bbl, then there won't likely be many new shale oil facilities that will make it beyond the planning stage. And if the price of oil is expected to remain down nearer to $50/bbl for a long period, no new projects are likely to be begun in the arctic, tar sands, or deep sea [graph from Slate link]:
But for the short run, very little if any of the existing wells will be shut down. Here's the Econ 100 explanation:
The cost of drilling those wells has already occurred. It is a sunk cost (both in jargon and literally, I guess). The only relevant decision for an oil company is whether the revenue from continued pumping will offset the extra costs of doing the pumping, transportation, and marketing. These extra costs are generally referred to by economists as marginal costs, but what we mean is "extra" or "incremental" costs. Accountants sometimes use the term "direct costs" to refer to approximately the same thing.
What are the extra costs of pumping an additional barrel of oil, and how do they compare with the extra revenue the firm gets from selling that barrel? In economics jargon, pump another barrel so long as the MR>MC. In the case of oil pumping firms, MR=P probably.
Here is a graph (also from the Slate link) of the marginal costs of pumping and selling oil from various sources. The graph labels these as "cash costs" but it means marginal costs:
This graph makes the point really well. So long as the oil companies are receiving enough to cover these marginal costs, they will keep pumping the oil. And that will occur so long as the spot price of oil exceeds about $40/bbl. Pumping oil at those prices will cover the variable costs of pumping andmake some contribution toward covering some of the overhead/fixed/sunk costs.
There is an exception not addressed in the article, however. If the costs of stopping and starting the pumping process are low, some oil companies may choose to stop pumping if they expect oil prices to rise in the future.
In this case, the marginal cost of pumping oil now is not just the extraction, transportation, and marketing cost; it is also the present value of lost higher revenues in the future, which of course depend on the expectations people in each oil company have about future prices for oil. If they expect prices to rebound in the near future, they may want to curtail some pumping; if they expect prices to remain low for the foreseeable future, they may decide to keep pumping.
Note, though, that this decision depends only on their expectations about future prices of oil and has very little to do with the marginal costs of pumping. Or, to put it differently, the marginal opportunity costs of selling oil for cheap now are the possible foregone revenues from waiting.
Six years ago, in a public presentation, people asked me what I thought would happen with the price of oil.
I had no idea. I was tempted to tell them to look at the futures market, since that would be a pretty decent predictor.
Instead I said, "I can readily imagine the price of oil will drop back to $50/bbl. Not because I have any reason to think that. It's just that I want to stick it to OPEC, including especially Iran, Venezuela, and Russia."
Well whaddya know. It isn't $50, but it's down near there.
The price for a barrel of West Texas Intermediate crude oil -- a U.S. benchmark -- closed today at $59.95, a level of great psychological significance. Ever since Thanskgiving, when member nations of OPEC decided not to cut oil production, prices have tumbled. But this is also part of a longer term pattern, a fall of over $40 per barrel since late June.
Also, see this from Slate about which countries will suffer the most from the low oil prices.
For our April concert, Encore (the Concert Band) will be performing selections from Carl Orff's CarminaBurana. I love the piece and have been looking forward to rehearsing and playing it. It should be interesting with a concert band and a top local male chorus.
Tonight we had our first run at the piece. All was going pretty well for me on the 4th horn part until we hit the 13th movement, "Fortune Imperatrix Mundi" (Fortune, Empress of the World).
It started out being relatively easy stuff. Notes below the staff in the treble clef are not always easy for horn players used to playing above the staff in treble clef, but the first couple of lines were a piece of cake for a career 4th-horner like me (whose chops are going and who has troubles playing notes above the treble clef staff).
And then I hit the 3rd line (beginning bar 13) of the 13th movement:
I can play low notes. In a recent concert I had fun playing an E-flat below the staff of the bass clef (yes, that's right, bass clef!) but look at this section. If I'm reading this music correctly, that's a frickn A waaayyyy below the staff.... below the bass clef staff. I have never been able to play any note below a C# below the bass-clef staff. I don't know if ANYone can play the note as it is written. Certainly none of the top-flight horn players in Encore can even come close, so far as I know.
I figure Carl Orff was just having fun with this (or was it the arranger who is responsible? I've never seen the full orchestra music).
I cheat. I play the A at the bottom of the staff in the bass cleff. It seems to work. And I'm grateful they weren't eighth-note runs in that range.
What began as an annual tradition several decades ago. Here it is again in response to many requests. You'll have to click on the link to get to it. Merry Christmas.
You won't want to miss it.
I just received the following email at my UWO email address. Fortunately their mail server flagged it. It's ingenious.
Shipping status: Transaction confirmation: 71872499590
Agatha Staebell <firstname.lastname@example.org>
Your order #71872499590 will be shipped on 10.12.2014.
Date: December 08, 2014. 01:55pm
Transaction number: 0B6939A3F078A5
Please find the detailed information on your purchase in the attached file order2014-12-08_71872499590.zip
I was perplexed. I have, indeed, ordered some canvas prints recently but certainly not from this outfit and not from anyone in the UK and not using my UWO email address for confirmation. Also the confirmation number does not match the confirmation numbers on my orders. And, no surprise, there is no website for photocanvas.co.uk.
So this email looks like a massive attempt to infect some computers of people who have ordered canvas prints recently (which may be more likely this time of year).
Many years ago, I heard someone say,
One problem, among others, with white elephants is that once you build them, you then find you need to build bigger zoos to keep them in.
I was reminded of that quote today when former student/colleague/co-author John Henderson sent me this:
The city of Timmins finally closed its white elephant Shania Twain Centre. Had never heard of it myself, then again I can't imagine ever listening to a Shania Twain song. This, unusually informative bit, from Wikipedia:
Annual attendance for the Centre was originally projected at 50,000 but never reached above 15,000. Annual subsidies to the center cost the city of Timmins $7 per resident, or $33.72 per centre visitor.
For more on the closing of the centre, see this:
A failed tourist attraction in Timmins is set to become the gold mine the city always hoped for.
The Shania Twain Centre permanently shut its doors Friday.
International gold miner Goldcorp will officially acquire the property in June. The company plans to demolish the structure to make it part of a massive open-pit gold mine.
City councillors decided several weeks ago the centre was too big a money pit to keep subsidizing....
The centre has racked up more than $1 million in operating deficits ...
Goldcorp, which will officially acquire the property June 28, plans to demolish the structure to make the gold-seeded land underneath part of a massive open-pit mine being developed adjacent to the town.
Recent media reports have suggested the centre cost as little as $3.7 million to build. But a May 2011 analysis by PKF Consulting Inc. in Toronto says the figure was actually about $10 million for all construction, including the building, site development and upgrades to the co-located gold-mine tour attraction.
The entire 65-acre site is to be razed, including the gold-mine tour facilities, and added to Vancouver-based Goldcorp's planned open pit.
Here's hoping local politicians everywhere use this as an example before committing zillions of taxpayer dollars to more white elephants.
The "problem" of people reclining their seats on airplanes has given rise to this wonderful piece by Virginia Postrel.
In it, she explains the Coase Theorem, the importance of the assumptions underlying the theorem, and how to deal with situations when the assumptions are not satisfied (which is what makes both the Coase Theorem and her article so good).
A lengthy excerpt:
Airline seats offer a perfect illustration of Ronald Coase’s famous analysis in his 1960 article, “The Problem of Social Cost.” Coase’s crucial insight was that the way we tend to think about unwanted spillovers misses half the story. “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,” he wrote. “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?”
The traditional sort of thinking leads people on both sides of the airline-seat debate to get self-righteous, arguing that legroom and the ability to work is more important than comfortably reclining, or vice versa. Each camp finds the other rude. Each camp wants to improve its situation by inflicting harm on the other. It’s a “problem of a reciprocal nature.”
Essentially, the recliner says, "there wouldn't be a problem if you weren't behind me or if you didn't care about my reclining." And the tray user says, "there wouldn't be a problem if you didn't recline."
But, as Josh Barro has observed, the airlines have clearly defined the property rights. Passenger A (the recliner) has the right to harm Passenger B (the unfortunate soul behind him). Citing a common simplification of Coase’s work, Barro claimed that “it doesn’t matter very much who is initially given a property right; so long as you clearly define it and transaction costs are low, people will trade the right so that it ends up in the hands of whoever values it most.” So, he argued, “If my reclining bothers you, you can pay me to stop.”
This solution, however, is highly unrealistic. It waves away the central theme running throughout Coase’s work: the problem of transaction costs. Making and enforcing contracts, Coase emphasized, isn’t free. And when it comes to airline seats, it’s a lot more costly than Barro admits.
In theory, I could have offered the guy in front of me money to sit up, but even assuming that my fractured Italian had been up to conducting the negotiations and that he wouldn’t have gotten nasty in response to my overtures, how would I have enforced the deal? It’s not a simple problem, and certainly not a cost-free one. Suggesting that as long as property rights are well-defined, you can simply make a deal misunderstands what Coase was all about. He was obsessed with transaction costs. They explain why we have institutions (including firms), not just individual bargains.
Let's face it: many, if not most, of us would find it extremely uncomfortable/bothersome/annoying/unpleasant to be bargaining with a stranger about the exchange of the right to lower or not to lower a seat on the plane. These psychological costs mean that otherwise value-maximizing transactions rarely occur. I cannot imagine offering $20 to the person in front of me if they won't recline. Nor can I imagine offering notto recline if they compensate me by $20. [or fifty dollars or whatever deal we might strike]. Negotiation and transaction costs are important, and hence the initial assignment of property rights (or legal entitlements in general) is also important.
Postrel notes that the airlines have the property rights and assigns them with the sale of tickets. She offers one solution that airlines might try, but commentors have offered others as well. Likely there is some scheme that could lead to more value for passengers (and hence for the airlines).
It is as if she read Coase, Demsetz, and Calabresi and folded them all into one nice exposition.
My own version of the Coase Theorem:
- If property rights (or more generally legal entitlements) are clearly defined and easily enforced, and
- If transaction and negotiation costs are low,
- Then resources will move to their most highly valued use regardless of the initial assignment of the legal entitlements.
The theorem itself is trivial and not much different from Adam Smith's "invisible hand". It becomes rich, however, in the consideration of its assumptions. And that is where Postrel's piece shines. It doesn't just look at Coase; it looks at the assumptions.
One of my favourite scotch whiskies is Caol Ila. I can get it in Alberta, where retail liquor sales have been privatized and there is competition among retailers in the provision of brands and varieties.
But I can't get Caol Ila in Ontario. The gubmnt monopoly stores do not carry it. Maybe they will at some point, but I haven't seen it in the LCBO [gubmnt monopoly stores] for a long time.
Fortunately it is available at most duty-free shops.