The issue is the power imbalance it creates and outlines.īecause in and of itself, wealth is of little interest. I agree with you but it remains a problematic point. Many or most people have no wealth, depending on your semantics of "wealth." Therefore, if the value/quantity of wealth rises, wealth disparity rises. The first thing to understand about wealth disparity is that it maps pretty much to wealth. > In any case, the "wealth disparity" discussion is almost always badly anchored. The actual equality dichotomy is ROIs vs labour/income. In any case, the "wealth disparity" discussion is almost always badly anchored. If not it does matter where the money starts. It doesn't really matter where the money starts, the market will deal with allocation efficiently. If we are extremely confident that markets work the way efficiency-assuming models do. Trickle down economics is the same kind of error. He meant that because market are imperfect, it really matters what the starting position is. Literally the opposite of what I was taught as "Coase Theorem." What Coase actually meant is that (1) transaction costs tend to be high (2) this explains the clearly observable inefficiencies of such markets. Everyone had been teaching his theorem backwards for decades, backed with the "chalkboard economics" he despised. Policy should focus on minimizing transaction costs and let the market organize itself.Ĭirca 2005, I heard a podcast with 90-something Ronald Coase. The market will achieve efficient solutions as firms sell each other radio spectrum or whatnot. The major application ATT was infrastructure stuff.Ĭoase's argument was that "given 0 transaction costs," it doesn't matter who owns what property or right. In college, I studied Ronald Coase's famous 1920s papers.
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