Theorems about Coase (and his theorem), as a (kind of) obituary.

Mixed obituaries for the economic legacy of Ronald Coase.

He was, of course, a classic Keynesian "academic scribbler."

But should we blame the scribblers, or the "madmen in authority?"  

Specifically, he's the scribbler whom we should thank for the carbon tax and for cap and trade, since he essentially invented the idea of internalizing an externality, although he would have denied to his deathbed (and probably did), that these were efficient or even acceptable means to internalize the externality of, and thus stabilize, climate change.

In my more lucid moments, in the wee wee hours, I secretly tend to agree. The market distortions even the best-planned carbon fee or carbon market systems set up are probably going to be intolerable in the long run.

There. My secret is out.

But in the pragmatic and more hectic daylight, I'm not sure what else we might do, and consider that it would at least be some progress if we followed the route the Australians took (at least until the election this weekend). And, as Keynes explained, in the long run we're all as dead as Dr. Coase is now. Why worry about the long run? We can't predict which emerging or unthought-of energy technologies will be available in 2050.

Thankfully, no-one in authority, mad or sane, is listening to me anyway.

The only current approach that makes full economic sense to me is divestment, a moral not economic technique, but one that worked in the past (for abolition and against apartheid).

Even divestment has its Keynesian downsides. I'm starting to consider that we need to add investment to divestment. Divest from fossil fuel stocks, invest the proceeds in green power and green jobs and companies that seem to be able to make and sell useful stuff, while also reducing fossil fuel inputs.

That's the real ticket.

Divest and invest, in other words. D & I.

Otherwise, do we really know what happened to the money we got from selling the fossil fuel stocks? Of course, that presents a eventual new problem, since managers will begin to run out of such high quality economic assets quickly. Filthy lucre is, after all, filthy. There's no brass without some muck.

But as this article here presents, the best asset management institutions, such as CALPERS, are already sending managers out to firms to work with their sustainability and social practices.

Job creation for Unity College SEM graduates.

Just for the record, all Unity College SEM and Environmental Policy graduates will have been exposed to The Problem of Social Cost before graduating. Even the deadliest scribblers should get their due. We just went over Marx. Coase theorem is an angel, compared to Marxism.

And, just in case any Keynesian "madman in authority" does happen to be reading my scribbles, when are we going to ask TIAA-CREF to divest? Isn't that the next big target?

Here's your quote for the day:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

John Maynard Keynes, The General Theory of Employment Interest and Money, 1936.