Wednesday, December 1, 2010

So, countdown for run upto 100 year old Professor Ronald Harry Coase!!

At last, the winty December has come, wait!!

"Human beings have, since time immemorial, taken the credit for whatever has gone right while shifting the blame for all that has gone wrong to the unfortunate year! Thus, 1992 was described by the British monarch Queen Elizabeth II as annus horribilis, Latin for a horrible year that saw not just a fire in the royal home of Windsor Castle but an announcement in December of the formal separation of the Prince and Princess of Wales.

In India, which philosophically takes a much, much longer perspective of happenings, everything bad is attributed to the world currently going through an age called kaliyuga, which is aeons removed from nobler eras in a very distant past.

Those who are not philosophically inclined take a much simpler view. Instead of ruminating about why things have gone wrong, they prefer to plan out where they should see the last sunset of the old year or the first sunrise of the new one."
(From ET see here)

Yes I have been watching and reading ever since I presented a research paper at the NIRD Foundation Seminar in 2006 in November (also got some cash award for the paper!!!) when this month will come, it now says ‘I am here’!! The research paper was on environment and private property rights and human action.

Before posting next big quote let’s say one thing which I wanted to share with you. Professor Ronald Coase is the only economist who is going to celebrate his 100th birthday by end of this month!! and too after winning Nobel Prize in Economic Sciences. Long live Professor Coase!!!

From Library of Economics and Liberty:

  • Ronald Coase received the Nobel Prize in 1991 “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.” Coase is an unusual economist for the twentieth century, and a highly unusual Nobel Prize winner. First, his writings are sparse. In a sixty-year career he wrote only about a dozen significant papers—and very few insignificant ones. Second, he uses little or no mathematics, disdaining what he calls “blackboard economics.” Yet his impact on economics has been profound. That impact stems almost entirely from two of his articles, one published when he was twenty-seven and the other published twenty-three years later.

  • Coase conceived of the first article, “The Nature of the Firm,” while he was an undergraduate on a trip to the United States from his native Britain. At the time he was a socialist, and he dropped in on perennial Socialist Party presidential candidate Norman Thomas. He also visited Ford and General Motors and came up with a puzzle: how could economists say that Lenin was wrong in thinking that the Russian economy could be run like one big factory, when some big firms in the United States seemed to be run very well? In answering his own question, Coase came up with a fundamental insight about why firms exist. Firms are like centrally planned economies, he wrote, but unlike the latter they are formed because of people’s voluntary choices. But why do people make these choices? The answer, wrote Coase, is “marketing costs.” (Economists now use the term “transaction costs.”) If markets were costless to use, firms would not exist. Instead, people would make arm’s-length transactions. But because markets are costly to use, the most efficient production process often takes place in a firm. His explanation of why firms exist is now the accepted one and has given rise to a whole literature on the issue. Coase’s article was cited 169 times in academic journals between 1966 and 1980.
  • “The Problem of Social Cost,” Coase’s other widely cited article (661 citations between 1966 and 1980), was even more pathbreaking; indeed, it gave rise to the field called law and economics. Economists before Coase of virtually all political persuasions had accepted British economist Arthur Pigou’s idea that if, say, a cattle rancher’s cows destroy his neighboring farmer’s crops, the government should stop the rancher from letting his cattle roam free or should at least tax him for doing so. Otherwise, believed economists, the cattle would continue to destroy crops because the rancher would have no incentive to stop them.

There is some interesting information about his childhood:

  • Aged 11, I was taken by my father to a phrenologist. What the phrenologist said about my character was, I feel sure, determined less by the shape of my skull than by the impressions he derived from my behaviour. Out of the various printed summaries of character in his booklet, that chosen for "Master Ronald Coase" started: "You are in possession of much intelligence, and you know it, though you may be inclined to underrate your abilities." This printed summary also included the following remarks: "You will not float down, like a sickly fish, with the tide... you enjoy considerable mental vigour and are not a passive instrument in the hands of others. Though you can work with others and for others, where you see it to your advantage, you are more inclined to think and work for yourself. A little more determination would be to your advantage, however." In the written comments, the pursuits recommended were: "Scientific and commercial banking, accountancy. Also, horticulture and poultry-rearing as hobbies." Added were some comments about my character: "More hope, confidence and concentration required - not suited for the aggressive competitive side of business life. More active ambition would be beneficial." It was also noted that I was too cautious. It was hardly to be expected that this timid little boy would one day be the recipient of a Nobel Prize. That this happened was the result of a series of accidents.

Some of his important works:

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