It's been a while since I posted anything, but that's mostly for lack of time to post rather than for lacking of meetings worth posting about. We held a salon on Sunday, October 14th 2007 to discuss the a book by David Friedman (son of Milton):
(The above link goes to the full online text, alternately try Amazon or Google Books)
From the Google Books blurb: "Suppose legislators propose that armed robbers receive life imprisonment. Editorial pages applaud them for getting tough on crime. Constitutional lawyers raise the issue of cruel and unusual punishment. Legal philosophers ponder questions of justness. An economist, on the other hand, observes that making the punishment for armed robbery the same as that for murder encourages muggers to kill their victims. This is the cut-to-the-chase quality that makes economics not only applicable to the interpretation of law, but beneficial to its crafting. Drawing on numerous commonsense examples, in addition to his extensive knowledge of Chicago-school economics, David D. Friedman offers a spirited defense of the economic view of law. He clarifies the relationship between law and economics in clear prose that is friendly to students, lawyers, and lay readers without sacrificing the intellectual heft of the ideas presented. Friedman is the ideal spokesman for an approach to law that is controversial not because it overturns the conclusions of traditional legal scholars--it can be used to advocate a surprising variety of political positions, including both sides of such contentious issues as capital punishment--but rather because it alters the very nature of their arguments. For example, rather than viewing landlord-tenant law as a matter of favoring landlords over tenants or tenants over landlords, an economic analysis makes clear that a bad law injures both groups in the long run."
The book covered basic economic concepts such as economic efficiency, externalities, and Coase's Therem. The author's honesty about the way the concept of "property" involves a substantial amount of work and thinking to get right is charming and intellectually productive.
When something is owned, in a rather deep sense what's owned in is not simply "a thing" but a complicated bundle of rights related to the thing. With "my land", for example, there are: the right to build on land, the right to not have certain things built on neighboring land, the right to control the movement of physical objects through airspace above the land, the right to the minerals beneath the surface, the right to have it supported by neighboring land, the right to make loud noises on the edge of the land, and so on and so forth.
Once bundling of rights is acknowledged to be going on in potentially arbitrary ways it opens up the discussion to questions about how rights relating to different things should be bundled, who should initially own the bundles, what sort of transfer schemes should hold. Mr. Friedman takes a position on what should be happening but it's rather complicated. Chapter 5 has a "spaghetti diagram" showing a variety of possible initial assignments of different kinds of rights, further ramified by the relative costs and benefits that accrue to various outcomes after rights have been renegotiated by various means (up front purchase contract, after the fact court dispute, etc).
The "thing that should happen" isn't a single way of doing things but a situationally sensitive rule that requires estimation of the costs and benefits parties on each side of an allocation of rights faces, and further guesses about who is likely to be able to see how many of the costs and benefits (the parties involved, the courts, etc), recognition of the number of people owning various rights and how many people any particular agent would have to negotiate with in order to get anything useful, and estimates of transaction costs (like the cost of making all these estimates) to boot.
If the initial assignment of rights is done poorly, various game theoretic barriers to collective action can arise. Given the complexity of the decision, this is not necessarily a conclusion that inspires happiness and hope. Mr. Friedman discusses institutions for working through these issues, including an examination of the claim that the best institution for achieving economically efficient outcomes in the long run is common law.
Our discussion of the book ranged rather widely. One of the juiciest veins of thought we found was in the question of bundling rights in novel ways and trying to understand how they might be rebundled by the market over time. For example, the idea of "salesright" (inspired by copyright) was a sort of "horrifying or amazing" concept that fell out of the discussions. Sales right would be "the right to a sale given certain propaganda efforts". If one company advertised at you, and you ended up buying something in their industry (when you wouldn't otherwise have done so) but you buy something from one of their competitors... in some sense the competitor has "stolen a sale" that "rightfully" belonged to the company that paid for the advertisement. (And you thought patents and copyright were bad :-P)
Another theme we examined (that Mr. Friedman mostly ignored) was the similarity between the questions of rights bundling and what, in in modern philosophy, is known as the Goodman's new problem of induction.