Arnold Kling  

Lighthouses

PRINT
The Morality of the Market... Economics and Evolution...

In an essay on telecommunications pricing, Andrew Odlyzko spends some time reviewing the controversy about whether a lighthouse is necessarily a public good.


As an example, a recent commentary [68] claimed that Coase had shown that "[i]nstead of the government-sanctioned 'light dues' charged by Trinity House, developers persuaded ship-owners to sign up in advance for voluntary tolls." This claim from [68] is incorrect, as are many of the conclusions commonly drawn from Coase's paper. In defense of Coase, it has to be said that in his paper he never referred to \voluntary tolls." However, his paper uses very ambiguous language to describe the English lighthouse system, and is deeply flawed. Amazingly enough, even though any serious economic historian should have been able to see instantly the faults in the paper, it continued to be accepted uncritically for a quarter of a century. The first debunking appears to have been by Richard Epstein in 1999 [19], and a more thorough one was presented by Daniel Davis in 2002 [14].

Somebody should tell Odlyzko that d-squared spells his last name Davies, not Davis. In any event, Odlyzko points to history showing that "private" lighthouse owners acted more like government agents.

For Discussion. Why is the lighthouse issue so near and dear to the hearts of economists?


Comments and Sharing


CATEGORIES: Public Goods



COMMENTS (16 to date)
Eric Krieg writes:

You mean that professional, degreed economists believed something that wasn't true?

Maybe we should take Paul Krugman's point about the superiority of professional economic opinion with a grain of salt?

This is but one example of the problem with "experts". Just because someone is an "expert" doesn't mean that his beliefs are right.

We all need to be a little more skeptical, especially of so called experts.

Gautam Bastian writes:

Coase seems to attract detractors of Economics, which may not be so odd a thing, because he claims to be one himself, atleast of the mainstream of our Subject.

I think a defence of economics and its contribution to the way the world works today needs to be written. Needless to say ofcourse that like the real world, economics is deeply flawed. But non-economists seem to think it is dispensible as well. Much like many people who think that History is dispensible.

Maybe I'm over-reacting :-).

Gogol writes:

"I think a defence of economics and its contribution to the way the world works today needs to be written."

Gautam, _Commanding Heights_ tried to do something like that, rather unsuccessfully, I might add. Perhaps something more like this book maybe? :D

http://economist.com/books/displayStory.cfm?story_id=2349891

Cheers!

Eric Krieg writes:

I think you guys are missing the point.

The misinformation was with TRAINED ECONOMISTS, not the general public.

I am still a little pissed off about Arnold's put down of Michael Lind, and his referencing of Krugman's quote:

"The question here is not why Lind got these numbers wrong. It takes considerable experience to know where to look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance."

Yeah, just like all that training about the lighthouse, huh?

Economists flatter themselves if they think that economics is too hard for the above average college educated individual to understand. They may wrap their writing in jargon and statistical mumbo jumbo, but the ideas themselves are not that hard to grasp (comparative advantage not withstanding!).

Lawrance George Lux writes:

"Why is the lighthouse issue so near and dear to the hearts of economists?"

It is the prime example of a Public Good whose value is not enjoyed by the Suppliers, but by the Users of the Public Good. Expense of upkeep falls upon the Suppliers, while freedom from risks is granted gratis to the Users. Economists have worked throughout modern history to throw the expenditure onto the Risk-takers. lgl

drk writes:

well so are vaccinations and fireworks/national defense.

tyler cowen said it, "The imperfections of market solutions to public goods problems must be weighed against the imperfections of government solutions."

and it's become increasingly germane to discussions on 'intellectual property' (IP) and information economics.

Bernard Yomtov writes:

Eric,

"Economists flatter themselves if they think that economics is too hard for the above average college educated individual to understand. They may wrap their writing in jargon and statistical mumbo jumbo, but the ideas themselves are not that hard to grasp (comparative advantage not withstanding!)."

I agree with you (I am not an economist, though I have studied the subject at the graduate level), and I suspect both Arnold and Paul Krugman do also. But it is necessary to do some work to understand it. What is frustrating about public discourse on economic issues is not that participants do not have a Ph. D. level understanding of the issues. It is that they often seem to have no understanding whatsoever - certanly not the level of understanding that would be obtained by taking a couple of undergraduate courses.

Eric Krieg writes:

>>What is frustrating about public discourse on economic issues is not that participants do not have a Ph. D. level understanding of the issues.

And who exactly are we talking about here? I mean, I have come across people who, while not PhDs in economics, are well educated folks who have taken a couple of economics courses, and who have some pretty stupid economic beliefs. Guys like Robert Rubin, for example!

But I don't get frustrated. People can believe what they want to believe, and just because you have a college degree, or even an advanced degree, doesn't mean that you aren't a total frigging idiot (have you LISTENED to Odyssey or Fresh Air lately? Ugh!).

The question that I would like answered is, who has the stupider beliefs? The Wal-Mart set or the NPR crowd?

I go with the former.

Tom Ault writes:

Eric's point about experts can't be taken seriously enough. The only reason why we make progress in science (including "soft" sciences like economics) is that people are willing to challenge the beliefs of the experts.

Bernard Yomtov writes:

Eric,

Yeah. Rubin is an idiot. No wonder he couldn't make a living being a bond trader, and the economy did so badly when he was Secretary of Treasury.

I thought you were the one who was always scornful of ivory-tower intellectuals and more interested in practical results. By that standard, I'd say Rubin knows a lot.

Bernard Yomtov writes:

But I don't get frustrated. People can believe what they want to believe, and just because you have a college degree, or even an advanced degree, doesn't mean that you aren't a total frigging idiot (have you LISTENED to Odyssey or Fresh Air lately? Ugh!).

Have you read NRO lately?

The question that I would like answered is, who has the stupider beliefs? The Wal-Mart set or the NPR crowd?

The NRO crowd, actually.

Eric Krieg writes:

I don't know if Rubin is a smart guy or not. But like his boss, he is VERY lucky. He was the luckiest Tresury Secretary ever.

Is Rubin of Irish descent?

Bernard Yomtov writes:

It's interesting how many backflips conservatives do to avoid giving the Clinton Administration credit for anything. "It was the Internet."
"It was the Republican Congress."
"It was carryover from Reagan (didn't help Bush I, but never mind)."
"It was luck."

What next? Sunspots?

Eric Krieg writes:

Bernard, payback is a bitch.

Pat Moynihan said that the success of Ronal Reagan was just the "luck of the Irish". He was in the right place at the right time.

Now, I happen to think that Moynihan was wrong. But if not, the same thing could be said about Clinton, and Rubin for that matter. They did nothing to create the productivity renaissance that occured under their watch (and which continues to this day, apparently.)

Yet they certainly benefited from it.

Eric Krieg writes:

Bernard, I give Clinton credit. He was LOADS better than any of the nine dwarves! ESPECIALLY Howeird Dean and John F-ing Kerry.

And Al Gore for that matter.

Did I ever tell you guys about the time that Clinton hit on my mother?

Eric Krieg writes:

Wow, maybe I need to take John Fitzgerald Kerry a little more seriously! Maybe the Democrats aren't as likely to commit electoral Hari-Kare as I thought they were.

Or maybe it's just IOWA! How the heck can Iowa be the first Democrat primary? Is it some kind of Republican conspiracy or something?

Comments for this entry have been closed
Return to top