David R. Henderson  

Take That, Math Geeks

Certainty, Uncertainty, and Ma... Too Lazy to Waste? A Death Bl...

That was the title I gave my Wall Street Journal article on the Nobel prize that appears on line now and will appear in print tomorrow. Of course, as people who write for newspapers and magazines know, the odds that the editors will use your title differ only a little from zero. In over 100 articles I've written for the Wall Street Journal, Fortune, and the Red Herring, I think my title might have been used once.

Still, their title isn't bad.

The most-important paragraph is this:

Both draw on rich data from outside the field of economics. Ms. Ostrom draws much of hers from case studies of common-property resources and Mr. Williamson from business historians such as the late Alfred Chandler. Some have summarized their work by saying that institutions other than free markets often work well. But that statement can mislead you to conclude that government solutions are the answer. Free markets are only a subset of free institutions. A better way to sum up their work is that what Ms. Ostrom and Mr. Willamson really show is that voluntary associations work.
In the original, I did hedge the last statement a little. I had written:

A better way to sum up their work, with only some exaggeration in the case of Ostrom, is that what Ostrom and Willamson really show is that voluntary associations work.

In retrospect, I think I should have argued to put the hedge back in, but these decisions are made quickly.

I also highlighted, as none of the other articles or blogs did, Williamson's 1968 classic, "Economies as an Antitrust Defense."

One thing that helped was a long discussion I had with my friend Pete Boettke Saturday night in Santa Fe about who we thought had a reasonable chance of winning the Prize and who should win the prize. Pete blogs about it here. Pete is one of the most widely read economists I know and one of the finest people I know.

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COMMENTS (3 to date)
Ivan Pongracic, Jr. writes:

Really enjoyed the WSJ piece, David! Thanks so much for writing it. (BTW, yesterday in my Industrial Organization class we went over Williamson's model from "Economies as an Antitrust Defense" as it related to our discussion of mergers - how's that for good timing?? That was actually the material scheduled for yesterday's class since the beginning of the semester. I love it when things work out... :) )

Oh, may as well put a plug in for myself: I have an extended discussion and critique of Williamson's theories of the firm in my book "Employees And Entrepreneurship" (Edward Elgar), which came out in March. A fascinating and original scholar, no doubt.

David R. Henderson writes:

Thanks, Ivan. That 1968 article is one of my favorite articles from the 1960s. I used it to teach federal judges for GMU Law School in the late 1990s. One line that got cut was an actual example from Ollie's table showing, if I recall correctly, that for an elasticity of demand of -5, a 0.5 percent cut in average cost would generate more surplus than the DWL from a 10% increase in price.

Josh Zachariah writes:

Excellent article professor. Did you happen to catch the reverse side of your article? There was an article relating to water shortages in Colorado and addressing the tragedy of the commons. The developer offered a rather crude response, but it was interesting nonetheless.

If you're reading it online, the title is "In arid west, thirsty lawns get cut from plans"

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