Efficiency or Property Rights: Thomas Woods’ comments on the Chicago School of Economics

This was originally posted at City of God.

Thomas Woods, in his book The Church and the Market, spends a little time in the first chapter distinguishing the Austrian and Chicago schools of economics. One major difference between the schools is on the issue of central banking and monetary policy. We’ve had occasion to discuss this on the blog in the past, and I’m not particularly interested in raising it again here. However, Woods brought to my attention another difference which is of much greater concern to me, and this is over a moral issue. The difference is this:

The classic case in Chicago law and economics, famously described by Ronald Coase, is the example of the train that emits sparks that set fire to a farmer’s crops. (The example occurs prior to the introduction of diesel engines.) Either the farmer or the train will have to bear the cost of this damage. On the basis of strict liability, of course, the farmer has the right to the property in question and therefore the right to enjoy its fruits unmolested. The train should compensate him for his loss or install some kind of spark retarding device. But Chicago decides this case in such a way that overall wealth is maximized. (25)

Thus economic efficiency becomes an ethical value that is weighed against the property rights of people. The Austrians vehemently disagree with this point. They argue

that the rights of property should not be compromised in order to satisfy any wealth maximization calculus, and that as a rule strict liability should be observed. (They offer these critiques in their capacities as moral philosophers rather than qua economists, a point to which we shall return in our discussion of economics as a value-free science.) Walter Block has described it as “evil and vicious to violate our most cherished and precious property rights in an ill-conceived attempt to maximize the monetary value of production.” (26)

Woods provides one quote from a defender of Coase to make clear that the Chicago school explicitly teaches what he says they teach:

In defense of Coase, Chicago economic Harold Demsetz argues that “[e]fficiency seems to be not merely one of the many criteria underlying our notions of ethically correct definitions of private property rights, but an extremely important one. It is difficult even to describe unambiguously any other criterion for determining what is ethical.” Here is efficiency analysis with a vengeance. (26)

Now, I’m not sure any other way to describe this theory besides the words Block used: evil. Quite clearly, this is a form of coarse utlilitarianism, and one which will undoubtedly help the well-connected over against those who have little wealth. And I think this point is something where those on the left and those who support a view of property rights as natural rights (be they conservative or libertarian) can find agreement.

Human Rights?

Is this a human right?

[Cross-posted at City of God.]

“Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women…” ~ From the Preamble to the Universal Declaration of Human Rights

Here is something that I wonder: does Western civilization have a coherent argument for the existence of human rights?

How do we determine what is a right?

An article on the Mises.org blog from a while back raised this question in a vivid manner:

Every once in a while, something comes along that perfectly encapsulates the idea of so-called “social justice” in action. For all the wonderful critiques that have been written about this wretched concept by its many detractors, none quite match the elegant simplicity of a recent work by some of its advocates. I am referring here to a recent video made for the World Day of Social Justice in which students and teachers complete this sentence:

Everyone has the right to _____. Continue reading

Obama and "investment" (Updated)


Projected US Federal Budget Deficit (Source: examiner.com)

The stimulus bill has passed the Congress and awaits signing by President Obama.  The AP reports:

President Barack Obama, savoring his first major victory in Congress, said Saturday that newly passed $787 billion economic stimulus legislation marks a “major milestone on our road to recovery.”

Speaking in his weekly radio and Internet address, Obama said, “I will sign this legislation into law shortly, and we’ll begin making the immediate investments necessary to put people back to work doing the work America needs done.”

Now I have to say that the term “stimulus” is euphemistic for “wasteful government spending”.  But the term “investments” for this bill is ridiculous.  If the US government doesn’t raise sufficient money to cover this deficit, it will lead to inflation.  Inflation is form of robbery.  Do you have a savings account?  At 20% inflation like what we had during the Carter years (I was alive in those days, I remember it), your savings account will have lost 1/5 its value in one year.  In five years its worth nothing.

Continue reading

New Series: Why American-style liberalism would be bad for Africa-Preamble


It may have occurred to the few readers of this blog that I am a conservative.  I don’t know how this strikes them.  Perhaps some may question the appropriateness of a partisan line of thinking in a blog which is supposed to be a conversation about any subject relating to French-speaking Africa.  Perhaps some of you think that it is not relevant at all to speak of US politics. Continue reading

Double Standard AND Tax Evasion and Stealing (updated)

Elisee Ouoba wrote:

Obama and tax evaders:

It’s kind of funny and ironic that Obama’s secret revenue plan would be to appoint people who have failed to pay their taxes and then have them pay their outstanding bill. Funny because this would be, indeed, a way to help some rich people return what they have “stolen,” and ironic because that would mean that the non-payment of taxes is the reason for the economic/financial crisis and thus turn a problem into a solution.

I will respond to this in a new post as a opposed to the commentary section.

First, the approvals of Daschle and Geitner prove that there is a higher standard for Republicans than for Democrats.  Linda Chavez was forced to withdraw her nomination for far less serious grounds which the media and the Democrats played to the hilt.  The media even made numerous excuses for Geithner, because they feel it is their responsibility to support Obama’s presidency.  They are after all the reason he is president.

Continue reading