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Quotation of the Day…

… is from page 109 of the late, great Harold Demsetz’s richly rewarding 2008 book, From Economic Man to Economic System:

[E]fficiency itself requires foregoing fine-tuning of the sort that would be appropriate (efficient) in a world in which transaction costs were zero. This point, made some time ago, has not penetrated discussions of externalities.

DBx: Yep.

Perfection in a world of scarcity is affordable only by gods – meaning, in other words, that achieving perfection in a world of scarcity is impossible for us humans. And to spend resources and effort in pursuit of the impossible is to reject the good in the futile quest for the perfect. This reality is why efforts to realize utopian dreams produce dystopian nightmares.

And so whenever you hear professors, pundits, or politicians endorse anything “zero” – for example, net-zero carbon emissions, zero Covid, or zero tolerance – beware. You are hearing persons who believe either that their desired ‘goods’ are, or can be, made as superabundant as is breathable air on the earth’s surface, or that there is no additional quantum, no matter how minuscule, of their desired ‘good’ that fails to yield benefits in excess of the costs, no matter how gargantuan, of achieving that quantum.

One further thought: Among the ‘transaction costs’ that must be reckoned when pondering how much power to give to government to deal with “externalities” is the reality not only that government officials are not omniscient, but that power is addictive to its possessors (and can come to be mistaken as necessary even by those persons on whom it is wielded). Power cannot be created today to deal with today’s problem X without this power being given momentum to stick around far longer than is justified by any reasonable cost-benefit calculus.

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