Epstein on Coase and Environmental Regulation
The recent death of Ronald Coase has given rise to an outpouring of praise about his contributions to the field of economics and his influence on the complex world of institutional politics. In my interactions with Coase, he was always cautious and diffident about social prescriptions—the very opposite of an ideologue. He never engaged in overt political activity and he had little patience for political opportunists who turned his ideas to ends that his own cautious intellect did not support. He never proselytized like Milton Friedman, but was an understated and consistent critic of big government.
Sadly, in death, Coase is being swept into today’s overheated political vortex, most notably in a graceless column written by John Cassidy of the New Yorker. The column, “Ronald Coase and the Misuse of Economics,” castigates conservative intellectuals for using Coase’s insights to promote a slavish adherence to market solutions when it comes to the environment, leading, in Cassidy’s view, to “a conservative counter-revolution that turned the United States (and many other countries) into a coarser, less regulated, and less equitable direction.”
Cassidy’s uninformed and overwrought criticism cries out for a response.
Let’s start with the simple question of influence. Coase’s seminal intellectual contribution was his 1960 article, “The Problem of Social Cost,” which is apolitical. It has proved so influential over the last 50-plus years because it offers a coherent approach to environmental harms of use to liberals and conservatives alike.