Jobs, Jobs, Jobs and Ronald Coase

While President Obama is floundering in Syria, Americans are thinking about jobs, writes Salena Zito from a farmers market in rural Pennsylvania. People are learning about canning vegetables while they worry about jobs and the economy.

"We keep waiting for the White House to talk about jobs in a meaningful, constructive way so that our families, communities and schools stop crumbling," said one young woman as she contemplated buying fresh honey.

Yeah, let's do that. And there's no better time to do that than right now with the death of economist Ronald Coase. He's famous for his theory about "The Nature of the Firm" and his theory about "The Problem of Social Cost."

His idea about the firm was that people work at corporations because it reduces their transaction costs. A wage laborer doesn't have to market and buy and sell and all that hard stuff. He just has to show up and do his job.

His idea about social costs was that well-defined property rights are probably better than government administrative regulation.

But David P. Goldman, otherwise "Spengler," begs to differ. Says he:

I have an alternate theory of the firm, namely that large firms exist to protect mediocrity -- from the lunatics and conmen on one hand, and disruptive innovators on the other...

Most people don't like disruption. They want to acquire a skill, work reasonable hours, secure reasonable pay, watch television in the evening and play golf or whatever on the weekends. They don't look deeply into the matters that concern them and are content to do what other people in their position do. If they are diligent, reliable, well-mannered and polite, they are just the sort of folk that the human relations types at corporations prefer. Without a way to socialize, train and employ such people the world would come to a halt, because they make up the vast majority. And that is the great contribution of corporations to social welfare: they find ways to make mediocre people useful.

Ouch.

If we allow that this is "settled science" then it stands to reason that government would be doing everything it could to make things easy for corporations to create jobs for mediocrities like you and me, and doing everything possible to limit externalities with property rights.

Yet President Obama came into office with a corps of acolytes five years ago promising fundamental transformation.

Today, five years later, it is evident to ordinary people that something is wrong. With all that fundamental transformation it seems that things are worse than before.

Back to the Theory of the Firm. For 200 years activists and politicians have been campaigning non-stop against the bourgeoisie, against capital, against the limited liability corporations, against corporate personhood, against monopolies, against trusts, against robber barons, against conglomerates, against banks, against insurance companies, against mergers, against CEO compensation, against stock markets, against usury, against derivatives. Against everything. That's how we got to Obama and fundamental transformation.

But when you look at the work of a quiet man like Ronald Coase, you are inspired to step back and take a look at the economic inventions of the last 200 years with a little more respect. You might even be tempted to think, as you gaze in awe, about how the different parts of the modern economy fit together in astonishing harmony, like the architraves, friezes, and cornices of a Greek temple. You might remember that the Parthenon is not a good place to store gunpowder.

And you might think, knowing how income in the West has gone from $3 to $120 per person per day in 200 years, that we ought to be really careful about sending in the activists to blow things up with their fundamental transformation.

Now let's look at the Obama administration. It sets all quiet ideas at naught. It wants to harass and pillage corporations with taxes and regulations and mandates. It wants to manipulate property rights with subsidies and crony capitalism to advance its fashionable ideas on inequality and green energy.

Yet the net result of Obamanomics has been to help the 1% and hurt the young, women and minorities that trust in the liberals' tribal identity politics.

So what about the good people at the farmers market? They want their jobs and a growing economy -- and reasonable hours, reasonable pay and television in the evening -- precisely what corporations offer.

And what will the young heads full of mush at a rural "farmers market" do next? They will decide, soon enough, that it is Time for a Change.

Here's an idea. How about it's time for a change to a politics that understands the corporation and the Firm in the way that Ronald Coase did?

Christopher Chantrill (mailto:chrischantrill@gmail.com) is a frequent contributor to American Thinker. See his usgovernmentspending.com and also usgovernmentdebt.us. At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism. Get his Road to the Middle Class.

While President Obama is floundering in Syria, Americans are thinking about jobs, writes Salena Zito from a farmers market in rural Pennsylvania. People are learning about canning vegetables while they worry about jobs and the economy.

"We keep waiting for the White House to talk about jobs in a meaningful, constructive way so that our families, communities and schools stop crumbling," said one young woman as she contemplated buying fresh honey.

Yeah, let's do that. And there's no better time to do that than right now with the death of economist Ronald Coase. He's famous for his theory about "The Nature of the Firm" and his theory about "The Problem of Social Cost."

His idea about the firm was that people work at corporations because it reduces their transaction costs. A wage laborer doesn't have to market and buy and sell and all that hard stuff. He just has to show up and do his job.

His idea about social costs was that well-defined property rights are probably better than government administrative regulation.

But David P. Goldman, otherwise "Spengler," begs to differ. Says he:

I have an alternate theory of the firm, namely that large firms exist to protect mediocrity -- from the lunatics and conmen on one hand, and disruptive innovators on the other...

Most people don't like disruption. They want to acquire a skill, work reasonable hours, secure reasonable pay, watch television in the evening and play golf or whatever on the weekends. They don't look deeply into the matters that concern them and are content to do what other people in their position do. If they are diligent, reliable, well-mannered and polite, they are just the sort of folk that the human relations types at corporations prefer. Without a way to socialize, train and employ such people the world would come to a halt, because they make up the vast majority. And that is the great contribution of corporations to social welfare: they find ways to make mediocre people useful.

Ouch.

If we allow that this is "settled science" then it stands to reason that government would be doing everything it could to make things easy for corporations to create jobs for mediocrities like you and me, and doing everything possible to limit externalities with property rights.

Yet President Obama came into office with a corps of acolytes five years ago promising fundamental transformation.

Today, five years later, it is evident to ordinary people that something is wrong. With all that fundamental transformation it seems that things are worse than before.

Back to the Theory of the Firm. For 200 years activists and politicians have been campaigning non-stop against the bourgeoisie, against capital, against the limited liability corporations, against corporate personhood, against monopolies, against trusts, against robber barons, against conglomerates, against banks, against insurance companies, against mergers, against CEO compensation, against stock markets, against usury, against derivatives. Against everything. That's how we got to Obama and fundamental transformation.

But when you look at the work of a quiet man like Ronald Coase, you are inspired to step back and take a look at the economic inventions of the last 200 years with a little more respect. You might even be tempted to think, as you gaze in awe, about how the different parts of the modern economy fit together in astonishing harmony, like the architraves, friezes, and cornices of a Greek temple. You might remember that the Parthenon is not a good place to store gunpowder.

And you might think, knowing how income in the West has gone from $3 to $120 per person per day in 200 years, that we ought to be really careful about sending in the activists to blow things up with their fundamental transformation.

Now let's look at the Obama administration. It sets all quiet ideas at naught. It wants to harass and pillage corporations with taxes and regulations and mandates. It wants to manipulate property rights with subsidies and crony capitalism to advance its fashionable ideas on inequality and green energy.

Yet the net result of Obamanomics has been to help the 1% and hurt the young, women and minorities that trust in the liberals' tribal identity politics.

So what about the good people at the farmers market? They want their jobs and a growing economy -- and reasonable hours, reasonable pay and television in the evening -- precisely what corporations offer.

And what will the young heads full of mush at a rural "farmers market" do next? They will decide, soon enough, that it is Time for a Change.

Here's an idea. How about it's time for a change to a politics that understands the corporation and the Firm in the way that Ronald Coase did?

Christopher Chantrill (mailto:chrischantrill@gmail.com) is a frequent contributor to American Thinker. See his usgovernmentspending.com and also usgovernmentdebt.us. At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism. Get his Road to the Middle Class.

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