Farewell to Ronald H. Coase

CoaseAlmost every student who has attended law school in the past 40 years has encountered Ronald Coase and the Coase Theorem. Even professors who disagree with Coase feel compelled to expose their students to his famous theorem, even if only to rebut its argument. As a long-time teacher of both Torts and Property who is not an advocate of law and economics, I cannot imagine teaching either course without references to the Coase Theorem as a way of evaluating the correctness of legal rules.

In a nutshell, Coase, widely acknowledged as the founder of the law and economics movement, posited that in a world without transaction costs, individuals would bargain with each other to achieve the most efficient use of resources, and legal rules would be irrelevant. As a consequence, in a world with transaction costs, Coase seemed to suggest that legal rules should be constructed so that they favor the most efficient user, since that is the party who will eventually end up with the resource . The Coase Theorem was presented to the world in a 1960 article entitled, The Problem of Social Cost, which appeared in the Journal of Law and Economics and is still the most frequently cited law review article in history.

Sadly, Robert Coase died last week in Chicago at the age of 102. Born in London and educated at the London School of Economics, Coase first achieved widespread recognition in 1937 with the publication of his article, The Nature of the Firm, which introduced the concept of transaction costs and explained why large economic deals were handled by large integrated firms rather than by temporary market-based alliances of suppliers.

Coase came to the United States in 1951 as a professor at the University of Buffalo, and moved to the University of Virginia in 1958. He was a member of the University of Virginia’s Thomas Jefferson Center for Political Economy when he published his most famous article. In 1964, he left Virginia for the University of Chicago, where he remained until his death.

Coase was awarded the Nobel Prize in Economics in 1991. His final book, How China Became Capitalist, was published in 2012 when Coase was 101 years old.

 

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A Sensible Approach to Reforming College Sports

The modern university is essentially a corporation with four lines of production, the four lines being: education, research, medical services, and entertainment. Understanding the proper role of athletics in the university framework is complicated by the fact that sports are both part of the university’s educational “mission,” and the primary form of public entertainment it produces.

The confusion between athletics as a component of undergraduate education and athletics as entertainment has produced no end of problems for universities and for the NCAA, the primary regulator of college sports.

The primary source of the confusion is the labeling of participants in revenue generating college sports as student athletes, as though they were somehow ordinary students who just happened to choose to participate in sports as an extracurricular activity, as opposed to college radio, theater, or their school’s African-American heritage organization.

In reality, scholarship athletes are paid entertainers whose wages are, thanks to the salary cap imposed by the NCAA and tis member schools, paid in kind in the form of free food and lodging, free textbooks, the opportunity to attend classes and pursue a degree, and special tutoring not available to ordinary students. If these particular university employees lose interest in their sport, or simply fail to perform at an acceptable level, their employment can be terminated.

On the other hand, the educational role of athletics is related to the Jeffersonian view that education involves the development of both the mind and the body. While athletic opportunities for ordinary students are primarily supplied by Physical Education Departments and intramural sports, the opportunity to play for an intercollegiate sports team should be part of a well-rounded undergraduate curriculum. While only a minority of students will enjoy the direct benefits of participating in intercollegiate athletics, the same could be said for the Classics, Slavic Languages, or Physics departments and that fact in no way diminishes the importance of having the opportunity.

However, because we pretend that scholarship athletes are real students, actual students—those who chose to attend the college of university for reasons other than that they were being paid to do so—are precluded from participating in intercollegiate athletics unless they earn one of the handful of usually meaningless walk on positions or else attend a Division III school where scholarships are not awarded.

This confusion in regard to the educational and entertainment lines of production has been particular problematic in regard to Title IX, which is a statute that was intended to apply to educational opportunities generated by the college. By counting roster spots on big time college football teams as “educational opportunities,” it has been necessary for universities to eliminate numerous male sports teams to remain Title IX compliant. This has produced absurd results, like the fact that tiny Ripon College, with fewer than 1000 students sponsors almost as many varsity athletic teams for its students (21) as the 40,000+ student University of Wisconsin-Madison (23).

Once understood, the education/entertainment problem can be addressed by the following steps:

  1. Universities should formally acknowledge the Education versus Entertainment distinction.
  2. Sports-related scholarships for all sports other than men’s football and basketball should be eliminated. There is absolutely no justification for paying students to participate in sports that are of no interest to the ticket-purchasing public when regularly enrolled students would be happy to fill their roster spots and when other more academically promising students have unfulfilled financial needs. If other sports, like women’s basketball or men’s baseball or ice hockey, are established money-making enterprises, as they are at some schools, then athletic scholarships for these sports can be retained as part of the university’s entertainment payroll. Acknowledging that scholarship athletes are entertainment employees of the university (and only incidentally students) will make it easier to address the thorny issue of appropriate levels of athletic compensation.
  3. Universities with “scholarship-funded” teams may also operate non-scholarship varsity teams in the same sport. To some extent, club sports are already fulfilling this role, but club teams are usually underfunded and lack professionally trained coaches. For Marquette, this would mean that the university would continue to operate its Division 1 professional basketball team (composed of players very few of whom would otherwise be at Marquette), but it would also sponsor a second men’s team recruited from the ranks of its student body. While the professional team would continue to play a national schedule, the true student team would primarily compete against similar teams from Wisconsin and the upper Midwest.
  4. Recruiting of athletes for non-scholarship teams should be discouraged to the extent possible. In this regard, athletics should be treated no differently than potential members of the university symphony, marching band, or the dance and theater programs.
  5. The NCAA should be broken up into two separate bodies, one dealing with athletics in the educational sector and the other with what are essentially minor league professional sports.
  6. All coaches associated with the educational sector should be members of the university’s faculty with appropriate qualifications for physical educators.

If implemented, these changes would go a long way to eliminate the hypocrisy in contemporary college sports and would greatly facilitate the revival of physical education as an important academic discipline within undergraduate education.

On a personal note, as an undergraduate, I was a reserve outfielder-first baseman on the baseball team at Oberlin College, a Division III college with an important athletic tradition—Moses Fleetwood Walker, the first black major league baseball player, legendary football coach John Heisman, and the last Ohio team to beat Ohio State in football—but by the 1970’s, the college placed very little emphasis on sports. Even so, I still count my experiences as a member of the baseball team as one of the most valuable parts of the very good undergraduate education I received there.

 

 

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The U.S. also Violates an International Norm Against Chemical Weapons

Lost in the ongoing debate about Syria is a rather startling irony: while the Administration argues that intervention is necessary to enforce global norms against chemical weapons, the United States stands in material breach of the Chemical Weapons Convention, the single most important international law on this category of arms. Entering into force in 1997, the CWC prohibits the production, stockpiling, and use of chemical agents. Significantly, it also required member states to completely destroy their stockpiles by April 2007 or obtain an extension from a conference of states-parties. The United States ratified the treaty in the late ’90s and proceeded to comply with the obligation to destroy the U.S. arsenal, which included mustard gas, VX, and sarin. But our stockpile was easily one of the largest in the world, with nearly 30,000 metric tons of chemical agents, and by 2003 it became apparent that meeting the 2007 deadline would be impossible. So Washington requested a new deadline of April 29, 2012, and the conference of states-parties granted the request.

The new deadline, however, was again too soon, and the U.S. military failed to complete the destruction project in time. Today approximately 10% of the arsenal remains in place, and the Pentagon doesn’t expect to finish with disposal until 2023. What’s more, there’s no possibility of another extension: an annex to the CWC establishes that “in no case shall the deadline for a State Party to complete its destruction of all chemical weapons be extended beyond 15 years after the entry into force of [the] Convention.” In short, we’ve been in breach of the CWC for over a year, and we’ll probably continue to breach the treaty for another decade. This breach, moreover, isn’t trivial, as the obligation to destroy stockpiles reduces the risk of proliferation, drastically lowers the risk of use, and generally goes to the very heart of the treaty’s purpose of ridding the world of chemical weapons.

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