Law v. Common Sense, or: When the Hypothetical Becomes the Real

Posted: Apr 30, 2014 12:01 AM
Law v. Common Sense, or: When the Hypothetical Becomes the Real

Reality is repeating scholarship again. It does so with some regularity. A clash between the feds and a Nevada rancher captured the nation's attention the other day -- and brought to mind how prophetic scholars can be.

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Think of Max Weber, the German sociologist and thinker (yes, the two can go together) back in the 19th and early 20th century who foresaw the defining, interacting aspects of dawning modernity even before they had fully taken shape. From an omnipresent bureaucracy to the disenchantment with religion to the Holocaust, which were all of a piece.

Think of the economist Joseph Schumpeter, who summed up the essence of modern capitalism in just a couple of words, creative destruction. Or how Fritz Schumacher crystallized the whole of anti-trust philosophy with what has become a slogan, small is beautiful.

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Just think of Ronald Coase -- an economist who was just minding his own theories at the University of Virginia when his thoughts proved so (a) unconventional, (b) politically incorrect and (c) sound that he had to take refuge, as many a great scholar has done before, at the University of Chicago, home of that bevy of independent thinkers (Milton Friedman et al.) who became known as, appropriately enough, the Chicago School of economists.

Is there a single phrase that captures the spirit of Ronald Coase's many and original contributions to economics and, beyond that, to society in general? How about the Beauty of Simplicity?

Back in 1960, Ronald Coase wrote an essay about "The Problem of Social Cost" that may be the most cited law-review article in history. It's an incisive look at how inefficient the fractious jumble of government regulation, taxation, subsidization and litigation can be -- certainly when compared to settling disputes by amicable negotiation between competing interests.

Here is the no longer so hypothetical case Dr. Coase used to demonstrate the problem: The farmer whose land is being damaged by emissions from passing trains. His solution: not a penalty or fine or still another lawsuit or 10,000-word bill in Congress, but a businesslike arrangement that would benefit all concerned. A win-win deal, to use the current term of art. Let the farmer agree not to cultivate that vulnerable part of his land in return for a payment from the railroad to cover whatever profit he would forgo by letting it lie fallow.

Talk about reducing costs -- for the farmer, the railroad, and the tax-paying public. Not to mention promoting a peaceable, efficient society. Ronald Coase's hypothetical solution to the problem was designed to benefit all. Well, maybe all but the lawyers.

Naturally enough, ideas like Professor Coase's deeply offended his colleagues in academe. Which was why he was exiled to the University of Chicago. And would surely be declared persona non grata at any respectable Eastern university today. See how even a once trail-blazing school like Brandeis has become just another redoubt of left-wing conformity: It's just withdrawn the honorary degree it had offered a leading advocate of women's rights in the Muslim world after the usual pressure groups were heard from.

At least since Jonathan Swift's time, it's been easy enough to spot a scholar with talent or imagination, or just a capacity for independent thought: "When a true genius appears, you can know him by this sign: that all the dunces are in a confederacy against him."

Just how relevant Ronald Coase's thought remains was illustrated just the other day by the news of an incipient range war, or maybe another Sagebrush Rebellion, out in Nevada. That's where a confrontation took place between a rancher named Cliven Bundy, together with family and friends, and the federal government in the form of the Bureau of Land Management, a powerful bureaucracy that, as powerful bureaucracies will, was seeking to become even more powerful.

For years, for more than a century going back to the 1870s and the days of the great cattle drives, the Bundys had been grazing their herds on public land, but this was the century, and the year, that the feds decided to crack down, having won the usual, long, drawn-out and expensive lawsuit. Result: They were now in a position to demand years of accumulated fines, fees and interest -- more than a million dollars in all. And the whole dispute all came to a head the other day in the middle of the Nevada desert.

Happily, the feds prudently decided, just before guns were drawn, that discretion was the better part of valor and withdrew from what might have been Gunfight at the OK Corral II. They're to be congratulated on that realization even if it took dangerously long to dawn.

But the whole melodrama might have been avoided if both sides had read Ronald Coase and, more important, learned from him. In this case, the Bundys could have sold whatever their long-established grazing rights were worth to the feds, or the feds could have agreed to let the rancher graze his cattle wherever he wanted for a reasonable fee. But in these Modern Times, such an arrangement might have struck both sides as unspeakably sensible. Quick, call the lawyers instead, followed by the posse/SWAT teams, and even bloodshed. Which was narrowly averted.

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With just a little more recklessness on both sides, the country could have seen another Branch Davidian massacre, that emblematic catastrophe of the early Clinton Years, when masterminds like Janet Reno and Webb Hubbell were running the Justice Department. (And you thought Eric Holder of Fast and Furious fame was bad.)

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Not that anybody noticed, but a real-life example of the efficacy and amity of the Coase Theorem took place only a few years ago just across the Nevada state line in Arizona, where a rancher named Tony Heaton made a deal with an organization in the private sector, the Conservation Fund, to buy his grazing rights in the 44,000-acre Mount Trumbell Wilderness. There was no armed showdown, no mounting suspense and crisis atmosphere. Just a businesslike arrangement in the common interest. For there is still no force as efficient as good will, which cuts through all the needless friction and animosities of human affairs.

If only the federal government would show as much common sense as Tony Heaton and the Conservation Fund did. Give us a happy ending every time. So happy that hardly anybody notices it.

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There are some officials who do show that kind of grace -- and common sense -- under pressure. Asa Hutchinson, who's now running for governor here in Arkansas, had his finest hour in law enforcement when he was U.S. Attorney, and just waited out the nutcases who called themselves the CSA (the Covenant, Sword and Arm of the Lord) when they turned their compound in North Arkansas into an armed camp. The siege lasted four days, during which Mr. Hutchinson talked peacefully to the holdouts but, other than that, did nothing -- and did it particularly well. That's another lesson the federal government might profit by.