| | The '''Coase theorem''' is a logical truth about [[economics]] that is also immensely helpful in life. It gives primacy to the future over the past, and predicts the triumph of optimal outcomes. | | The '''Coase theorem''' is a logical truth about [[economics]] that is also immensely helpful in life. It gives primacy to the future over the past, and predicts the triumph of optimal outcomes. |
| − | In economic terms, the Coase theorem states that if property rights are well-defined and [[transaction costs]] (including costs of negotiating) are zero or negligible, then the most efficient economic activity will occur regardless of who initially owns the property rights. Negotiation and market transactions will ensure optimal allocation of property. Simply put, '''''it means "build a better mousetrap, and the world will beat a path to your door,"'''''<ref>The phrase is attributed to [[Ralph Waldo Emerson]], who [https://www.americanheritage.com/better-mousetrap said something similar].</ref> '''''no matter who or where you are'''''. This is similar to the [[Bible|biblical]] "cast your net on the other side of the boat" that garnered [[infinity|infinite]] wealth.<ref name="Net">''See, e.g.'', [[Luke 1-8 (Translated)#5:4|Luke 5:4-7]]; [[John 15-21 (Translated)#21:6|John 21:6-7]]. This can also be considered the "[[invisible hand]]" on steroids.</ref> This theorem also echoes the biblical exhortation, “No one who puts his hand to the plow and looks back is fit for the [[kingdom of God]].”<ref>Luke 9:62 ([[HCSB]]).</ref> | + | In economic terms, the Coase theorem states that if property rights are well-defined and [[transaction costs]] (including costs of negotiating) are zero or negligible, then the most efficient economic activity will occur regardless of who initially owns the property rights. Negotiation and market transactions will ensure optimal allocation of property. Simply put, '''''it means "build a better mousetrap, and the world will beat a path to your door,"'''''<ref>The phrase is attributed to [[Ralph Waldo Emerson]], who [https://www.americanheritage.com/better-mousetrap said something similar].</ref> no matter who or where you are. This is similar to the [[Bible|biblical]] "cast your net on the other side of the boat" that garnered [[infinity|infinite]] wealth.<ref name="Net">''See, e.g.'', [[Luke 1-8 (Translated)#5:4|Luke 5:4-7]]; [[John 15-21 (Translated)#21:6|John 21:6-7]]. This can also be considered the "[[invisible hand]]" on steroids.</ref> This theorem also echoes the biblical exhortation, “No one who puts his hand to the plow and looks back is fit for the [[kingdom of God]].”<ref>Luke 9:62 ([[HCSB]]).</ref> |
| | Past and present entitlements are nearly irrelevant to future activity, confirming the admonition of [[Luke 9-16 (Translated)#9:62|Luke 9:62]] not to look back at the past. If a parcel of property is best used as a restaurant, a park, a library, or a school, it will eventually find that use no matter who owns it or what its prior uses were. The Coase theorem states that the property will adopt its most productive use immediately, in the absence of transaction costs. It confirms parables in the [[Bible]] about the hidden proximity of [[infinite]] happiness.<ref name="Net"/> | | Past and present entitlements are nearly irrelevant to future activity, confirming the admonition of [[Luke 9-16 (Translated)#9:62|Luke 9:62]] not to look back at the past. If a parcel of property is best used as a restaurant, a park, a library, or a school, it will eventually find that use no matter who owns it or what its prior uses were. The Coase theorem states that the property will adopt its most productive use immediately, in the absence of transaction costs. It confirms parables in the [[Bible]] about the hidden proximity of [[infinite]] happiness.<ref name="Net"/> |