Ronald Coase Quotes
The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism. The most obvious cost of 'organizing' production through the price mechanism is that of discovering what the relevant prices are.
Coase, Ronald H. "The Nature of the Firm." Economica, vol. 4, no. 16, 1937, p. 390.
The debate over whether the government ought to buy what it needs in the marketplace is as old as our country. Despite men like Jefferson having been strong advocates for market purchases of goods and services for government, there is even by the 21st century a marked tendency to have government actually do the needed work and create the needed merchandise. Even when the private sector is used, the market is avoided by sole source, non-competitive contracts and in the case of military research the National Laboratories were created which are means of avoiding the competitive marketplace and have the work done by entities that are Federal proxies.
This is a noteworthy quotation because it illustrates—to a slightly exaggerated degree—a major difference between the public and private sectors. However, Conrad fails to point out that when government does try and establish several competitive programs and approaches, conservatives like him are the first say that the government officials do not know what they are doing and then they object to the “duplication” and “waste.” Further, usually, when a government entity does experiment as the private sector competitive system does, it is chastised by liberals and conservatives alike for having had attempts that failed or did not succeed well. Experimenting requires a cultural tolerance for failure or imperfection. Only very courageous executive politicians like President Franklin Delano Roosevelt have been able to initiate many programs aiming at the same objective with the society keeping the best—like Social Security and rejecting the worst like the National Recovery Administration. See {631419} for his view.
When Bulgaria transformed from a Communist nation to a free market, competitive economy, most of the Bulgarian businessmen assumed that the competition was to get a favored position with the government and have the government then interfere with their competitors or some other government organized advantage for them as opposed to better products, better prices, better marketing. Ironically, there are still a few areas where the modern American system is much like Bulgaria was. Local telephone and electric monopolies are two of the worst.
Ronald Harry Coase was a British economist and author. He was the Clifton R. Musser Professor of Economics at the University of Chicago Law School, where he arrived in 1964 and remained for the rest of his life. He received the Nobel Memorial Prize in Economic Sciences in 1991.
