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Tue May 8, 2012
Planet Money

Nobel Laureate: 'I've Been Wrong So Often, I Don't Find It Extraordinary At All'

Originally published on Wed May 9, 2012 6:07 pm

I recently had a brief conversation with Ronald Coase.

"I'm 101 at the moment," he told me. "I get older by the minute."

Coase is a legend in economics. He won the Nobel prize. He has a theorem named after him. But China's rapid emergence as a global economic power — one of the most important developments of the past generation — took him completely by surprise.

"I thought it would take 100 years, if not more," Coase said.

It seemed striking that an economic legend could be so wrong about such an important subject. I asked Coase what he made of this.

"I've been wrong so often I don't find it extraordinary at all," he said.

Coase just co-wrote a new book. It's called "How China Became Capitalist."

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Transcript

AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

MELISSA BLOCK, HOST:

And I'm Melissa Block. Ronald Coase is the oldest living winner of the Nobel Prize in Economics. He's been alive for more than a century, had a profound effect on how we think about the field and he's found the time and energy to write a new book. David Kestenbaum with our Planet Money team spoke with him about it.

DAVID KESTENBAUM, BYLINE: Setting up the interview with Professor Coase took a little while. We emailed our request to his assistant, who prints out his emails for him to read and we got the OK for a brief conversation.

RONALD COASE: I'm ready.

KESTENBAUM: We talked on the phone.

COASE: My name is Ronald Coase. I'm a professor at the University of Chicago.

KESTENBAUM: May I ask your age?

COASE: I'm 101 at the moment. I get older by the minute.

KESTENBAUM: Coase is a legend in economics. He has a theorem named after him, which has to do with the importance of property rights, and he also famously weighed in on a debate centering on lighthouses. In the textbooks, lighthouses are sometimes cited as classic examples of what's called a public good, something the government needs to provide because the private market won't do it on its own. And what businessman would build a lighthouse? How would you charge anyone for using it?

Clearly, the government needs to provide lighthouses, right? Actually, no, says Coase. He published a paper in 1974. Turns out, there used to be a lot of private lighthouses.

COASE: I found, in England, lighthouses were financed by the ships that benefited from the lighthouse. For 200 years, it was a private system.

KESTENBAUM: Coase says the lighthouse owners just charged boats when they came into port and this is one thing Coase says he's learned in 101 years. Life doesn't fit into neat little boxes.

Is there anything in the world you would consider a public good?

COASE: I don't know. I can't think of anything. Oh, yes, I can. The provision of the Army is something which I think the government can provide, on the whole, better than leaving it to private enterprise.

KESTENBAUM: Can you think of anything else that definitely falls in that category?

COASE: Not in the moment.

KESTENBAUM: Will you let me know if you do?

COASE: I will.

KESTENBAUM: Coase has lived through the Great Depression. He was alive when we were on the gold standard. You could ask him about anything, but his assistant said he wanted to talk about his new book, which describes the sudden explosion of capitalism in China. Coase says this historic event completely took him by surprise, took almost everyone by surprise.

COASE: I thought it would take 100 years, if not more.

KESTENBAUM: What does that teach us that we were all wrong about this feat?

COASE: I don't know. I've been wrong so often, I don't find it extraordinary at all.

KESTENBAUM: Coase says he does think he's been more right than wrong over the years, which is probably the most any of us can hope for. With that, our time was up.

Thank you so much for taking the time to do this.

COASE: OK.

KESTENBAUM: I'm David Kestenbaum, NPR News. Transcript provided by NPR, Copyright NPR.

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