Judge Guido Calabresi : The Future of Law and Economics [20:23-25:28]

And so the whole 19th century view of torts as deterring, deciding something was out. And what my article tried to do was to say, it's not out at all, it just has moved from the immediate last minute decision of people to what kind of cars we have, who drives them, who is what kind of categories are safer than others. All sorts of things that now have become so much taken for granted that one doesn't even bother to cite anybody for it. And by the way, that is the greatest compliment of all. If you've done something that has become so common sensical that people don't bother even attributing it to you, to go from the ridiculous me to the sublime, any of you who read John Locke, say, what's so new about it? You read Locke and you say, what's so new about it? It makes perfectly good sense. But at the time he wrote, it was radical. And at the trivial level of what I did, I had that pleasure of having some things be taken now so much for granted that nobody even bothers. Is it fair to say, and I know this may be a bit over simplistic, but is it fair to say that when we start thinking about the 60s, beginning in that 1960 period with your work, Professor Kos's work, and then the work that's going to soon follow, that we get more than one school of thought as it relates to law and economics. So, is this the beginning of the Yale School, and the beginning of the Chicago School? Chicago School was really not yet there because Kos was not at Chicago. And one has to understand that Kos is a much more interesting person, theoretically in many ways, than Chicago would be. Because Kos had written the same thing as the problem of social cause, but none of us had seen it 25 years before when he wrote the nature of the term. But at the time he wrote the nature of the term, Kos was a socialist. And he wrote it in terms of there are times when command is more efficient, more effective. And that's why we have things like firms which are command structures. He was writing in a way arguing that sometimes direct control is more effective than markets. By the time he wrote the problem of social cost, he'd become a total libertarian, and he wrote there how markets sometimes come in and correct command. But he was always saying the same thing. In that context he then went to Chicago and some people there focused entirely on what they called then and called now efficiency. It's all a matter of reducing the sum of accident costs and of their avoidance, of getting the cheapest way. And that became Chicago. It already was Chicago, which is not a geographical place, it's a state of mind for areas like antitrust, which is what. Instead my writing was saying, but never forget that there are things which you can call efficiency or not, which is the fact that if you spread costs, they often are less burdensome. That's why we have insurance, that's why people are insured so that they can spread. But also that you always have to take into account the distributional consequences. That among any number of things that may be efficient, there are some that for a given society are better because of how they choose to distribute, who bears what. And that that's always a part of it. But even more important, there will be things that do not seem to be efficient, but because they are distributionally better, are preferred by that society. And that people, a society often will prefer to do something that could be done better if they can do it well that way and distribute in a way that makes sense. Now the problem with distribution is that people tend to think of distribution as being only one thing. Today we tend to think of distribution in terms of rich and poor. And how much do the rich pay? How much do the poor pay? And that is a perfectly good, very important way of looking at distribution.