I have a bad, bad neighbor. He’s actually a lovely guy but he spoils his kids and let’s them do crazy stuff. Several concussions and broken bones later, my bad, bad neighbor has not learned his lesson – the kids are still wild.

My kids are quite envious of the neighbor’s kids. They’re allowed to perform death-defying acts our kids can only dream of doing. My kids think I’m a bad dad because I won’t let them do death-defying stuff.

So I had a chat with the neighbor to try to persuade him to internalize externalities. Unfortunately, he is an argumentative lawyer. He appears to have heard of the Coase Theorem. So he says I should pay him to be a good neighbor. After all, he wants to indulge his children so, for him, doing what I want has a negative effect. I super-Coased him and pointed out that my transferring stuff to him creates perverse effects – he has the incentive to create more crazy activities – perhaps even ones he himself thinks are crazy to extract surplus from me. (By the way, of course it is not about the money. He is a competitive neighbor so he would love to “win” just for the sake of it.)

So, really, he should pay me not me pay him. That was my counter-proposal. He is puzzling over it – frankly, it has obvious flaws, though not ones I will reveal in this post just in case he reads it. In the meantime, crazy stuff continues.

(Of course many elements of the post are fictionalized and are a composite of many experiences and incidents, most involving my spouse.)

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