If judges decide cases by flipping a coin, should we expect the law to tend toward efficiency?
I said yes, that the law would tend towards efficiency by the principle behind stare decisis, that people would adapt their lives to the predictable environment created by the law and thereby improve social welfare.
This response, while perhaps interesting in its own right, fails to answer the more basic question of whether the law becomes more efficient over time under these conditions. The correct response was "yes, because cases brought to court will tend to be produced by socially inefficient arrangements, so even random decision-making will slowly resolve social inefficiencies."
It's not that I had simply been wrong; I wasn't even thinking of the problem in an open enough frame of mind.
I had essentially taken the status quo and asked how the system would respond to this impulse. The question was looking for an analysis of the parameters of the system, not its evolution.
In determining questions of public policy, we have to remain similarly open to this kind of analysis, lest we fall prey to the Lucas critique. Too often we assume that the lack of a central decision-maker is a problem.
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