The Coasean Republic

At times I've joked to my classes about the possibility of a Coasean Republic, a state I call "Coase-istan" (or perhaps Kosistan), in which the entire world operates via private ordering.  In Coase-istan, government does, well, nothing except put service provision out for private bids.  Mail would be delivered only by private express companies like Fed-Ex.  Prisons would be privately operated. Executions would be contracted out to the highest bidder. Food and drug safety would be policed solely by private litigation, which would, of course, all go to arbitration. Deposits would be privately insured, if at all. Taxes would be collected by tax farmers. The borders of the Coasean Republic would be protected by an army of mercenaries. Health care or transportation? Pay your own way. Want to buy a baby or enter a lifetime personal service contract? Go right ahead. 

The constitution of the Coasean Republic would, of course, enshrine self-evident truths such as revealed preferences and the absence of transaction costs or resource constraints.  Once one dismisses the rest of all possible worlds, one finds that this is the best of all possible worlds.   

Now, it turns out that the joke's on me. Sandy Springs, Georgia is well on its way to becoming the Coasean Republic. Well, let's hope that Tiebout competition works.