Most policy debates treat rights as static rules to be written into law, but Cyril Hédoin argues that the real crisis is epistemological: we simply do not possess the information required to design a perfect system of jurisdictional rights. This piece is notable because it reframes the eternal struggle over privacy, property, and speech not as a moral failure, but as an inevitable consequence of the "knowledge problem"—the fact that our preferences are too dispersed and local for any central authority to map. For busy leaders navigating complex regulatory landscapes, the insight that "rights are appropriately defined if they internalize all potential externalities" offers a stark warning: if we cannot measure the subjective harm of an externality, we cannot legislate it away without coercion.
The Limits of the Planner
Hédoin anchors his argument in the historical debate between Austrian and neoclassical economists, specifically the 1920s clash between Ludwig von Mises and Oskar Lange. He notes that while socialists believed a central planner could simulate market prices, Friedrich Hayek "decisively refuted this argument by pointing out that market prices can be found in the Walrassian model only because general equilibrium theory assumes that we can write a system of equations summarizing all the information about consumers' preferences and producers' production costs." The author’s framing here is sharp; he strips away the economic jargon to reveal a universal truth about governance. The core of the argument is that any attempt to design a "optimal" configuration of rights from the top down is doomed because the necessary data is private and tacit.
This lands because it challenges the modern impulse to solve social friction with comprehensive legislation. Hédoin writes, "Because knowledge is private and dispersed, it is virtually impossible for a single agent to design the 'optimal' configuration to solve these conflicts." The implication is profound: when the executive branch or a regulatory agency attempts to define the boundaries of acceptable behavior, they are inevitably acting on incomplete information. Critics might note that this view risks paralyzing necessary collective action, but Hédoin counters that the alternative—coercing people to act against their will based on flawed data—is far more dangerous.
The optimal allocation cannot be computed, and any attempt to enforce an allocation by design will illegitimately coerce people to act against their will.
The Paradox of Rights and Externalities
The essay then pivots to the definition of rights themselves. Hédoin suggests that jurisdictional rights are meant to create spheres of sovereignty where individuals can pursue their plans without interference. However, he identifies a critical flaw: "Externalities precisely exist when a system of (property) rights fails to internalize all the effects that the use of rights generates." This is a crucial distinction. It means that rights are not a magic shield against conflict; they are merely a mechanism that often fails to account for the subjective impact one person's actions have on another.
Hédoin illustrates this with the example of pollution, noting that "the harm is relative to subjective perceptions and individuals' willingness to 'trade' this harm against something else." He argues that a social planner cannot know the "marginal rates of substitution" for every citizen. This connects deeply to the legacy of the Coase theorem, which Hédoin references to show that the initial allocation of rights matters immensely when transaction costs are high. The author’s choice to link the abstract concept of "social choice theory" to the tangible reality of pollution and privacy rights makes the argument accessible. He writes, "Individuals will, most of the time, disagree about the value or even the very existence of externalities." This disagreement is not a bug in the system; it is the system's fundamental feature.
A counterargument worth considering is that this focus on subjective valuation makes it impossible to address systemic issues like climate change, where the "harm" is objective and existential. Yet, Hédoin's point remains that without knowing how different individuals value the trade-offs, any uniform policy will inevitably feel like an imposition to some.
Polycentricity as a Solution
If central planning fails, what is the alternative? Hédoin points toward "polycentricity," a concept championed by the Bloomington School of the Ostroms (Elinor and Vincent). He suggests that "letting people freely associate based on the system of rights that they consider best" allows for spontaneous sorting. This mechanism reveals information that a planner could never access. As Hédoin puts it, "people who voluntarily regroup in a jurisdiction where the right of free speech is unlimited signal that they don't perceive speech as causing any harm." This is a powerful reframing of jurisdictional conflict: it becomes a market for governance rather than a battleground for ideology.
However, the author is careful not to present this as a utopia. He admits that "externalities are unlikely to stop at the (territorial or not) borders of jurisdictions." This is where the concept of "packageability"—the ability to keep external effects within a specific jurisdiction—becomes the limiting factor. Hédoin writes, "The possibility of packageability depends, however, on people's perceptions and preferences, again information that nobody has ex ante." This admission adds necessary weight to the argument; it acknowledges that while polycentricity solves the knowledge problem better than centralization, it does not eliminate the friction of human interaction.
The Social Choice Dilemma
Finally, Hédoin connects these practical issues to the theoretical "Paretian-liberal paradox" identified by Amartya Sen. He uses a hypothetical scenario involving Bob and Ann to demonstrate that "the requirement of Paretian-optimality... is inconsistent with 'minimal liberty'" when preferences clash. The example is not just a logic puzzle; it illustrates the real-world impossibility of satisfying everyone's sovereignty simultaneously. Hédoin writes, "Hence, a contradiction emerges: on the one hand, a universalist moral stance indicates that we should all have the same jurisdictional rights... on the other hand, the fact that we disagree about externalities suggests that rights should be allocated differentially." This is the essay's most striking insight: the very equality we demand in rights may be impossible to implement without violating the diversity of our preferences.
Disputes about rights are mostly due to the fact that we disagree about what counts as externalities and how to value them.
Bottom Line
Cyril Hédoin's strongest contribution is his demonstration that the "knowledge problem" is not limited to economics but is the fundamental barrier to defining rights in a pluralistic society. The argument's biggest vulnerability lies in the practical difficulty of implementing polycentric solutions when mobility costs are high and externalities cross borders. Readers should watch for how this framework applies to current debates on digital privacy and speech, where the "jurisdiction" is increasingly virtual and the externalities are global.