Political Entrepreneurs

The Economic Engine of Political Change

January 2013

In Memoriam: James M. Buchanan

January 9th, 2013 by Wayne Leighton

The tributes will be coming fast and furious in memory of the great James M. Buchanan, who died today. As president of the Public Choice Society, my co-author Ed López can talk for hours about the contributions of this intellectual giant. For now, I will simply quote two paragraphs about Buchanan and Tullock’s contributions to political economy in general and public choice in particular, as described in Chapter 4 of our book, Madmen, Intellectuals and…
Read more»

Recommended Reading on Financial Regulation

January 8th, 2013 by Wayne Leighton

The Mercatus Center at George Mason University has been doing a fine job of chronicling the details of financial services regulation following the 2008 crisis. See, in particular, the research of the seventeen members of its Financial Markets Working Group . Today Mercatus announced that two of its scholars, Hester Peirce and James Broughel, have edited a new book on Dodd-Frank, “the largest and most complex piece of financial services legislation in American history.” Check out Dodd Frank: What It Does and…
Read more»

Reforming the NCAA on Player Compensation

January 7th, 2013 by Edward Lopez

Tonight — at last — Notre Dame and Alabama take the field to decide this year’s college football champion. An estimated 36 million viewers will tune in, and both schools will receive paychecks of $18 million. The winning team promises to have its assistant coaches descended upon with lucrative job offers. Alabama’s Nick Saban is already college football’s highest paid coach, at an annual salary of $5.5 million . And Notre Dame’s head coach, Brian Kelly, is already fending off rumors that…
Read more»

Quantitative Easing and Market Distortions

January 7th, 2013 by Wayne Leighton

In yesterday’s post , I noted that members of the Federal Open Market Committee are starting to discuss the Fed’s latest quantitative easing, in particular the size and duration of a program that includes purchases of Treasury securities and mortgage-backed securities. What really needs to be asked is 1) whether this policy is distorting the market rate of interest (which, if it is, will distort investment decisions and set the economy on the path to bigger…
Read more»

The Federal Reserve and Quantitative Easing

January 6th, 2013 by Wayne Leighton

On January 3, 2013 the Federal Open Market Committee (of the Board of Governors of the Federal Reserve) released the minutes of its last meeting, held December 11-12, 2012. As has already been widely reported but is worth remembering, the Fed decided that it will  continue monetary expansion with a combination of 1) purchase of Treasury securities and 2) purchase of mortgage-backed securities (MBS). The following key (or “money”) paragraph is taken from the Committee’s minutes…
Read more»

A Proposal to Reform the U.S. Postal Service

January 4th, 2013 by Wayne Leighton

Critics of government inefficiency often point to the U.S. Postal Service as an example of an agency that delivers poor service at high costs. And yet, proposals for reform of the USPS are seldom seen. Today’s Washington Post highlights a study that may offer a serious reform proposal in the future. The review by the nonprofit National Academy of Public Administration will analyze the benefits of restoring the agency’s financial health by using a “hybrid” model, which would…
Read more»

Fiscal Reform: Time to Channel Reagan?

January 3rd, 2013 by Wayne Leighton

Daniel Henninger’s article in today’s Wall Street Journal is angry, but it also makes a good point about the opportunity for fiscal reform in the United States. For the short term, it’s looking bad. And yet, as Henninger points out, we know the recipe for success. Reagan applied it in the Tax Reform Act of 1986. The ’86 tax act reduced tax rates on personal income and also famously gutted many nonproductive “tax shelters.” In short,…
Read more»

Fiscal Reform: When Will It Come? Will It Require A Crisis?

January 2nd, 2013 by Wayne Leighton

As both sides ponder the results of the “Fiscal Cliff” negotiations, one thing is clear. This was not a major reform. It was a short-term fix. In the opening chapter of Madmen, Ed and I argue that while significant reform often comes about as a result of a crisis, this need not always be the case. (In chapter 6 we discuss airline deregulation as an example of a major reform that did not emerge from crisis.)…
Read more»

Expanding Free Trade: An Idea Whose Time Has Come?

January 2nd, 2013 by Wayne Leighton

The lead article for the year-end issue of the Economist (subscription required) offers a simple recommendation to improve economic prospects in 2013: expand free trade, especially between rich-world countries. The editors argue that the world is less economically integrated than most people realize. Opportunities for another global free-trade agreement are slim. On the other hand, in some regions and especially among the rich-world countries, the time may be right for political change. The Economist outlines three potential…
Read more»

What Political Change Would You Like to See in 2013?

January 1st, 2013 by Wayne Leighton

Happy New Year! What political change — what meaningful reform — would you like to see in 2013? Watching the current debate in Washington, one might be pessimistic about the possibility of meaningful reform on spending, taxes … the big issues. And yet, the need for reform grows every day. The U.S. Census Bureau’s latest projections are for the population age 65 years and older to more than double by 2060, from 43 million to 92 million…
Read more»

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.

©2018 Wayne A Leighton & Edward López • Web Design by Barrel Strength