Political Entrepreneurs

The Economic Engine of Political Change

February 2013

The Limits of Madmen in Authority

February 26th, 2013 by Wayne Leighton

This Washington Post interview  is a must-read on the power — and especially, the limitations — of the U.S. president. The interviewee, Professor George Edwards of Texas A&M University and Oxford University, argues that “the traditional view of the persuasive presidency is wrong.” Here’s the opening, which also serves as summary: Years ago, the notion of leadership was that you get in front of potential followers and shout “follow me.” If you were a good leader,…
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Intellectuals in Action: Reason‘s Jesse Walker on Survivalists (a.k.a. “Preppers”)

February 21st, 2013 by Edward Lopez

This is the inaugural installment of a category we’ll call “Intellectuals in Action.” Keeping in mind that the book and this blog mean “intellectuals” in the Hayekian sense as traders in ideas – that is, people whose activities influence (whether deliberately or not) the way that other people view the world. To drill down, readers can go to Hayek’s 1949 essay, “ The Intellectuals and Socialism ,” and the introduction to his 1954 edited volume,  Capitalism and the Historians . The point of this…
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Peter Gordon reviews Madmen

February 19th, 2013 by Edward Lopez

Peter Gordon , an urban/regional economist and Professor of Public Policy at the University of Southern California, has posted a brief review of Madmen . Describing Madmen as a “superb read” and “pure joy,” Professor Gordon’s review emphasizes one of the book’s subtle yet important points: if the ideas of economists and philosophers do matter, then we should have a good grasp of the history of those ideas. This is essentially why we include a history of philosophy and economics in Chapters 2…
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Ranking Think Tanks: Some New Competition

February 18th, 2013 by Edward Lopez

The Center for Global Development recently posted a fresh analysis of think tank effectiveness . The “Index of Think Tank Profile” is essentially a ranking of think tank performance based on measurable outcomes. The authors compile data on social network impact, web traffic, publication counts, academic citations, and more. They also measure inputs, namely a think tank’s aggregate budget. The following bar chart, which ranks impact per per dollar spent, conveys much of the takeaway. For our purposes, this is interesting in…
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Young People and Attitudes About Government

February 16th, 2013 by Wayne Leighton

A New York Times article on young people and their attitudes towards government got plenty of play this week (on radio and TV, on the blogs, etc.) The headline tells the story well enough: “A Growing Trend: Young, Liberal, and Open to Big Government.” But you already knew that. So, what’s (sort of) new here? First, consider this quote regarding attitudes about what government should and should not do: “Young people absolutely believe that there’s a role for government,”…
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George Will and Peter Boettke on James Buchanan: Balanced-budget amendment or debasement?

February 12th, 2013 by Edward Lopez

Columnist George F. Will has been arguing for a balanced budget amendment to the United States Constitution (see his January 9 entry, “ Time for a balanced-budget amendment “). At the heart of his argument are three essential points: 1) chronic, growing deficits and the level of accumulated debt are not economically sustainable, so something has to give; 2) tax revenues are not going to give, partly because of the economic reality of slowed growth and partly because of the political…
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David Zetland at Aguanomics reviews Madmen

February 10th, 2013 by Edward Lopez

Dutch economics professor and water expert, David Zetland,  has reviewed Madmen on his blog, Aguanomics . It is a favorable review (“I recommend as a text for ANY policy class and for ALL students of law, economics and politics.”) that goes chapter-by-chapter in describing our approach to understanding political change, as well as its implications for bringing about beneficial change. I tried in vain to select a paragraph to block quote here, because the entire review is insightful — including the footnotes!…
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Nordic Countries, Education Reform, and Milton Friedman

February 10th, 2013 by Wayne Leighton

As we observed in a  recent post on the February 2, 2013 issue of the Economist, the Nordic countries have been leading the world in a number of economic reforms. A short article in this issue continues exploring this theme and describes the role that has been played by new ideas about reform, especially those that reject traditional “left” or “right” perspectives.  Even more striking than the Nordic world’s commitment to balancing its books is its enthusiasm for experimenting…
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Economics Music Video Contest

February 9th, 2013 by Edward Lopez

One of the main arguments in Madmen is that ideas don’t become implemented on their own; instead, multiple modes and levels of political entrepreneurship are needed for a different idea to defeat the twin forces that support any particular status quo: the power of vested interests on the one hand, and widespread, ingrained beliefs on the other hand. Many years of studying economics will convince someone that a litany of better ideas is readily available….
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Nordic Countries as Case Studies in Economic Reform

February 6th, 2013 by Wayne Leighton

The lead article from the February 2, 2013 edition of the Economist highlights Nordic countries as a case study in economic reform. The four main Nordic countries — Sweden, Norway, Denmark, Finland — have lessons to share, both in terms of the mistakes that got them into an economic mess and the policies they adopted to get out. The article begins by noting that the Nordic countries had remarkably high ratios of government spending as a share…
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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.

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.

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.

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.

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.

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.

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?

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.

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.

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.

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