Political Entrepreneurs

The Economic Engine of Political Change

May 2013

Case Study on Reform: The Transition to Market Economies in Central and Eastern Europe

May 31st, 2013 by Wayne Leighton

Lajos Bokros, former Minister of Finance of Hungary and current Member of the European Parliament, has published an overview of the main elements of reform in post-Soviet states,  Accidental Occidental : Economics and Culture of Transition in Mitteleuropa, the Baltic and the Balkan Area. For students of political change, the book draws links between nine different elements of reform. Below, some highlights. On liberalization of the business sector: The key was liberalization of entry and exit for private…
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Incentives and Flagrant Fouls in Pro Basketball

May 20th, 2013 by Edward Lopez

Competitive sport is a microcosm for understanding human affairs. Both in life and in sports, the rules of the game largely shape the incentives that people have for how to play the game. When the rules change (either formally as through legislation, or informally as through common practice) peoples’ incentives also change, and a different outcome will be observed–for better or worse. Chapter 1 of Madmen opens with the story of college basketball being saved by adopting…
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Stossel Nicely Summarizes Madmen, Intellectuals, and Academic Scribblers

May 18th, 2013 by Wayne Leighton

As Ed reported, John Stossel interviewed us for his show titled “The War Against the Little Guy” (airing May 16 and replaying through May 19). The current link for Stossel  has only a short video clip that doesn’t include our interview, which appears later in the hour. But the link does have a short summary of the show, which ends with a nice summary of the main argument in Madmen (emphasis added):  Is there any hope for…
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Leighton and Lopez Appearing on Stossel

May 16th, 2013 by Edward Lopez

Tune in to John Stossel’s show on the Fox Business Network, tonight at 9:00 p.m. Eastern, as Wayne and Ed will be interviewed about their new book, Madmen, Intellectuals, and Academic Scribblers. The eipsode will air again several times over the weekend. This episode of Stossel covers “The War on Small Business.” After interviewing other guests about unnecessary regulations that harm “the little guy,” Stossel then asks Wayne and Ed to explain how government sometimes deregulates. We describe how…
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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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