Political Entrepreneurs

The Economic Engine of Political Change

April 2014

Property and Contract Rights in High Frequency Trading?

April 30th, 2014 by Edward Lopez

Robert Levy, Chairman of the Cato Institute, responds to Burton Makiel and Aurthur Levitt’s Wall Street Journal op-ed on the most recent firestorm over high-frequency trading (HFT). Highlighting its downsides, critics have called for bans and regulations to stem or eliminate the practice. These critics allege the practice lends unfair advantage to large and inside traders relative to small and retail traders, worsens market volatility such as flash crashes, and amounts to “front-running”. Levy’s approach is to…
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Why Publishers Weekly Should Look Into How the Dismal Science Got its Name

April 20th, 2014 by Edward Lopez

The reviewer for Publishers Weekly did not like Madmen, Intellectuals, and Academic Scribblers. Annoyed evidently with the fact of economics — it’s very existence — the (anonymous) reviewer twice associates Madmen with “the dismal science,” hoping the reader shares every negative and objectionable connotation the reviewer seems to cast on that association. Madmen, we’re told, is dismal because it is a work of economics, because it is a difficult read, and because it recounts the life and works of “unheralded”…
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On Working Hard: Reflections on Receiving APEE’s Distinguished Scholar Award

April 18th, 2014 by Edward Lopez

As I do each April, this past week I attended the meetings of the Association of Private Enterprise Education. You can find my brief overview here , where I mention that the Association recognized me with this year’s Distinguished Scholar Award . It’s customary for the recipient to say a few words. My “acceptance” remarks were a brief reflection on APEE’s motto, “Work Hard, Play Hard” (in that order), and afterward several people had supportive things to say and…
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Free Enterprise on a Massive Scale: The 2014 APEE Meetings

April 18th, 2014 by Edward Lopez

The Association of Private Enterprise Education is alive and well. This year’s conference was held earlier this week at The Wynn Las Vegas and was attended by about 530 scholars, practitioners, and students from 12 countries. It was the largest attendance in the Associations 39-year history. To put that in perspective, my notes say that the 2001 meeting in Washington, DC, was attended by 142, and the 2000 meeting at Caesar’s Palace Las Vegas drew attendance of 206. So APEE…
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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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