Political Entrepreneurs

The Economic Engine of Political Change

Bill McGowan, MCI’s Political Entrepreneur

October 27th, 2017 by Arthur Diamond

AT&T was one of the most powerful and long-lived monopolies in U.S. history. Tim Wu has documented in The Master Switch how AT&T suppressed innovations, big and small, even some that were generated within AT&T’s own Bell Labs. The advocates of AT&T were articulate and well-connected politically. AT&T was a paradigm case of the seeming invulnerability of crony capitalism. How entrepreneurial capitalism eventually, and partially, won against crony capitalism is of interest, not just for…
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Behavioral Political Economy

October 17th, 2017 by Edward Lopez

Richard Thaler is the 2017 Nobel laureate in economics for his work in behavioral economics. This comes 15 years after the prize was awarded jointly to Daniel Kahneman for pioneering economic psychology and Vernon Smith for pioneering experimental economics. As the discussion unfolds, we should remember that “people are rational” is a starting point — a simplifying assumption for building models of human interaction. It is not a description of human interaction. So when lab…
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Leaders, Your Choice of Words Matters

September 25th, 2017 by Edward Lopez

I’ve been teaching college economics for a little over two decades now. Years ago I learned that I need to watch very closely my choice of language in the classroom. For example, early in my teaching days I would lace a “hell” and a “damn” or two into my lectures. I can’t say I pondered the reasons very carefully. I suppose I was just trying to be relatable and have an effect. But soon I…
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Should Checks and Balances be Removed from the U.S. Constitution? Part 2 on Nancy MacLean’s Democracy in Chains

July 15th, 2017 by Edward Lopez

NB: Part 1 of this series can be found here . The concluding chapter of Democracy in Chains is titled “Get Ready”. Here MacLean gathers all of her implications together and portrays the arc of influence that I summarized in Part 1 of my responses . Readers absorb details of just what the cause is capable of doing. I won’t recount the chapter. Instead, I would like to focus on pages 225-228, where MacLean argues that constitutional checks and balances should be removed because they…
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On Democracy in Chains by Nancy MacLean, Part 1

July 15th, 2017 by Edward Lopez

I only yesterday finished reading Nancy MacLean’s Democracy in Chains. Until now I haven’t commented publicly on the book, besides brief editorials when sharing posts on social media. Now I will begin writing my substantive responses. This first post is meant to establish some context that will help me be clear in later posts. Disclaimer: I first disclose my involvement with the subject matter. I am not mentioned in MacLean’s book, nor have I been…
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Thoughts on Kurt Vonnegut’s short story, “Harrison Bergeron”

July 10th, 2017 by Edward Lopez

Originally Posted to Division of Labour (DOL) on April 16, 2007 at 03:39 PM in Culture (Links have been updated and typos corrected.) Kurt Vonnegut passed away last week. I am no Vonnegut expert, although I’ve read some of the novels and found much of it disturbingly delicious and deliciously confounding. DOL readers are probably familiar with the short story, “Harrison Bergeron” ( text here ), which I first read as an undergrad in Eric Schansberg’s poverty…
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The symmetry of private and public failures

April 21st, 2017 by Vlad Tarko

Consider the following textbook argument: Public goods are under-supplied on a purely private market because the suppliers cannot get all the beneficiaries to pay. The same also applies for the other type of hard to exclude good — common pool resources — which are predictably under-managed, leading to tragedies of the commons. The difficulty to exclude people from consuming or using the good means free riding is a serious issue. Because suppliers/managers cannot get everyone…
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Informal Institutions, Formally

March 14th, 2017 by Edward Lopez

That’s the title of a paper I’ve finished a first draft of, which I’ll be presenting at the NYU market process colloquium in two weeks. The paper draws heavily on Madmen. I’ll post a complete draft after incorporating comments from NYU, and will post as an addendum here. For now, here is the abstract and introduction. Informal Institutions, Formally Edward J. Lopez Professor of Economics Western Carolina University Abstract: Informalinstitutions are important to numerous areas of…
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2017 Vincent & Elinor Ostrom Prize

March 10th, 2017 by Edward Lopez

The Vincent & Elinor Ostrom Prize awards $1,000 for the best combined paper & presentation at the annual meetings of the Public Choice Society. Vincent and Elinor Ostrom both served as Presidents of the Public Choice Society. The naming of this Award recognizes their ceaseless dedication to working with graduate students to improve both their writing and presentation skills, a dedication that is captured nicely in the documentary film about the Ostroms by Barbara Allen. The Prize is selected according to…
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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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