Political Entrepreneurs

The Economic Engine of Political Change

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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Dear New York: Are Term Limits Worth It?

February 25th, 2017 by Edward Lopez

Note: Initially published in The American Enterprise, Jan. 3, 2002. Dear New York: Are Term Limits Worth It? Many New Yorkers are wondering whether the term limits law they passed by referendum in 1993 is worth it. In pondering this question, New Yorkers join in one of history’s great democratic debates. The ancient Greeks grappled with this question, and term limited certain offices. America’s Founding Fathers also wrestled the pros and cons on the issue:…
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A Nice Example of Creative Destruction and the Market Process: The Decline of Newspapers

February 24th, 2017 by Edward Lopez

Initially written as “The Decline of Newspapers is a Sign of Market Success” for Info Tech & Telecom News, July 2010, by Edward J. López[1] The decline of newspapers is real. Since 1970 the number of dailies in America has declined by 20 percent, and circulation per capita has been cut in half.[2] More recently, advertising on news print is down 50 percent since peaking in the year 2000. Even including the more recent stream…
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Bryan Caplan’s “Idea Trap” as a key to understanding the election

November 16th, 2016 by Vlad Tarko

In The Myth of the Rational Voter Caplan observed that two main factors make people think more like economists: education and income growth. Education is hard to change quickly, but income can. Based on this, he proposed that the following dynamic between ideas and economic conditions may be at work: (a)     Virtuous cycle of growth: When income increases, people’s ideas about the economy are, for some reason, better, which, in turn, leads them to favor good policies, which, when adopted, lead to further…
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Complexity Theory, Formal Modeling, and Entrepreneurship in the Production Structure of Ideas

October 31st, 2016 by James Caton

Those who disagree with the reigning paradigm in economics - macro or otherwise - must find alternatives to the system that they challenge or else they may do more harm than good. Those who have strong methodological foundations must find a way to systematically convert their understanding into output: formal mathematical models. To be sure, we cannot do without high theory. Theorizing about economics without formal mathematical models can be a fruitful and invigorating exercise. But research, if it is to…
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The Pursuit of Order in a Creative World

October 27th, 2016 by James Caton

We see demands lately for a reformulation of economic theory. The current state of our practice appears to be much like the state arrived at in Babel. There is a need for new organization that is impeded by a lack of mutual understanding. Where is the solution? Answers to this systemic problem seem to exist, but lack an obvious unity. This frustration in communication seems to have left us with dependence on a paradigm that many economists…
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Excerpt about Bob Tollison (1942-2016)

October 24th, 2016 by Edward Lopez

Robert D. Tollison was dissertation adviser to both Wayne (in 1996) and me (in 1997). Bob passed away this morning, no details are available. I will be posting soon a memorial of Bob, and no doubt we will be arranging a memorial at the 2017 Public Choice Society meetings. For now, here is an excerpt of Madmen chapter 3, in which we introduce neoclassical welfare theory before next contrasting it with public choice theory. Chapter 3: Economists…
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Reflections on the Political Economy and Development of Ideas in Free Trade

October 22nd, 2016 by James Caton

Mercantilists formulated a system of political economy that put the strength of the state as the primary end. Economists supporting this doctrine, whether or not they realized, were defenders of the existing order. The mercantile system inverted the preference ordering appropriate for science, submitting the search for truth to some alternate end. Investigation was in the service of enriching and empowering the state and agents connected to it.  Much as still occurs today, the status…
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Co Blogger Vlad Tarko

October 15th, 2016 by Edward Lopez

Welcome to new co blogger Vlad Tarko , who will be writing here at Political Entrepreneurs about his research on ideas, institutions, and political economy. Vlad is the author or editor of three books  and a range of papers on capitalism, institutions, economic history, and the history of economic thought. Welcome aboard to Vlad!

Knowledge, Language, and Coordination

October 11th, 2016 by James Caton

Language is the ultimate archetype for emergent phenomena. Its structure is the archetype for the structure of knowledge embodied in those phenomena. Nobody plans language. Attempts at planning are worthy of the cynicism they receive. Remember the zealous high school teachers and college professors who preached the gospel of MLA formatting? This privileged group of experts may do their best to enforce homogeneous belief upon those who appear to be their subjects, but the emergent features of…
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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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