Political Entrepreneurs

The Economic Engine of Political Change

Video of Cato Book Forum on Madmen

January 18th, 2013 by Edward Lopez

We had a thoroughly good experience presenting the substance of Madmen at yesterday’s Cato Book Forum. For those of you who didn’t catch the live webcast, the video is now available. Follow the link below. I think it’s particularly interesting to hear Ian Vasquez’s opening remarks and then to skip to the 34:30 mark and watch/listen to the comments by Fred Smith (until recently, the President of the Competitive Enterprise Institute).  There was robust discussion during…
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Rediscovering Buchanan’s Rediscovery

January 14th, 2013 by Edward Lopez

As I claimed in  a post last Thursday , the recent flurry of commentary about Jim Buchanan is most welcome and impressive, but it fails to capture his deepest contribution and the breadth of its relevance. In this post I will try to convey in plain language what I think those are. This is a long post, long enough to try the patience of most readers. So, for your convenience, let me first summarize: While Buchanan is best known…
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Entitlement Reform and Public Employees: Interesting Battles, Important Experiments

January 13th, 2013 by Wayne Leighton

In December the U.S. Government Accountability Office (GAO)  released a report on retiree health benefits and the liabilities of the U.S. Postal System. Sounds pretty esoteric, right? We’re talking about one entry on the balance sheet of a government agency that is not particularly innovative or popular. Yawn. And yet, this issue points directly to questions that will drive any future discussion of fiscal reform in the United States. It’s best to pay attention. For example,…
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James McGill Buchanan, Jr.: The Family’s Obituary

January 12th, 2013 by Edward Lopez

This is the obituary released by the family. It is published in today’s Roanoke Times. Memorial services have yet to be announced. Information about charitable contributions is listed at the bottom below. Notes to the family should be directed to Jo Ann Burgess at the Buchanan House — address below. Nobel prize-winning economist Dr. James M. Buchanan died Wednesday, January 9, 2013, in Blacksburg, Virginia. He was 93. Buchanan, a 1940 graduate of Middle Tennessee…
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Financial Services Regulation: The New Ability-to-Repay Rule

January 11th, 2013 by Wayne Leighton

On January 10, 2013 the Consumer Financial Protection Bureau released new proposed rules related to mortgage lending standards. In effect, the agency will implement an “Ability to Repay Rule” to govern those who engage in mortgage lending. Here’s the agency’s announcement , which offers few details. This news report from the Wash Post’s business section is more informative. The new rules will apply to “qualified mortgages” and are designed to keep lenders from issuing loans to borrowers who…
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James M. Buchanan: A Compendium of Remembrances

January 10th, 2013 by Edward Lopez

Donald Boudreaux and Alex Tabarrok have already provided very useful lists of commentary about the passing of Jim Buchanan. Here, I add my own perspectives, admittedly with some overlap. The New York Times obituary  is an excellent place to start and a solid overview of Buchanan’s life and work: A similar article at Bloomberg fills in additional interesting details. Also an excellent introduction to Buchanan’s life and work, George Mason University produced this video , “Daring to be Different,” in 2009. One of…
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James M. Buchanan: Complete Scholar

January 10th, 2013 by Edward Lopez

Here are five observations to illustrate the breadth and depth of Jim Buchanan’s work. 1. The philosophical depth and political idealism of James M. Buchanan, from the early pages of The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962), which he authored with Gordon Tullock: The Scholastic philosophers looked upon the tradesman, the merchant, and the moneylender in much the same way that many modern intellectuals look upon the political pressure group. Adam Smith and…
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In Memoriam: James M. Buchanan

January 9th, 2013 by Wayne Leighton

The tributes will be coming fast and furious in memory of the great James M. Buchanan, who died today. As president of the Public Choice Society, my co-author Ed López can talk for hours about the contributions of this intellectual giant. For now, I will simply quote two paragraphs about Buchanan and Tullock’s contributions to political economy in general and public choice in particular, as described in Chapter 4 of our book, Madmen, Intellectuals and…
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Recommended Reading on Financial Regulation

January 8th, 2013 by Wayne Leighton

The Mercatus Center at George Mason University has been doing a fine job of chronicling the details of financial services regulation following the 2008 crisis. See, in particular, the research of the seventeen members of its Financial Markets Working Group . Today Mercatus announced that two of its scholars, Hester Peirce and James Broughel, have edited a new book on Dodd-Frank, “the largest and most complex piece of financial services legislation in American history.” Check out Dodd Frank: What It Does and…
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Reforming the NCAA on Player Compensation

January 7th, 2013 by Edward Lopez

Tonight — at last — Notre Dame and Alabama take the field to decide this year’s college football champion. An estimated 36 million viewers will tune in, and both schools will receive paychecks of $18 million. The winning team promises to have its assistant coaches descended upon with lucrative job offers. Alabama’s Nick Saban is already college football’s highest paid coach, at an annual salary of $5.5 million . And Notre Dame’s head coach, Brian Kelly, is already fending off rumors that…
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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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