Political Entrepreneurs

The Economic Engine of Political Change

Category: Core Concepts

The Heisman Memorial Trophy is Undergoing Political Change

November 24th, 2012 by Edward Lopez

Still two weeks remain before the winner of the Heisman Memorial Trophy is announced (explained below). Each year, about 900 members of the media and former Heisman winners cast ballots for their top three picks. Awarded since 1935 to the best player in college football, the Heisman traditionally has gone to upperclassmen, usually running backs or quarterbacks. Only three sophomores have ever won, the first in 2007. And no freshman has ever won, with just…
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How incentives matter, even in politics (Part II)

November 22nd, 2012 by Wayne Leighton

The first lesson in economics — incentives matter! — applies well beyond citizens in their role as taxpayers, employees, business owners, and the like. And one of the key lessons of public choice economics — a lesson that Ed and I discuss in detail in our book — is that incentives matter in politics, too. Politicians do not leave their self-interest at the door when they step into the legislature. This seemingly obvious point is…
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How incentives matter, even in politics (Part I)

November 21st, 2012 by Wayne Leighton

  A recent article  in the New York Times had one of what will surely be many stories on how investors and business owners everywhere are responding to potential changes in the tax laws. Money quote:  Kristina Collins, a chiropractor in McLean, Va, said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000…
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What do we mean by “Political Entrepreneur”?

November 14th, 2012 by Edward Lopez

Wayne and I talked about it a few times before deciding to name this site Political Entrepreneurs. We considered going with something catchy like Madmen in Authority, but we feared  that would draw more focus to policymakers than we intend to. Ultimately we went with Political Entrepreneurs because it puts attention on the driving force of political change in our framework, namely the political entrepreneur. This of course raises the question: what do we mean…
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Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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?

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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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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