Political Entrepreneurs

The Economic Engine of Political Change

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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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Guest Blogger James L. Caton

September 6th, 2016 by Edward Lopez

We continue our guest blogger series with James L. Caton, a Ph.D. candidate in Economics at George Mason University, where he specializes in computational modeling, Austrian economics, and monetary/macro.  Jim has blogged for several years at Money, Markets, and Misperceptions . He will be blogging here about knowledge transfers — a topic that is of central relevance to Madmen, Intellectuals, and Academic Scribblers and the basic questions it raises about institutional change — among other topics. Welcome Jim!

How Well Does the Economic Theory of Politics Explain Deregulation?

July 2nd, 2014 by Gary McDonnell

The theory of economic regulation developed by Stigler and expanded by others is sometimes referred to as the Chicago theory of politics. Politicians broker resources, typically transferring them from large, unorganized groups whose individual members have a small stake in the outcome, to well-organized groups whose individual members have a large stake in a political outcome. Voter ignorance and apathy help this process along. There is a tendency for government regulatory bodies to be captured by the interest groups they…
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Ideas and Political Change: A (Very) Short History of Transportation Deregulation

June 30th, 2014 by Gary McDonnell

  Public choice is a field of study that is a relative new-comer in the discipline of economics. Even more recent is the attempt to incorporate ideas into models of political economy. In Madmen Ed and Wayne have made a giant leap in the development of an economic framework, a “transmission mechanism” if you will, whereby ideas influence political outcomes. This approach offers great potential for helping to explain political change. Transportation deregulation during the…
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Engaging Students Through Op-Ed Writing Assignments

June 30th, 2014 by Todd Nesbit

As much as I and many other economists at teaching institutions take pride is having former undergraduate students go on to earn their PhD in economics and enjoy the “family” photos at professional conferences, the vast majority of students with which we interact will go on to pursue other professions.  This certainly suggests that we academic economists should not evaluate our success purely–or even mostly–as a function of students who go on to earn their…
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On the Economics of Success in the Labor Market

June 25th, 2014 by Todd Nesbit

Despite improvements in many of the macroeconomic statistics, a great many individuals still struggle to find employment befitting of their skill level.  Indeed, much attention has been paid to improvement in national macroeconomic statistics.  For instance, the  unemployment rate  in May was 6.2%, the lowest its been since Sept. 2008.  However, the employment-to-population ratio –a much more objective and, arguably, accurate measure of the labor market–still sits at 58.9%, well below the roughly 63% average prior to the recession….
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Ronald Coase and Spectrum Liberalization

September 4th, 2013 by Wayne Leighton

Over at MRUniversity , Alex Tabarrok has a short   video lecture on Ronald Coase and Spectrum Liberalization. Highly recommended, this twelve-minute talk gives a nice introduction to how the electromagnetic spectrum operates, and how government rules for its use have evolved over time. Coase, who passed away Monday, did more than anyone to help make it clear that the rules for spectrum use could be like those for most other resources — based on property rights that…
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What would you reform?

July 19th, 2013 by Wayne Leighton

The Freeman has just published “A Place of Learning for Reformers,” an essay on the Antigua Forum . The Antigua Forum is a project of Universidad Francisco Marroquín, designed to help reformers and others who are transforming existing institutions to improve human well-being through liberty. The secret to this project’s success is the careful mix of highly-leveraged participants and a very effective learning environment. As this brief essay explains: “The most thrilling conversation on reform is meaningless if it doesn’t yield…
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Dani Rodrik on growth, institutions and structural change

July 1st, 2013 by Wayne Leighton

Dani Rodrik has a new paper on “ The Past, Present, and Future of Economic Growth .” Rodrik distinguishes between growth that is a function of  “fundamental capabilities” (human capital and institutions) and growth from “structural transformation” (the move to higher-productivity industries). He argues that periods of extraordinarily high growth are the result of structural transformations. Increases in fundamental capabilities exhibit important complementarities, but they are slower in developing. What are the implications for political change? Rodrik’s other great work in this area…
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Madmen on Stossel (now available online)

June 17th, 2013 by Wayne Leighton

The May 16, 2013 edition of the John Stossel show, featuring an interview with your Madmen co-authors, is now available online and can be seen here  (around minute 30:45 in the program). Bemoaning the seemingly undending array of rules and regulations that stifle small businesses and often hurt consumers, Stossel asks: “Is there no hope.” He quickly adds, “There is!” And thus starts our interview. As we say in the book, on this blog, and wherever we…
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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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