Political Entrepreneurs

The Economic Engine of Political Change

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Stossel Nicely Summarizes Madmen, Intellectuals, and Academic Scribblers

May 18th, 2013 by Wayne Leighton

As Ed reported, John Stossel interviewed us for his show titled “The War Against the Little Guy” (airing May 16 and replaying through May 19). The current link for Stossel  has only a short video clip that doesn’t include our interview, which appears later in the hour. But the link does have a short summary of the show, which ends with a nice summary of the main argument in Madmen (emphasis added):  Is there any hope for…
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The Problem With the Holdout Problem

March 28th, 2013 by Edward Lopez

In his famous 1979 lecture, “Politics Without Romance,” James M. Buchanan briefly summarizes public choice theory and some of its implications. He puts special emphasis on viewing government as made up of individuals who respond to incentives in the decisions they make. This is contrary to the naive view of government that was implicitly assumed before public choice came along. That naive view would go something like this: 1. identify a market failure (defined as…
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George Will and Peter Boettke on James Buchanan: Balanced-budget amendment or debasement?

February 12th, 2013 by Edward Lopez

Columnist George F. Will has been arguing for a balanced budget amendment to the United States Constitution (see his January 9 entry, “ Time for a balanced-budget amendment “). At the heart of his argument are three essential points: 1) chronic, growing deficits and the level of accumulated debt are not economically sustainable, so something has to give; 2) tax revenues are not going to give, partly because of the economic reality of slowed growth and partly because of the political…
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Economics Music Video Contest

February 9th, 2013 by Edward Lopez

One of the main arguments in Madmen is that ideas don’t become implemented on their own; instead, multiple modes and levels of political entrepreneurship are needed for a different idea to defeat the twin forces that support any particular status quo: the power of vested interests on the one hand, and widespread, ingrained beliefs on the other hand. Many years of studying economics will convince someone that a litany of better ideas is readily available….
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Light blogging of late

January 25th, 2013 by Edward Lopez

Sorry for the light blogging of late. After last week’s Cato Book Forum , Wayne flew south to Guatemala to direct the annual Antigua Forum conference — a gathering of several dozen reformers (i.e., political entrepreneurs) from around the world. As for me, I flew north to the University of Toronto for a one-day seminar on Madmen sponsored by the Institute for Liberal Studies, and I’ve been putting in long hours organizing the 50th anniversary conference of the Public Choice Society. So, although Wayne and…
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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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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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Fiscal Reform: Time to Channel Reagan?

January 3rd, 2013 by Wayne Leighton

Daniel Henninger’s article in today’s Wall Street Journal is angry, but it also makes a good point about the opportunity for fiscal reform in the United States. For the short term, it’s looking bad. And yet, as Henninger points out, we know the recipe for success. Reagan applied it in the Tax Reform Act of 1986. The ’86 tax act reduced tax rates on personal income and also famously gutted many nonproductive “tax shelters.” In short,…
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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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