Political Entrepreneurs

The Economic Engine of Political Change

Incentives Matter (French Edition)

December 18th, 2012 by Wayne Leighton

Gerard Depardieu is giving up his French citizenship due to his home country’s oppressively high tax rate.  Bloomberg reports that the French Prime Minister Jean-Marc Ayrault called the move “pathetic” and that other ministers joined in the condemnation.

But Depardieu is not alone. The famous (and increasingly infamous) actor was preceded by French billionaire Bernard Arnault, chief executive of LVMH Moet Hennessy Louis Vuitton, who also found the country’s tax rate to be unbearable.

The French government recently moved to raise top tax rates to 75% for incomes over one million euros, Bloomberg reports. The article gives the state of the debate, illustrating what happens when individuals have options:

Critics point out that Depardieu has benefited from generous government subsidies to France’s film industry, while defenders say it is unfair to condemn him for leaving the country when many wealthy French have done likewise. Nearly 6,300 taxpayers subject to France’s “wealth tax” on high-net-worth individuals—the only tax of its type in Europe—left the country between 2001 and 2010, the newspaper Le Parisien reported on Dec. 17. The French-speaking border region of Belgium where Depardieu plans to settle is one of the most popular destinations, along with Switzerland and Britain.

Depardieu argues that he has paid 145 million euros in taxes over the course of his career.

 

 

 

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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

Buy the Book
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.

©2018 Wayne A Leighton & Edward López • Web Design by Barrel Strength