Political Entrepreneurs

The Economic Engine of Political Change

Ranking Think Tanks: Some New Competition

February 18th, 2013 by Edward Lopez

The Center for Global Development recently posted a fresh analysis of think tank effectiveness. The “Index of Think Tank Profile” is essentially a ranking of think tank performance based on measurable outcomes. The authors compile data on social network impact, web traffic, publication counts, academic citations, and more. They also measure inputs, namely a think tank’s aggregate budget. The following bar chart, which ranks impact per per dollar spent, conveys much of the takeaway.

For our purposes, this is interesting in several ways. First, the huge proliferation of think tanks in the last 50 years makes it valuable to measure and rank their relative effectiveness. Second, this index is itself a new entrant in the competition to measure think tanks. Both of these points demonstrate how competitive the marketplace of ideas has become in modern times. Let me elaborate on these points.

In Chapter 5 of Madmen, Wayne and I discuss Hayek’s famous essay, “The Intellectuals and Socialism,” which inspires the way we conceptualize “intellectuals.” They are traders in ideas. They include news and editorial writers, speech writers, think tank scholars, t.v. news talking heads, radio talk show hosts, and basically anyone whose work can easily be identified as attempting to understand and influence human affairs. But intellectuals also include less obvious professions, like novelists, preachers, film makers, teachers — anyone whose business it is to convey ideas, but whose effect can be to influence the beliefs that mass audiences hold about human affairs. Intellectuals are important because, to paraphrase Hayek, they act like a sieve between academic scribblers who generate new ideas and mass audiences whose absorption of new ideas shapes public opinion, predominant attitudes, and widespread beliefs — i.e., where the madmen in authority make their appeal.

In 1949, when Hayek wrote his essay, he argued that the intellectual class was relatively small in number and dominated by a unified bias toward socialism. So they would systematically favor academic scribblers whose ideas promoted more state intervention, less markets and freedom. And the intellectuals of Hayek’s time would communicate their preferred ideas in ways that made socialism more popular among mass audiences in the general public. Meanwhile, Hayek’s own classical liberal ideas lay dusty on the shelf.

Yet so much has changed since Hayek wrote his famous essay. The world of Walter Cronkite telling viewers, “and that’s the way it is” has exploded into a multi-dimensional, multi-media smorgasbord of options. Beginning with talk t.v. shows, then 24-hour cable news, then talk radio, the Internet, political satire, and now Web 2.0, the marketplace of ideas has become more competitive and less dominated by a single ideology than at any time in history. Think tanks, and their proliferation, have played an important part in that. As we write in Chapter 5

There are well over 6,000 think tanks around the world, for example, with about nine in ten having been founded since the end of World War II. (p.123)

Where did we get that number? As you’ll find in the endnotes, we cite the Global GoTo Think Tank Index, which has been published annually by the International Relations Program at the University of Pennsylvania. The authors of the newer index, at the Center for Global Development, are consciously attempting to provide an alternative index — that is, to compete with the original.

Our general approach in Madmen, and on this blog, places great emphasis on competition in ideas. Not only is the proliferation of think tanks on balance likely to be a good influence on human affairs, but so is the emerging competition among organizations to measure and rank the performance of think tanks.

UPDATE: Here is the second entry in this series. And here is the third, “Ranking Think Tanks: The Challenge of Specialization“.

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.

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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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