Political Entrepreneurs

The Economic Engine of Political Change

When the Rules of Sports Change

September 11th, 2014 by Edward Lopez

Over at the Sports Economics blog, Madmen has attracted some interest. John Considine recently pointed to some high profile examples of when a soccer referee changes the outcome of the match because of how much stoppage time is added. In most such instances, there’s a strong perception of unfairness. Arguably no one, including referees but especially teams and fans, wants matches decided arbitrarily. In response, momentum builds for a change in the rules. Considine likens the soccer scenario to the shot clock story that we tell in the opening of Chapter 1. In both cases, the rules of the game were generating undesirable outcomes. A change in the rules creates improved incentives for how to play (or, in this case, how to referee) the game, which in turn improves outcomes for teams and spectators — something league investors ultimately care very much about. Considine concludes:

Madmen, Intellectuals, and Academic Scribblers is not a sports economics book.  Rather, it is a book about how economic ideas matter for political change.  The sporting incident is used as an example of how, when people are unhappy by the outcomes produced within the existing rules, they set about changing the rules of the political and economic game.  Leighton & Lopez use the sporting analogy because they argue that sports are controlled experiments in human behaviour.  Many would agree.  It is a book worth reading for the economists among those who read this blog.

See more about sports here on PE.com, perhaps starting with my take on the NBA’s flagrant foul rule.

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.

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.

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.

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.

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.

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.

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?

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.

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.

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.

©2024 Wayne A Leighton & Edward López • Web Design by Barrel Strength