Political Entrepreneurs

The Economic Engine of Political Change

Calling Political Entrepreneurs: San Francisco Ride-Share Edition

December 12th, 2012 by Edward Lopez

Like many cities, San Francisco limits the supply of taxi cabs and town cars. This keeps cabbies out of the red, but it creates shortages along the way. As with any shortage, entrepreneurial folks tend to find ways around. At Radical Social Entrepreneurs, Jeff Fong (my former student) draws attention to the emergence of ride-sharing start-ups

Ride-sharing start-ups Lyft, SideCar and Tickengo are helping San Franciscans get around faster and cheaper than ever before…much to the chagrin of local cabs.

But ride-sharing isn’t quite like catching a cab or even an Uber.

Instead of managing a fleet of taxis, each of the three manages their own cooperative ride-sharing community. They don’t own the cars, pay the drivers, or even act as dispatch.

Passengers use mobile apps to directly request rides from any nearby, participating driver.

Sounds like a good idea, right? The guardians of the wasteful status quo are not amused.

In September, The California Public Utilities Commission (CPUC) and the San Francisco Metro Transit Authority (SFMTA) both issued cease and desist orders to the companies. All three start-ups elected to continue operations.

On November 13th, the CPUC came down on Lyft and SideCar2; it’s unclear why Tickengo evaded the fine, but not the original cease-and-desist order.

Lyft and SideCar are continuing with operations while they negotiate with the CPUC. A general petition has also been started as a show of public support.

As the framework in Madmen would predict, a new idea has come along and it has been met with resistance from vested interests. On their behalf, madmen in authority are resisting beneficial institutional change. And what’s needed is a good dose of political entrepreneurship to vault this good idea over status quo forces. The public petition is part of that process, and it nicely illustrates our message in Chapter 7 that all persons — not just academic scribblers — can be political entrepreneurs. But ultimately political entrepreneurs must find ways to make it in the interests of the madmen to bring about beneficial change. We’ll be staying tuned…

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.

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