Political Entrepreneurs

The Economic Engine of Political Change

The Limits of Madmen in Authority

February 26th, 2013 by Wayne Leighton

This Washington Post interview is a must-read on the power — and especially, the limitations — of the U.S. president. The interviewee, Professor George Edwards of Texas A&M University and Oxford University, argues that “the traditional view of the persuasive presidency is wrong.”

Here’s the opening, which also serves as summary:

Years ago, the notion of leadership was that you get in front of potential followers and shout “follow me.” If you were a good leader, people would follow you, even in the face of enemy fire. This notion of leadership is misleading, however. The public almost never moves in the president’s direction if there is division in the country. It is difficult to reach most citizens, overcome their predispositions and combat a vocal opposition. We also know that members of Congress are rarely persuaded to change their minds on an issue. They have strong policy commitments, and their constituents reinforce these inclinations. Presidents cannot create opportunity for change by changing minds. Instead, effective presidents recognize and exploit opportunities for change.

This argument parallels the framework for political change that Ed and I lay out in Madmen. We claim that political leaders, what we call Madmen in Authority, for the most part must take commonly held political beliefs as a given. What they can do is determined by the political ideas at a given time and place.

Of course, a political leader can attempt to push on the limits to change by appealing to the masses, and by seizing on opportunities as they arise. This explains the title of the interview: “Why presidents need to be exploiters.”

But as Professor Edwards puts it, presidents cannot “create opportunity for change by changing minds.” Rather, as Ed and I describe it, the business of changing minds is handled by traders in ideas, also known as Intellectuals, and those who come up with ideas about the best political arrangements, who we call Academic Scribblers.

 

 

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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