Political Entrepreneurs

The Economic Engine of Political Change

Why Jon Stewart Should Read Buchanan and Wagner not just Zingales, Stiglitz, and Lessig

February 13th, 2014 by Edward Lopez

“Intellectuals” are middlemen of ideas. They influence the world views of large numbers of people, both in designed and spontaneous ways. In general, we can say that people’s worldviews affect their positions about the proper role and scope of government. So when people’s worldviews change, this in turn can be an impetus to political change.

Video as a medium of communication, be it film or television or YouTube or other, is a powerful tool for the intellectuals. Enter Jon Stewart, host of Comedy Central’s flagship political satire (with apologies to South Park), The Daily Show. For many years now, a robust audience has been tuning in to Jon Stewart. The audience has been influenced by his antics — and vice versa — and while it’s difficult to detect or measure, this mutual influence has its effects on political change. If nothing else, the list of major political figures who appear on the show attests to its importance. Perhaps it’s not all laughs after all.

Case in point. Here is Jon Stewart interviewing House Minority Leader Nancy Pelosi (Part 2 and Part 3). Most of the interview dwells on the failures of government, especially HealthCare.gov. Pelosi does her job by blaming everything on Republican obstructionists (and, oddly, “risk-averse people in the bureaucracy”). She reassures viewers that there are no excuses for the many failures of government, but that things are getting better. She looks uncomfortable throughout the interview, shifting in her seat, forcing strained smiles, scratching her face, and talking more with her hands than her words. She faults Democratic leaders for poor “messaging”. You see, things really are better than they appear to be, and if the public would just listen better we’d all realize that.

Stewart, on the other hand, wants to pursue an argument that government’s inability to function is more fundamental than bad Republicans obscuring and obstructing the work of faithful Democrats. He says government has a foundational problem, that is has been corrupted by moneyed interests sliding through revolving doors between government and corporate lobbying jobs. He says that government fails because it has gotten too complex, but complex is the way big moneyed interests like it. In simpler times — better times! — rules like Glass-Steagall and McCain-Feingold were in place. In simpler times, the Dodd-Frank legislation was two pages long, but it quickly bloated to 900 pages. Both Pelosi and Stewart want to “overturn Citizens United.”

One can find these very arguments on the pages Luigi Zingales’s A Capitalism for the People (2012), Larry Lessig’s Republic, Lost (2011), and Joseph Stiglitz’s The Price of Inequality (2013). And yes, libertarian economist Luigi Zingales defends a return to Glass-Steagall and stronger antitrust enforcement, on the very grounds that doing so would make government simpler and therefore more functional, if not more efficient.

In short, the argument in play is that government failures are the result of too much complexity, which in turn is the result of big money spent by organized interests who prefer complexity because they specialize in it.

This is a bad argument. Big money doesn’t cause complexity. Rather, complexity and big money are both symptoms of the root cause of government failure. The root cause is the audience’s false belief that government can assume a large role in society without becoming grossly corrupt, insanely complex, and therefore a giant failure.

James Buchanan and Richard Wagner make this root argument in their classic, Democracy in Deficit: The Political Legacy of Lord Keynes (1977). Voters who expect politicians to provide full employment are actually handing politicians a rationale to simply spend. Spend in good times and spend in bad times. Over spend and mis spend on wasteful, unproductive projects. And to obfuscate the actual effects of this policy failures, while also obfuscating the tax-price that these failures impose on voter-taxpayers, policymakers have every reason and incentive to make the tax and budget processes more complex.

The whole argument is laid out in the second half of this slender classic by the 1986 Nobel prize winning economist and his star student. I’m sure Jon Stewart could absorb it all in a couple of sittings. If he needs some help, perhaps there are mutually beneficial gains by having someone who is in the know be a guest on the show. It’s important to have conversations like that, so better arguments can begin to inform the more proximate processes that lead to political change.

 

NOTE: See my related post about Comedy Central’s other big t.v. political satirist Stephen Colbert, “I change the world with thought.”  For still more see the category, “Intellectuals in Action.”

 

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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