Political Entrepreneurs

The Economic Engine of Political Change

December 2012

Why Rules Matter, and Meta-Rules Matter More

December 13th, 2012 by Wayne Leighton

A key argument in Madmen is that in any given society the rules of the game matter; they determine the incentives that shape human behavior. In Chapter 4, Ed and I introduce public choice theory, which pioneered the study of rules in politics. After public choice, no longer would political decisonmakers be viewed as acting according to some ill-defined standard of public interest. Of particular importance are the rules or principles that apply to the rule-making process…
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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…
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Cato Institute book forum on Madmen, January 17th

December 11th, 2012 by Wayne Leighton

Mark your calendars! On Thursday, January 17, 2013, the Cato Institute will host a book forum on Madmen, Intellectuals, and Academic Scribblers: The Economic Engine of Political Change. Ed and I both will be there to explain the core ideas of the book and take your questions in person. And a special treat… Fred Smith , Founder and President of the Competitive Enterprise Institute, will lead the discussion. If you are familiar with Fred’s passion for ideas and his belief…
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I will be guest blogging at MarginalRevolution next week.

December 10th, 2012 by Edward Lopez

    While Alex Tabarrok and Tyler Cowen are in India next week expanding the reach of MRUniversity , they have invited me to guest blog on MarginalRevolution.com . Starting next Monday (December 17) I will blog for seven days on topics broadly related to Madmen and PoliticalEntrepreneurs.com. I can’t think of a more fitting place than MR for Wayne and I to be introducing our ideas. Notice their tagline, “Small steps toward a much better world.” What Alex…
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Egypt and Institutional Change

December 10th, 2012 by Wayne Leighton

As we outline in Madmen, institutions — also known as the “rules of the game” — shape the incentives for a productive and peaceful society, or a poor and violent one. When these institutions change, the results can be far-reaching. One of the most fascinating and important examples of this today is the struggle to reshape political institutions in Egypt. In the latest issue of Foreign Affairs , George Washington University’s Nathan Brown outlines the terms of the debate,…
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Eminent Domain Has it All (Part 1)

December 8th, 2012 by Edward Lopez

When we look “out the window” and observe political economy in action, what is a useful method for understanding and explaining the outcomes? The framework that Wayne and I develop in the book begins by explaining observable outcomes as the product of incentives, and incentives are in turn shaped by institutional rules. So far that’s pretty standard stuff, thanks to the work of Douglas North and others. These days, political economists today are familiar with…
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What do we mean by “Framework”? Ask Elinor Ostrom

December 7th, 2012 by Edward Lopez

On the publisher’s website , Madmen is described as a book that “offers up a simple, economic framework for understanding the systematic causes of political change.” That description follows the language that Wayne and I use throughout the book. For example, in the Preface we say we “offer a framework to think about how ideas matter, when it is that political change happens, and why at other times the status quo endures.” In brief, our framework (laid out…
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Stephen Miller reviews Madmen

December 6th, 2012 by Edward Lopez

My colleague here at Western Carolina, economist Steve Miller, has posted his review of Madmen to the book’s Amazon page. Steve is a political economist who specializes in empirically modeling the effects of intelligence and education on people’s beliefs about human affairs (yes, that’s a broad description but for more detail you can visit Steve’s research page ). Like other reviewers so far, Steve has highlighted the fact that Madmen is rooted in public choice theory, but that it extends beyond traditional…
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BARRON’S reviews Madmen, Intellectuals, and Academic Scribblers

December 2nd, 2012 by Wayne Leighton

Check out the latest issue of Barron’s, in which Michael Strong reviews Madmen, Intellectuals, and Academic Scribblers. The book review section is available online here , and the hard copy is on newsstands now. Money quote: How and when does political and economic change happen? Does such change require a crisis? What role do ideas play? And how might those who hope to effect change invest their time, money, and effort? Economics professors Wayne Leighton and Edward Lopez, active…
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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.

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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