As economists we have been studying these fundamental questions for years. Our new book, Madmen, Intellectuals, and Academic Scribblers, addresses how, when, and where political change happens. Madmen shows that a crisis is neither necessary nor sufficient for meaningful political reform. In the book and in our continuing work, we argue that ideas do indeed have consequences, but only when the right conditions of time and place present themselves, and only when certain individuals – we call them political entrepreneurs – seize the opportunity.
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Does major political reform require a crisis? When do new ideas emerge in politics? How can one person make a difference?
In short: how and when does political change happen? Madmen, Intellectuals, and Academic Scribblers tackles these big questions, arguing that ideas and entrepreneurship are the key ingredients in any episode of political change. Authors Wayne A. Leighton and Edward J. López begin with the first lesson in economics — incentives matter — and artfully explain how the lesson applies throughout political life. Incentives explain why democracies often generate policies that impose net costs on society, and why these inefficient policies persist for years.
Yet beneficial reform does sometimes occur. So Madmen goes beyond incentives to offer a framework in which political change channels its way from ideas in society, through society’s shared institutions (i.e., its rules of the game) , which in turn shape incentives. This type of change is seldom easy, because new ideas for shaping the rules of the game must overcome two forces in society: widely shared beliefs and powerfully vested interests. Yet at certain political moments – perhaps during a crisis, but not always – shared beliefs and vested interests begin to weaken, and the opportunity for reform emerges. Within this framework, Madmen shows why certain inefficient policies eventually get repealed (e.g., airline rate and route regulation), while others endure (e.g., sugar subsidies and tariffs).
Drawing on the history of Western political ideas, both in theory and in practice, Madmen matches up three key ingredients – ideas, rules, and incentives – with the characters who make political waves – madmen in authority (such as Franklin Delano Roosevelt and Margaret Thatcher), intellectuals (like George Will or Jon Stewart), and academic scribblers (in the vein of Friedrich Hayek and John Maynard Keynes).
Political change happens when these characters – called political entrepreneurs – notice loose spots in the structure of ideas, rules, and incentives, and then find ways to change a society’s rules of the game. These entrepreneurs in political change may be philosophers, opinion makers, political leaders, or other types of influencers. What they have in common is an interest in better ideas—ones that improve the human condition—and a vision to change incentives and outcomes.
Madmen helps leaders in business and politics, and opinion-makers everywhere, better understand where the next opportunities are emerging. Students and professors will eat up its history of ideas, from the Ancients Greeks to Adam Smith, and from the Progressives to modern political economy. Using the framework laid out by the authors, readers of all stripes will see how they can be entrepreneurs in promoting effective political change.
“Ideas matter. Madmen, with its engaging stories, is perfect for anyone interested in public policy, or how our world could be a better place. Read it, and assign it to your students.”
— Tyler Cowen, George Mason University, blogger at Marginal Revolution, and author of Discover Your Inner Economist
“There’s no shortage of writing about bad government policies, but Leighton and López go several steps deeper, by exploring the incentives that foster bad policies, the institutions that foster bad incentives, the ideas that foster bad institutions, and the social processes that foster the spread of bad ideas. Better yet, they offer wise prescriptions for change and colorful stories to illustrate their wisdom. This is a book that manages all at once to be sage, important, and great fun to read. I highly recommend it.”
— Steven E. Landsburg, Professor of Economics, University of Rochester and author of The Armchair Economist
“Come along with Leighton and López as they speed date significant economic and philosophical influencers and chart the triumph of markets. As an erstwhile political practitioner in radical market reforming mode, I was relieved to find that I could dodge the moniker of ‘madman’ and classify myself as a ‘political entrepreneur.’ Racy and relevant, this book is a call to reforming arms.”
— Honourable Ruth Richardson, former Minister of Finance, New Zealand
“This book is an inspiring reminder that great thinking matters. It’s a delightful, accessible, and thought-provoking book for anyone interested in big ideas at the intersection of economics and politics.”
— Charles Wheelan, University of Chicago and author of Naked Economics: Undressing the Dismal Science
“Leighton and López have written a captivating book that explains the process of social change, from ideas to outcomes. Their theoretical framework—centered on the figure of the ‘political entrepreneur’—is illuminating and original. It will spark productive conversations among those who are interested in social change and the wealth of nations.”
— Giancarlo Ibarguen, Entrepreneur and President of Universidad Francisco Marroquín
“Madmen makes clear there are several necessary conditions for a political shift to take place. We tend to think of change as resulting from a single hero or villain, but the story is more complex. The tales in this book show what it takes to effect change, while weaving a yarn that is entertaining and memorable.”
— Michael C. Munger, Duke University and author of Analyzing Policy
“Madmen is a rare treat—and a rare feat. Seldom does a work combine the rigors of academic inquiry with the delights of a successful storytelling enterprise. The principles of “political change,” as it turns out, can explain human behavior in the body politic, in sports, in decisions of daily life, in financial markets, and naturally in the complex field of structural reform. This book is required reading for people focusing on the dynamics of political transformation; it is also a splendid read in itself.”
— Dr. Roberto Salinas León, President, Mexico Business Forum
“Leighton and López supply intellectually sound arguments, grounded in public choice and Austrian economics, to explain why democratic governments often fail to produce policies that are consistent with the public’s interest. Most impressive are the authors’ evident grasp of—and ability to synthesize—complex arguments about the properties of ‘good government.”
— William F. Shughart II, Utah State University and co-author of Policy Challenges and Political Responses
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.