Political Entrepreneurs

The Economic Engine of Political Change

Category: Policy Issues

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…
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Better Living Through Political Entrepreneurship

June 27th, 2013 by Edward Lopez

Today I discovered a book the old fashioned way: while browsing the stacks at a brick-and-mortar library . Published in 2010, Better Living Through Economics is a collection of essays that documents the impact of basic economic research on improving public policies. The collection is edited by John J. Siegfried, who is Professor of Economics at Vanderbilt University and the Secretary-Treasurer of the American Economic Association. All the contributors to the volume are top economists in the profession. Better Living has a…
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Robert Samuelson on government spending: a public choice perspective

March 20th, 2013 by Wayne Leighton

A recent Washington Post op-ed  by Robert Samuelson argues that both Democrats and Republicans are hesitant to address some of the biggest problems affecting the federal budget. It’s a nice primer on the political economy of government spending (whether or not you agree with the policy recommendations). Money quote: What frustrates constructive debate is muddled public opinion. Americans hate deficits but desire more spending and reject higher taxes. In a Pew Poll, 87 percent of respondents…
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A Case Study on Reform: Telecom Privatization in Guatemala

March 5th, 2013 by Wayne Leighton

  The Antigua Forum recently released a case study on telecom reform in Guatemala. Like a lot of studies, this one takes a careful look at the policies that were changed and the effects of those changes. Unlike a lot of other studies, it digs deep to examine the ideas that were behind the reform and how such reform was made possible. The full study is available here . And here’s an excerpt from the preface: In…
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George Will and Peter Boettke on James Buchanan: Balanced-budget amendment or debasement?

February 12th, 2013 by Edward Lopez

Columnist George F. Will has been arguing for a balanced budget amendment to the United States Constitution (see his January 9 entry, “ Time for a balanced-budget amendment “). At the heart of his argument are three essential points: 1) chronic, growing deficits and the level of accumulated debt are not economically sustainable, so something has to give; 2) tax revenues are not going to give, partly because of the economic reality of slowed growth and partly because of the political…
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Nordic Countries, Education Reform, and Milton Friedman

February 10th, 2013 by Wayne Leighton

As we observed in a  recent post on the February 2, 2013 issue of the Economist, the Nordic countries have been leading the world in a number of economic reforms. A short article in this issue continues exploring this theme and describes the role that has been played by new ideas about reform, especially those that reject traditional “left” or “right” perspectives.  Even more striking than the Nordic world’s commitment to balancing its books is its enthusiasm for experimenting…
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Nordic Countries as Case Studies in Economic Reform

February 6th, 2013 by Wayne Leighton

The lead article from the February 2, 2013 edition of the Economist highlights Nordic countries as a case study in economic reform. The four main Nordic countries — Sweden, Norway, Denmark, Finland — have lessons to share, both in terms of the mistakes that got them into an economic mess and the policies they adopted to get out. The article begins by noting that the Nordic countries had remarkably high ratios of government spending as a share…
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Entitlement Reform and Public Employees: Interesting Battles, Important Experiments

January 13th, 2013 by Wayne Leighton

In December the U.S. Government Accountability Office (GAO)  released a report on retiree health benefits and the liabilities of the U.S. Postal System. Sounds pretty esoteric, right? We’re talking about one entry on the balance sheet of a government agency that is not particularly innovative or popular. Yawn. And yet, this issue points directly to questions that will drive any future discussion of fiscal reform in the United States. It’s best to pay attention. For example,…
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Financial Services Regulation: The New Ability-to-Repay Rule

January 11th, 2013 by Wayne Leighton

On January 10, 2013 the Consumer Financial Protection Bureau released new proposed rules related to mortgage lending standards. In effect, the agency will implement an “Ability to Repay Rule” to govern those who engage in mortgage lending. Here’s the agency’s announcement , which offers few details. This news report from the Wash Post’s business section is more informative. The new rules will apply to “qualified mortgages” and are designed to keep lenders from issuing loans to borrowers who…
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Recommended Reading on Financial Regulation

January 8th, 2013 by Wayne Leighton

The Mercatus Center at George Mason University has been doing a fine job of chronicling the details of financial services regulation following the 2008 crisis. See, in particular, the research of the seventeen members of its Financial Markets Working Group . Today Mercatus announced that two of its scholars, Hester Peirce and James Broughel, have edited a new book on Dodd-Frank, “the largest and most complex piece of financial services legislation in American history.” Check out Dodd Frank: What It Does and…
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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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