Political Entrepreneurs

The Economic Engine of Political Change

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 and Tyler have been doing every day for all these years is competing in the marketplace of ideas, and their tagline says that they’re consciously doing so in order to improve the human condition.

This reflects a major theme in Madmen: that the free flow of ideas is an essential input into beneficial political change. As Justice Oliver Wendell Holmes said:

When men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas—that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. (Abrams v. United States 250 US 616 [1919] at 630)

This is a very old argument, of course. John Milton made it in 1644 when his Areopagitica advocated freedom of expression. “Let [Truth] and Falsehood grapple,” he said. “whoever knew Truth to be put to the worse, in a free and open encounter?” This same theme can be found re-occurring anywhere from Socrates, to John Stuart Mill, to Thomas Jefferson — and now in Madmen as the argument applies to political change.

So I’ll continue competing next week on MarginalRevolution, and I hope to see you there!

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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