Utopia, you are standing in it!

Dr. Peter Boettke joins the podcast to talk about the history of GMU economics. He discusses his days as an undergraduate student at Grove City College and as a graduate student here at GMU. We learn who the major professors were back then and how the campus has grown to its present size. We talk college basketball and the Nobel Prize. We also learn who told Dr. Boettke to “wear a proper pair of trousers.” This episode is full of fun stories from Dr. Boettke’s life in economics, and it’s only Part 1. Stay tuned for Part 2 next Friday. Marcus Shera cohosts.

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A Nobel Prize for applied theory – now this something I can get behind! Jean Tirole’s prize announcement credits him for his work on market power and regulation, and there is no question that he is among the leaders, if not the world leader, in the application of mechanism design theory to industrial organization; indeed, the idea of doing IO in the absence of this theoretical toolbox seems so strange to me that it’s hard to imagine anyone had ever done it! Economics is sometimes defined by a core principle that agents – people or firms – respond to incentives. Incentives are endogenous; how my bank or my payment processor or my lawyer wants to act depends on how other banks or other processors or other prosecutors act. Regulation is therefore a game. Optimal regulation is therefore a problem of mechanism design, and we now have mathematical tools that…

The Nobel Prize in Economics was given yesterday to two wonderful theorists, Bengt Holmstrom and Oliver Hart. I wrote a day ago about Holmstrom’s contributions, many of which are simply foundational to modern mechanism design and its applications. Oliver Hart’s contribution is more subtle and hence more of a challenge to describe to a nonspecialist; I am sure of this because no concept gives my undergraduate students more headaches than Hart’s “residual control right” theory of the firm. Even stranger, much of Hart’s recent work repudiates the importance of his most famous articles, a point that appears to have been entirely lost on every newspaper discussion of Hart that I’ve seen (including otherwise very nice discussions like Applebaum’s in the New York Times). A major reason he has changed his beliefs, and his research agenda, so radically is not simply the whims of age or the pressures of politics, but…

Gary Becker, as you must surely know by now, has passed away. This is an incredible string of bad luck for the University of Chicago. With Coase and Fogel having passed recently, and Director, Stigler and Friedman dying a number of years ago, perhaps Lucas and Heckman are the only remaining giants from Chicago’s Golden Age.

Becker is of course known for using economic methods – by which I mean constrained rational choice – to expand economics beyond questions of pure wealth and prices to question of interest to social science at large. But this contribution is too broad, and he was certainly not the only one pushing such an expansion; the Chicago Law School clearly was doing the same. For an economist, Becker’s principal contribution can be summarized very simply: individuals and households are producers as well as consumers, and rational decisions in production are as interesting to…

The first Speaker?

The remarkable account in the Anonimalle Chronicle of the so-called ‘Good Parliament’ of 1376 provides what is generally taken to be the first reference to a ‘Speaker’ of the Commons, Sir Peter de la Mare. The account is extraordinarily detailed and circumstantial – so unusual for an account of any event in the fourteenth century, let alone a Parliament, that many have been tempted to call it an eyewitness account, though it’s impossible to tell. (The Chronicle is available in digitised form from the University of Leeds website here: the account of the Good Parliament starts about f. 313; you can get at an edited version of some of the original Norman French text here, from p. 83; and there is a translation of the bit relating to the Good Parliament available on the California State University website .) The Chronicle describes how once the…

The modern practice of prorogation and adjournment is in theory, at least, clearly enough understood. Prorogation is an act of the Crown, usually used to mark the end of one session and fix a date for the start of another. Adjournment is an act of each House of Parliament, used routinely to end each day’s sitting, and to interrupt the normal succession of daily sittings, so that the House can take a break for its holidays, or some other purpose. In modern political memory, prorogation is a brief pause that acts as a routine way of marking the end of one parliamentary and political year and the start of another. There are plenty of earlier instances – leaving aside the much argued-over case of 1997 and the rather sui generis case of 1948 – in which prorogation is said to have been used in order to block one or other…

An astonishing rumour has been current of late. A certain section of the Unionist party is said to be encouraging the idea that it is possible, as a matter of practical politics, for the King to refuse the Royal Assent to the Home Rule Bill next May, when for the third time it has passed the House of Commons and has complied with all the requirements of the Parliament Act. … The danger may seem fanciful to many. It is impossible, it will be said, that so mad an idea could be entertained for a moment by responsible politicians. But it comes from Ulster, and though constitutional doctrine from Ulster requires very cautious acceptance just now, Ulster is strong in the councils of the party.

‘Auditor Tantum’, ‘The Veto of the Crown’, Fortnightly Review, Sept. 1913

In the last few weeks an increasingly abstruse but sometimes irritable debate has…

The principle that an administration can only function if it has the backing of a majority in the House of Commons is acknowledged to be a fundamental part – perhaps the fundamental part – of not only the British, but of any parliamentary constitution. It expresses the idea that Parliament itself cannot exercise executive power, but gives its authority to a smaller group who can, trusting them to use it wisely. The meaning of a vote of no confidence – indicating the withdrawal of that trust – is obvious enough in principle. But as arguments mount about what might happen in September, what it means in practice has come to seem considerably more complicated and uncertain; and the idea of a vote of no confidence has come under a degree of scrutiny that it is scarcely able to bear. For although it has now acquired a specific meaning as incorporated…