Luigi Zingales: evaluation

Transcript context

…A long time ago, yeah. A long time ago, at a time where there was much less money in politics. First of all, he got, clearly, the derivative right, because from 1972 to today, the amount of money in politics exploded. I think he was very far‑sighted in understanding this. The second is, in my view, the reason why we don’t see enough money is twofold. Number one, there is ideology. You can’t really pay everybody. People will have some preferences — especially when they’re not paid a lot — for some position. That decreases the power of money. The most important fact is that some people find it very easy to collect money, which are vested interests. They organize because they’re small. This is Mancur Olson. They organize much faster, they can collect money faster. The public at large finds it difficult to collect money. The paradox of Tullock, the way I like to describe it, the Gordon Tullock paradox is the following. Imagine you have some lottery tickets in which, unlike most lotteries, which the state gets most of it, is pure, actuarially fair. You know that you are going to buy let’s say $5 trillion that pay off, and you start to sell the tickets. You know that by buying all the tickets, for sure you’re going to get $5 trillion. It seems that why the collective amount of tickets doesn’t sell for $5 trillion? That’s basically what Tullock is saying. He’s saying why, if we are purely cynical and we try to buy all the votes, if you buy all the votes in Congress and for president, you can get to allocate a lot of goodies. The value of the votes collectively should be at least the value of the rents you get and all the goodies you allocate, which we can discuss how much it is, but it’s in the order of trillions of dollars. The point is that the public at large is not able to coordinate and beat very much for those votes. Those votes sell cheap. Why do they sell cheap? Because the parties are not well organized. Since the time of Gordon Tullock to today, people got more and more organized, and so the price is going up, but there is a way to go. If we don’t do something, there is a way to go and spend more. I think that Gordon Tullock was absolutely right. The interesting thing is that Gordon Tullock implicitly, because the type of game he designed for this, it’s a game in which there is a benefit for society to put some limits. I actually enjoyed, in my book, to pick a little bit on Robert Barro, because Robert Barro defends restrictions in basketball and baseball but not in everywhere else in the United States. I don’t understand why in the United States the only thing that is really noncompetitive is sports. In Europe, the only thing that is really competitive is sports. In Italy, soccer you are the first division, second division, you are promoted or demoted, according to performance. You don’t buy your way into the NFL or the Major League, et cetera. tive is sports. In Italy, soccer you are the first division, second division, you are promoted or demoted, according to performance. You don’t buy your way into the NFL or the Major League, et cetera. Here, you buy the franchise, and once you’re in, no matter how incompetent you are, you stay there, which is completely un‑American. [laughter and applause]…

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