 I feel like I'm especially well qualified to join this panel on Hayek because of the following personal connection. As some of you know, when I was a graduate student, I worked for several years as a research assistant to the philosopher William Bartley, published as W.W. Bartley III. Bartley was the founding editor of the Collected Works of F.A. Hayek and was also Hayek's authorized biographer. Bartley passed away in 1991 before he was able to make much progress on the biography, but he did spend a number of years in the, several years in the 1980s, conducting an extensive series of interviews with Hayek and Bartley conducted these interviews in Germany in Freiburg where Hayek was living at the time. And he purchased, so Bartley purchased a car. It was a 1984 Audi 5000, if you're interested, in Germany. And he used it to drive Hayek around. They would have these long conversations in the car and they would go to the restaurants and so forth. And so Hayek spent many kilometers riding in Bartley's car. Subsequently, Bartley had the car brought to the U.S. And then a few years after that, he sold it to me. So for several years, I was the holder of the Hayek chair. And I would drive my friends around and say, do you know that your rear end is now occupying the space where Hayek's rear end spent many hours? And that didn't usually get me too far. But both Tom and David have mentioned Hayek's chapter Why the Worst Get on Top. It's one of the best known chapters in the book. And I want to elaborate on Hayek's argument a little bit and perhaps extend it by introducing the concept of political entrepreneurship and try to explain why I think under socialism and interventionism the worst political entrepreneurs tend to get on top. What Hayek is doing in this chapter is trying to explain the effects on the margin, if you like, that socialism and interventionism have on human society, on the human character, on the organization of human interaction, the human economy. It's really not... The title makes it sound perhaps like Hayek is giving sort of a detailed explanation of the mechanisms by which particular individuals with particular attributes rise to particular positions. But it's really a more general kind of argument. It's more of a sociological and psychological argument than it is an economic argument. But Hayek's... The point that Hayek makes is that, of course, collectivism, totalitarianism, socialism, these systems have a very harmful effect on human society, a harmful effect on human character. But it's not what the biomedical literature would call a treatment effect. It's more like a selection effect. In other words, it isn't the case that socialism makes people sort of act badly where they previously would have acted more virtuously. Although that is, of course, a valid critique of socialism if we look at incentive effects from central planning and so forth, and Hayek touches on those elsewhere in the book. But here he's making the argument that the sorts of people who will tend to occupy the socialist apparatus, not only as the leaders of various groups, bureaus, departments, but even as sort of the mid-level functionaries, will be people who like to do bad things. Okay? Hayek says, for example, there is thus in the positions of power in the socialist Commonwealth little to attract those who hold moral beliefs of the kind which in the past have guided the European peoples. So Hayek means here roughly classical liberal, the virtues consistent with classical liberal society. The only tastes which are satisfied in the socialist system are the taste for power as such and the pleasure of being obeyed and of being part of a well-functioning and immensely powerful machine to which everything else must give way. Under socialism, totalitarianism, there will be special opportunities for the ruthless and unscrupulous. In other words, the sorts of people with high sort of moral ideas, with outstanding character like us, would find the whole enterprise rather distasteful and wouldn't have much interest in bossing people around and sending people to camps and so forth. But there are people who enjoy being part of that kind of a system and those who will tend to self-select and to be selected into the socialist enterprise. Hayek actually closes the chapter with a well-known quotation from the American economist Frank Knight who says, the probability of the people in power being individuals who would dislike the possession and exercise of power, reluctantly drafted into the noble cause, is on a level with the probability that an extremely tenderhearted person would get the job of whipping master in a slave plantation. Okay, so what I want to do here is sort of add another layer to Hayek's argument and introduce the concept of political entrepreneurship into the discussion. And my claim is that an interventionist system like the totalitarian systems that Hayek was explicitly writing about, but even under interventionist systems like our own, these systems also select for people who are particularly skilled at political entrepreneurship. So what do I mean by political entrepreneurship? The idea is, many great economists, Austrian economists and others have elaborated on the theory of entrepreneurship, what entrepreneurs do in a commercial setting. If we take sort of the metaphor of entrepreneurial behavior, but extend it into a non-market setting, into the political realm, we might be able to gain some additional insight into what certain political actors do. Now as most of you know, and if you were in the previous session in this room, you particularly know, there are many different ways of conceptualizing the entrepreneur, both in the Austrian literature and in mainstream economics literature. There's Israel Kursner's notion of entrepreneurship as alertness to opportunities for gain. There's the Schumpeterian notion of entrepreneurship as novelty, the introduction of new things, new products, new processes, new markets, and so forth. There's the Nitean-Misesian idea that I've developed in my own works on entrepreneurship as judgmental decision-making under uncertainty. We can imagine ways that we might apply each of these concepts to the political realm. So imagine US Congress people who are trying to achieve particular ends. They're trying to get legislation enacted. They do so by forming coalitions, by writing the legislation in a particular way, by cashing in favors and so forth. You can imagine that some politicians are better able than others to recognize opportunities to strike a deal, right? I know that if I support Tom DiLorenzo's bill, he'll support my bill, but Joe Salerno doesn't recognize that he can get Tom to help him in that way. And so I'm able to strike the deal and reap some kind of a gain that Joe Salerno wasn't able to achieve. Maybe political entrepreneurs introduce new legislation, new types of legislation. They create new government agencies and so forth. We can also think about politicians exercising control, at least de facto if not de jure control, over productive resources that they invest under conditions of uncertainty in anticipation, excuse me, of uncertain returns. I mean, maybe Tom's, what was it, the Asian Carp Bazaar? You know, presumably the Asian Carp Bureau, you know, has a building and they have furniture and if they're like the fisheries and wildlife department, they probably have guns and tanks and things too, right? The leaders of these departments have to make decisions about where to deploy these resources, resources that have alternative uses, that can be combined in various ways and so forth to try to achieve whatever are the goals held by the Asian Carp Bazaar. Now, you know, in trying to extend these metaphors into the, extend these concepts into the political realm, we want to understand that they're metaphorical, right? So there are differences, important differences, of course, between commercial entrepreneurship, entrepreneurship in a private property order with voluntary exchange and so forth and political entrepreneurship, the element of coercion, of course, that parties may be compelled to deal with the political entrepreneur, not because they find it in their interest to do so, but because of power. You know, measuring the objectives of the entrepreneur is more complicated. We don't have profit and loss signals. This is not a, we're not in a sort of a catalactic environment to use Misa's term. It's hard to know which ones have really been successful, which ones have not. We don't have the same kind of competitive selection process that selects for, you know, in which the successful entrepreneurs are rewarded and the unsuccessful ones go bankrupt as we do with commercial entrepreneurship and, you know, profit and loss statements. I mean, yes, there are elections, which maybe select out some of the particularly bad political entrepreneurs, but we know these are not, you know, the same, these are highly, much less, much weaker mechanisms than you have in a market. There is some literature on political entrepreneurship. I see Randy there. Randy Holcomb has a nice paper in the RAE, sort of a cursinarian interpretation of the political entrepreneur. I have a paper with some colleagues that appeared in 2010 that develops a slightly different sort of approach to thinking about entrepreneurship in a political context. There's a literature in the political science journals and public administration journals on the political, on political entrepreneurs and policy entrepreneurs. You can just do a Google search. You can find a number of these. The sorts of examples they usually give are interesting. I mean, one guy you often see uses an example of a political entrepreneur is this guy, Howard Jarvis. Most of you are too young to know who Howard Jarvis is, but he was a California businessman in the 1970s who was behind the notorious Proposition 13, which was a state ballot measure in California that introduced the level of state property taxes. Jarvis was the prime mover behind the ballot initiative process. So as you Californians know, ballots in California tend to be very lengthy. There's a lot of voting on specific pieces of legislation and very detailed items like the tax rate. It's almost more like Athenian democracy than representative government. Jarvis was able to get these initiatives on the ballot because he was frustrated that he couldn't get the legislature. He couldn't get tax rates lowered by sort of the normal legislative means. So Jarvis is often modeled in the political science literature as a political entrepreneur in the sort of Schumpeterian sense of introducing a new mechanism for translating voter preferences into particular policy outcomes. I mean, maybe we could call Yulia Tomashenko a political entrepreneur. Well, I guess until a few weeks ago was a leader of the Ukrainian opposition and now she's part of the Ukrainian political establishment. She was a former prime minister who was in jail, got out of jail, attended the rallies, helped to get people fired up before this sort of coup took place a few weeks ago. I mean, depending on how far we want to go, maybe we could say that dictators, maybe Pol Pot was a political entrepreneur in that he was particularly skilled at coming up with new and better ways of doing really, really horrible things to the people in Cambodia. What I do in this paper that my colleagues and I came out with, sorry, in another paper that came out last year, we try to introduce, try to explain the behavior of political entrepreneurs by using Edith Penrose, Edith Penrose's concept of excess capacity. So Edith Penrose was a British economist who wrote a very influential book on the theory of the firm, 1959, particularly the growth of the firm, and so Penrose's theory is that as companies engage in business activity over time, they develop particular capabilities, perhaps latent or tacit capabilities, they get good at doing particular things, and they may develop excess capacity, meaning that they're able to do all of the things that they previously had done, make all the products, sell the products, and they still have some capacity left over. So they look for new markets in which to expand, new products to develop, new activities to engage in, and so forth. If you think about public sector organizations in this light, you see a lot of similarities. So you can imagine that, again, to use Tom's wonderful example, the Asian Carps are, after controlling the Asian Carp business for a number of years, gets pretty good at it, and like Einstein and the patent office, being able to take care of all his patent work in an hour and having the rest of the day to theorize about relativity, maybe the Asian Carp Bazaar can complete all his responsibilities after a couple of hours, and so he has all this free time in the rest of the day, and maybe he says, well, I think there are other fish besides the Asian Carp that need a little bit of protection, and maybe I can also become the Mahi-Mahisar or whatever. Public sector organizations, of course, do have these kinds of tacit capabilities and accumulated routines just as they have physical resources. So you might imagine that the growth of government and the sort of diversification of government, the specific directions into which agencies evolve, the new activities that particular bureaucrats tend to pursue, can be understood in terms of ways of them leveraging their excess capacity as they're able to perform their current functions. Let me show you just a small diagram. This is modified from the version that's in my 2013 paper that maybe helps to illustrate this a little bit. So imagine two different scenarios on the vertical axis of this little 2x2 diagram. We sort of depict the degree of alignment of interests within a group, within a society. So interest can be low, meaning there's a lot of heterogeneity of preferences and opinions, or they can be fairly highly aligned, meaning that the views of the elites are well aligned with those of the other people in society and so forth. You can also imagine some variation in the degree to which government bureaucrats, political entrepreneurs, are able to perform the functions that they have expressly been given. So how effective is the Asian Carps are and his or her staff in doing whatever it is they're supposed to do? That could be low or it could be high. So imagine, just for the sake of argument, that government bureaucrats are very good at doing what they are ostensibly doing, or what they're supposed to do, what they're charged with doing. And people in society are pretty happy with what the government bureaucrats are doing. There's not a lot of disagreement. There's not a lot of dissent. And so here they are in the bottom right-hand corner of the diagram, effectively providing the quote-unquote public good. I put that in scare quotes for this audience. In other words, whatever it is that they're supposed to be doing to Asian Carp, they're doing it just fine. There are no problems. However, according to Penrose, over time they get to be pretty good at performing their functions and so they develop this excess capacity. They develop new capabilities that are not completely exhausted by achieving, sort of, fulfilling the current mandate. So what do they do? Well, there are some different options here. If it is still the case that over time that the wishes of the bureaucrats are fairly well aligned with the preferences of people in society, it's likely that they will choose to exploit this excess capacity by consuming slack. In other words, by leaving work at 2 o'clock in the afternoon. So you still do the same things that you're charged with doing. You shirk, you consume agency, high agency costs, however you want to describe it. This, of course, is the classic explanation of bureaucracy in Bill Nascan and his 1971 book. However, that's not the only possible outcome. Particularly in cases where the decision-making elite has some different ideas about what they could do. They maybe have preferences for particular outcomes that are not closely aligned with the preferences of the people in the group. And so they can leverage their excess capacity by doing new and different things. Right? So now in two hours a day I take care of the carp. Now we're moving on to the mahi-mahi. Right? Or whatever else it is we might be interested in. You can think of this as a conceptualization of Bob Higgs's famous ratchet effect. Right? That as Higgs explains it, for example, after World War I, all of these World War I planning agencies, once the war was over, the bureaucrats didn't just pack up and go home. Right? Some of them stuck around and certainly their capacities remained in place just underutilized, but they looked for new things, new ways in which they could leverage those capabilities. And so when the Depression rolled along, all of these old World War I agencies were reconstituted. They were given different titles, they were doing the same things, governed by the same documents, following the same procedures, and so on. So there's a tendency for government to grow and expand as bureaucrats get good at doing the things they were originally charged to do, and they look for opportunities, they look for new things that they can do to take advantage of those capabilities. Of course, you know, probably from the point of view of the well-being of the public at large, we would actually rather have them consume slack. We would come up with new ways to spend money and do harm and create so-called public bads, etc. So in other words, to conclude, Hayek shows us why the worst get on top. How socialism tends to select for people who enjoy doing bad things. But I think we can add that socialism and interventionist systems also select for people who are good at doing new and better bad things. Okay? Finding new and better ways to achieve and retain power. New and better ways to achieve the objectives of the state by which I mean the objectives of the ruling elite, not the population at large. Maybe new and better ways to consume leisure, which we might regard as okay. Right? But also sort of new activities in which they can engage, be engaged so that they leverage their existing resources and capabilities. I think there's some interesting research opportunities here for Austrians. Right? Of course the, you know, the sort of Austrian approach to non-market or call it non-catalactic, maybe to be more precise, entrepreneurship is nascent. There are few papers, but I think there are a lot of opportunities to do more work in this area. Mises' theory of bureaucracy has an important role to play in this discussion as well. To use the term bureaucracy as a pejorative, a bureaucratic system according to Mises refers to the way in which an organization is operated with a reliance on fixed rules and procedures in cases where the output of the entity cannot be assessed according to a profit and loss test. So certainly as, to the extent that we have the department of Asian carp, we would prefer that it would be operated under bureaucratic rules than to have the top officials be given latitude and encouraged to act entrepreneurially in finding new things to do. Also, there's a need to add a little bit more of sort of the micro foundations, I think, to Hayek's argument of, you know, by what procedures do particular individuals rise to the top and what sort of institutional constraints might be developed to constrain these procedures. Thank you.