Paul Romer Supports a Cambrian Explosion in Government

Paul Romer begins with fundamental questions, such as:

What’s the underlining dynamic of rules? Why do rules sometimes get better in a way that makes everyone better off, & why do rules sometimes trap us in a way that seems so harmful to all?

He acknowledges the crucial requirements for growth in markets, including new entry, copying, & reallocation, then contends that the same conditions must exist in government in order that society may progress. Of course, these ideas are not new (see here, here, & here), but Romer is merely remaining true to the theory by “entering, copying, & reallocating” the concepts offered by the aforementioned advocates.

The talk is profoundly interesting throughout, but the most vital insights can be seen in this clip:

(access the full presentation here)

What’s more, it appears The Economist recognizes the merits of these proposals. As it recently reminisced:

There is no perfect model of government: it is America’s genius to have 50 public-policy laboratories competing to find out what works best—just as it is the relentless competition of clever new firms from Portland to Pittsburgh that will pull the country out of its current gloom.

It is extremely unfortunate that policymakers no longer approach decision making in this manner (consider the aggressive actions of the Obama administration to implement nationwide health care reform & its absolute lack of regard for experimentation at the state level). It makes little sense to push a “one size fits all” agenda in such a diverse & dynamic world.

Unfavorably, the theory does include an element of social engineering, & history has displayed grievous consequences for such a fragile process when accessed by evildoers. Therefore, careful consideration of implementation will involve an extensive analysis of citizens’ ability to exit.

With all this said, it is a pleasure to see such ideas reaching larger audiences. Romer has considerable influence in the field of economics; only time will tell if people accept his reasoning as luminary or reject it as lunacy–even as pundits claim that the world is on the verge of global governance, I certainly have great hope for the former.

UPDATE: Romer is so confident in his ideas that he has resigned from his academic position at Stanford & will proceed to persuade nations to adopt this process of innovation.

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