Tuesday, March 28, 2006

Georgetown's Economic Secret

Alexander Tabarrok and Peter Boettke, who are economists at George Mason University tell us:

....In the academic market, herd behavior is compounded by political correctness. In the 1960s, James Buchanan and Gordon Tullock were joined at the University of Virginia by Ronald Coase (who would later win his own Nobel). But the university administration and powerful organizations like the Ford Foundation thought their free-market ideas (limited government, tax cuts, selling radio spectrum!) were disreputable, and they worked hard to push them out of the university.

From the 1960s into the 1980s, a small university such as GMU could hire conservative and free-market thinkers of true genius for the same kinds of reasons that, in the mid-1960s, a middling school like Texas Western University could recruit some of the best basketball players in the nation, so long as they were black, and win the 1966 NCAA championship. Conservative and free-market economists were so undervalued that GMU could afford the best of them.

Today, blacks are no longer undervalued in the market for basketball players, and neither are free-market economists undervalued in the market for university professors (even if free markets remain undervalued in the world at large). As a result, the George Mason economics department must work ever harder to pick winners.

GMU remains an underdog in both basketball and economics. But Coach Larranaga has a plan to succeed in the long term and so do GMU's professors. Click here to read about how GMU is seeking out different new kinds of undiscovered geniuses.

The odds are still against GMU on the court and in classrooms. Neither in basketball nor economics is GMU a top-10 school. We cannot match the endowment of a Harvard or Stanford. Building with the odds stacked against you is difficult, but GMU proves it can be done. Look for undervalued assets, eschew political correctness, and take the long view. But don't try to imitate Mason. The opportunities Coach Larranaga found will dry up. A small economics department today is more likely to succeed by assembling a quality group of socialists than free-marketeers. Bring it on! We're ready to play.

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