Be moderated the for we are discussing the new book from mark zupan t11 teeleven. Mr. Zupan looks at the sources of national decline typically when people think about the sources Philip Gossett of government as special Interest Groups to coopt government for their own benefit. However mr. Zupan takes a different approach to look at that decline from inside government from government insiders that could cause even more harm to countries and civilizations and the harm from outside of government. We are really looking forward to hear from mr. Zupan today. The way we will be framing the of book for of we will hear remarks from dr. Zupan then comments from, myself and our guest from the Brookings Institution. The first doublea2 introduce dr. Zupan to begin his tenure as the 14th president of Alfred University dean at the Simon Business School at university of rochester january 1st 2004 serving is dean and professor at university of Arizona College of management through 2003 and taught at university of Southern California where he served master dean of the Masters Program also Teaching Fellow while pursuing his doctoral studies at m. I. T. And a faculty member at the school of Business Administration at dartmouth with a bachelors degree from Harvard University and a ph. D. From the Massachusetts Institute of technology we now look forward to it exciting conversation from dr. Zupan. [applause]. Thanks for the kind introduction thanks for being here. A special shot out to the editor of the cato journal who provided space while on sabbatical with lots about articles of research to pursue this work is a work in progress over 30 years with this provided the opportunity for these ideas to come to fruition the book probably has gotten more popular with the most recent president ial election but if you look at the Research Poll done annually the percentage of americans that trust government all the time or most of the tightness set the alltime low. Right now at 19 this poll has been done for over 50 years at 77 slower now banned lower than watergate. Some would argue between that assessment like donald trump and bernie sanders. But did deals with the topic that has spent with us for a while why nations succeed and fail. Sociologists or political scientist so that economic model of politics has been around roughly 50 years so has grown out of the time for democracy is the focus in conceptualizes politics of mike other settings. Business union or environmentalist activist. The supplyside is comprised of political leaders that are appointed to execute those policies bureaucrats and if you think more broadly with of military and public employe leaves where things go wrong as semele mentioned earlier the common belief is that there is capturer of the system from the demand side of the marketplace jordan stickler to one and nobel prize will lead to the producers because there were concentrated would be more likely to coopt the system and back to the way carl marks looked at politics that conceptualization was broadened by other economists to be expanded to other potential groups from the other side and there are cases where consumers were coopting the process for their benefit or the environmentalist of the oneperson or the economic elite so when you try to find out who may be a fault what you look for is motive means opportunity that is all present on the supply side of politics. Not just looking at the last 50 years but the last several centuries where it was the norm we may have a different perspective on the marketplace when it was the norm as did leave the 14 will lead the 14 not to say that they are human beings like the rest of us if they populate the business settings be given a workplace to have capacity for great good and great evil anybody who has been to the beaches of omaha in normandy could not have been moved by what people have done to sacrifice the greater good of the political scientist to paraphrase the definition of politics is who gets what paul and why and when and where that looks at those fundamental questions from the supplyside who is it . Why are delaware motivated to coopt the system . Have been a duet and when and where . Is an important enough question to account for 50 of gdp than 20 percent of the work force who is on the supply side . We think of rulers with democracies think of officials with also have to worry about people who populate our bureaucracies they are pleased with latitude to decide these policies there was a recent book review done from the roman empire in the role that they played to figure out who would be empowered or stay in power to the detriment of the roman citizenry but there are other similar reviews coming out on alexander the great army as they defended the czar. But what shows up in a few places this is what first got me started on the question back in the 80s we were trying to test the model and other economize tab then to find out what extent Interest Groups they could explain me individual issue outcomes and while there was explanatory power of the demand side suisse surprised as to what extent we could explain the senators votes with how they voted on abortion bills there is something about these ideological Motives Police around election time ernest that the individual issues but seem to matter if you look at those congressional settings there seems to be a presentday United States with republican or democrat has viewpoints to pursue their objective what are the motives . As a pecuniary motive there are examples we could point to to play in the daily press what was revealed in the Panama Papers or to go even further back with the Dominican Republic at 1. 100 percent in gdp of the country is accounted for 60 percent of the umpiring decisions in making fine examples of that the also we have to leave room for the non pecuniary moves motives for what hitler accomplish once in power living from democracy and is not to say the capture just occurs on the supply side or the demand side the book argues pcs sums symbiotic cases the best way to think about it in is dna sight unseen so even if the capture ochers of the demand side we should expect to see something on the supply side or on the supply side there be something kilter on the demand side Milton Friedman had this absurd observation nothing so permit as a temporary Government Program even though the explanations may vary over time why they have a lasting nature but if we look at that venture vested interest that inertia becomes easier to launder stand if you look at the work that has now been 30 years the rise and fall of great powers what is striking to reread the principal stories to go back to the 1500s to ask the fundamental question of we would predicted that point the dominant powers nowadays we would pick china and the Ottoman Empire and how they unwound themselves it is hard not to construe that looking at that population of the technological advances in how under the awning dynasty they return in a word either from the bad emperor problem to face the shipbuilding restricting trade shifting the of border in word but the bureaucracy star is to weigh in in the last start to set in supporting Technological Innovations and to call it the idiot sultan problem there are cases we could point to secession and planning not well thought out because of the number of male heirs to the sultan also delete to deal leaked a figure out a creative way to avoid favoritism so they would raid christian land to identify the ablebodied males to serve in their army then bring them back to constantinople to train them and indoctrinate them one generation was a fighting force at the spread of the Ottoman Empire but once in place some of the scenes of decay that if i am here why not my son and started to bargain. Then the sultan was murdered to promote the reform and then the Ottoman Empire was the sick man of europe with those that are threatened by the Printing Press and with the worries of the spread of information so the Ottoman Empire went to hundred 25 years but by 1800 only 2 was literate for places like germany and england very much a supply side story if you read the book 30 years later the new kingdom of ancient egypt which is found in ramses the second he has is greek name from the famous poem but look at the extensive abuilding projects the palaces insulting ran doesnt with the larger priesthood on the payroll 30 percent was accounted for part when the ownership and by those who study that period it became increasingly hard to sustain under the new kingdom. That regime but also democratic examples in steve walter suspect there gave a marvelous book from the United States looking at places like boston and San Francisco to have this defect named after him with the ability natalie to in franchise but to shoot those opponents. Looking closer urged to home in rochester new york the state of new york the day Public Investment made that a boom town rochester went from 15 people in a teeseventeen to the United States 13th largest city by 1840. Advent of railroad slowly loosened that preeminence but that does not start falling from the 40s our the 50s but to be correlated to be the high tax state. Look at those nine states without income tax with the growth rates and migration rates and a very similar story i was then there last week looking at the crane cranes that our absent today more modern example whether they are the autocracy with the three generation of the kim the Iranian Revolutionary guard 33 of their country what they were doing in venezuela but in india most recently the survey was taken 54 reported having to pay for bribes to get a Public Service even higher for the lowest income class 34 of recent electable candidates it pays to be in the assembly looking at asset growth look that argentina or anybody who has traveled to argentina how there were three Different Exchange rates the best is usually the corner bakery where the suites are good but foreignexchange trades more briskly some of those challenges from the e. U. From the euro traps some of the challenges the European Union faced especially with two or three each countrys looking at china under mao or more recently with the consolidation of power with the Upcoming Congress in the fall but also in the United States there is a chapter that deals with the challenges is that we face with the Worlds Largest democracy to be doubled over the last 100 years Robert Carroll has of wonderful book by he was one of the of first to figure out to insulate you from the roll call voting to increase your tenure and political power. Paul krug men will argue it is only in detroit from yesterdays news in new jersey and to be at stanford but the reverse your rochester estimates these unfunded liabilities to be the second biggest fiscal challenge that 5 trillion looking at monopolizing the Education Sector the number of districts has decreased by over 80 percent we are spending is real terms per student the publicsector unionization rates appear in is of issues to think about of the supplyside is us simple book theres only one figure or one occasion but just to conceptualizes if we capture that profit it is a combination of how much potential there is to be captured how it could very zero with perfectly Police Supply side door untethered and how much interest is there to exploit . Michael sandal an earlier philosophers will argue about the importance to be that civic mindedness so even then we can rely and the factor to diminish the chances those on the supply side will operate not to the benefit of the public interest. Therein is of a chapter of the patronage and the bureaucracy the transaction cost potentially this is something of a ruler in persia argued in 585 let the economy grow then that means more tax revenue to be productive to love them to have a government insiders but the transaction cost of operating the government how porous in is the of bucket to transfer 0. 50 that is 1. 50 to create the transfer so twothirds of the tax in is chewed up with that disincentive or that management of the tax and transfer policies. Those that will argue competition should end up leading us to the best of all possible worlds because they will bid the most and will argue there are too many examples and one of the first to point this out is to keep the of politics as political clout and that does not correlate one one. There is no reason to have that sugar quota. That for far exceeds in addition to the damage that we do with that political clout outweighs the of 55 each family abuses from the producers in the maintenance this is one of the classic reasons so public goods are under provided there is the reason about the militaryindustrial complex to worry about the political clout the consumer of those goods and average taxpayers one could argue they are the most Interest Group in the reason why reseat programs like the f22 continue despite massive cost overruns and qualitycontrol and the producers know this at Rockwell International departs on this plane spain and 40 states and over 400 Congressional Districts. There was of picture of the plane in the map of the United States each part had the Congressional District where it was manufactured. If it comes from a place that they resided bennett is a double header. Russ roberts has an analogy to agree to split the bill you get some unusual behavior l. A. Is one of the most challenged places because of the geographic spread but to look more recently at the steady 90 percent of the funding came from elsewhere berger 10 voss angeles but that conversant was paid for partially by raising bus fares. The writer should apply is picked up on the subway system. To supply these problems there is a recent book out to that point out how the single unit district but it became the highest sales tax city because of cut county tax district there is a Park District in the problems are exacerbated for those individuals that sea that district. The factors affecting a fascinating scholar who is positive civilizations will last for generations in coming with new ideas how to organize society with those creature comforts the higher taxes diminished industry even those who is considered the father of modern day sociology the founders word about mobility and benchmarks to go to singapore and japan to help move communist china india to seek nearby growth rates like pakistan but key to modernizing. There is the karzai market for control we dont see the biogen the corporate world there are reasons for that because of the currency of the realm and the politics if you give up the power you give up the ability to write the rules so there is thirdparty enforcement that the promise will be kept like Marie Antoinette was promised one thing and got another. This may seem simple but as the the fall 2014 tatters eight categorization of a political scientist how long is that regime in power to develop a compendium of surveys . Makes it pretty obvious with more checks and balances but some of those fundamental points that first study that conclusively shows those checks and balances would show that people are not angels to end up nowhere close to 100 democracy is an improvement. Democracy is not optimal that has a Transparency International scored less than 50. Onequarter of democracies out there are less than the average autocracy and there some like singapore the do well in terms of integrity but none average they are lower so francis had a book the table one results say we cannot be assured democracy by the people but some good news with Transparency International has so any bin around 20 years it is already improving at three titans of the rate integrity is not the same thing as trust so what delaware measure is not the same thing is what transparency measures but yet people may still have a negative feeling government is doing when you looked at changes across the country the more you can improve integrity it tends to buy you more time in power. Then we cannot be assured by electoral competition to insure integrity and trust pdf but yet they rate close to be economically on free. And those that tell us every six shares and with those integrity scores in the last point public said sector integrity and a leader can change the system and that is for good or bad because those current democracies like paraguay with new zealand and persistent high levels so the big question is why from virtually none in 1800 from now close to twothirds of the nations around the world. There is more of that based on more productive trade or mobility or specialization behalf to give the populace morse given in the game to realize a greater gain to have sea that was a market for political control from the decade to decade be some basis local over though longer time horizon guided peoples not the same as for the people had reform a more Perfect Union