I want to thank the Instituto Bruno Leoni for inviting me to Milan to give the 2011 Discorso Bruno Leoni. I have enjoyed being here to see firsthand all the good things that the Institute is doing to promote economic and political freedom under Alberto Mingardi’s leadership. I’ve also enjoyed the chance to learn about the great Piedmont wines and the wonderful hospitality of your city. So thank you, Alberto, for being such a gracious host and for that kind introduction. And thank you all for coming tonight.
This beautiful room—the Galleria—as well as the whole Palazzo Clerici has so much history behind it. I’ve already learned that the ceiling was painted by Tieplo in 1741, 35 years before my country was founded, and I’d like to learn more. (See photo below)..
To answer the question about exit strategies posed in this lecture —where do we go, rules or discretion?—I want to talk about history. I’m going to go back in time—not to the 1740s, but to the 1960s—to tell you about the amzing history of rules and discretion, an old, but important, topic in economics, and very relevant today.
I’m going to focus on the United States. I’ll discuss some corroborating history from Europe, but I know the United States the best, and that’s where I most clearly see the remarkable historical developments, which help us, I think, understand where we should be going now.
If you look back over the past fifty years or so, you see some striking trends in which policy moves toward more discretion and intervention, and then moves back again toward more rules-based policy, and then back again. It’s a cycle between the balance of rules and discretion.
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