Think Tanks and Political Change

by Larry Smith

Larry Reed, the 53-year-old president of a Michigan-based free market think tank called the Mackinac Centre, gave a speech on public policy in Nassau last week to about 60 business and professional people.

In a throw-away line he mentioned an association with a Mongolian leader who had helped end communism in that central Asian country and went on to privatise the country's yak herds in the 1990s.

Well, that seemed a little more interesting than our struggles with inefficient state enterprises like BTC, ZNS and Bahamasair, so I took the time to learn more.

Yaks are hairy cattle prized by the nomadic Mongols since the time of Genghis Khan. In 1924 Mongolia became the second communist nation in the world - after the Soviet Union - and that was when the yak herds were nationalised.

Elbegdorj Tsakhia (the son of a herdsman, whom we will refer to as EB) has been prime minister of Mongolia twice since the end of communist rule. Today he runs a libertarian think tank and has become a poster boy for the free market movement, having attended the Mackinac Centre's leadership training programme.

At 44, EB is one of a handful of libertarians who were elected to high office after the collapse of the Soviet empire. Others include Mart Laar, the controversial former prime minister of Estonia; and Vaclav Klaus, former prime minister and now president of the Czech Republic. But EB is perhaps the most interesting.

After studying military journalism in the Soviet Union during the late 1980s, EB founded and edited Mongolia's first free newspaper, and became a leader of the anti-communist underground that tossed out the country’s dictatorship in 1992.

According to Larry Reed: "EB is fond of quoting someone we can loosely refer to as one of his predecessors, Genghis Khan. Eight hundred years ago, Khan said 'It is easy to conquer the world with a horse; what's challenging is to dismount and try to govern.' That's what EB tried to do."

Reed is a soft-spoken economist who made an unsuccessful run for Congress in 1982. He has led the Mackinac Center since 1987 and now oversees a $4 million budget with a staff of 32. Their reports, commentaries and training programmes are aimed at helping decision makers evaluate policy options from a free market perspective.

The speech he gave in Nassau last week was a standard text on the "seven principles of public policy" that he has delivered over 100 times, including once at the Peoples University in Beijing. Reed says the principles are "bedrock concepts that derive from centuries of experience and economic knowledge."

They are, he says, a prescription for maintaining freedom: "Policymakers often give no thought whatsoever to the general state of liberty when they craft new policies. If it feels good or sounds good or gets them elected, they just do it. Anyone along the way who might raise liberty-based objections is ridiculed or ignored," Reed says.

"Sound policy requires that we consider long-run effects and all people, not simply short-run effects and a few people. We shouldn't have a license to enact policies that make a few people feel good now at the cost of hurting many people tomorrow. We should remember that today is the tomorrow that yesterday's poor policymakers told us we could ignore."

Reed goes on to make the basic economic point that if you encourage something, you get more of it; and if you discourage something, you get less of it. In other words, people naturally respond better to incentives and disincentives than to force or penalty.

"Government has nothing to give anybody except what it first takes from somebody, and a government that's big enough to give you everything you want is big enough to take away everything you've got. You've got to keep your eye on even the best and smallest of governments because the natural tendency is for government to grow and liberty to retreat. It takes eternal vigilance."

Or, as Groucho Marx once said of his brother Harpo, "He's honest, but you've got to watch him."

Reed is part of a growing universe of non-profit institutes (on both the left and right) that serve as "political idea factories" and promote public understanding of key issues. He claims the British anti-slavery campaigner Thomas Clarkson as the world's first think-tank entrepreneur. In 1787 Clarkson brought together 12 men at a London print shop to form the Society for the Abolition of the African Slave Trade, and within 20 years they had changed the world.

Others say the British Fabian Society (founded in 1884 to promote socialism) was the first think tank. But the best-known names today are the original American ones: the Carnegie Endowment for International Peace (founded in 1910), the Brookings Institution (founded in 1916), and the Hoover Institution ( founded in 1919). By mid-century, they were joined by the research organisation that created the name 'think tank' - the RAND Corporation.

The general idea behind all these groups is to shape public policy through research and education, rather than through conventional political lobbying. Some are just fronts for industry sponsors, but private funding does not necessarily make them illegitimate. In general, however, research from think tanks is ideologically driven in accordance with the interests of funders and founders.

And today, there are more than 1,600 think tanks in the United States, and perhaps as many as 3,500 across the globe. The event in Nassau last week was organised by the sole Bahamian think tank: the Nassau Institute.

A handful of enthusiasts like Rick Lowe, Joan Thompson and Ralph Massey have kept this organisation punching above its weight since 1995 as one of the few independent voices contributing to public debate on policy issues. It operates on a shoestring budget maintaining a web site, organising seminars and publishing regular commentaries.

The NI supports the principle that allowing the greatest scope of political and economic freedom results in the maximum well-being and efficiency for a society. The Institute's heroes include classical liberal economists like John Locke, Friedrich Hayek and the nobel prize winner Milton Friedman. For those not familiar with their philosophy, it is often said that libertarians agree with liberals on social issues and with conservatives on economic issues.

Most Bahamians don't have a clue about all that - including our policymakers, who are mired in the political consensus formed after the Second World War. But Milton Friedman (who died last year at the age of 94) is now credited as the most influential economist of the second half of the 20th century. His work stressed the advantages of the marketplace and the disadvantages of government intervention. And it led to a sea change in economic policy around the world - especially under Margaret Thatcher in Britain and Ronald Reagan in the US.

That seismic shift in thinking culminated in the collapse of communism in the early 1990s and the discrediting of socialist ideas that were once taken for granted. Indeed, free marketers today regard Friedman much as communists revered Lenin, the architect of the Soviet Union. Here is one classic line of his: "People worry about government waste; I don't. I just shudder at what would happen to freedom if the government were efficient in spending our money."

According to Daniel Yergin and Joseph Stanislaw in their 1998 book, The Commanding Heights, "The market consensus that seemed radical and beyond the pale when Thatcher initiated her revolution has become the consensus in less than two decades. The move to the market has been driven by a shift in the balance of confidence—a declining faith in the competence of government.

"For some the embrace of the market is a matter of conviction. For many more, it is a matter of practicality, finding something that works better than the historic alternatives. Lee Kuan Yew, the progenitor of modern Singapore, summed up the reality. Asked why the turn to the market he replied pithily, 'Communism collapsed and the mixed economy failed. What else is there?' Results count. "

Many of us were drawn to socialism because of its moral appeal. As Yergin and Stanislaw wrote: "The market system cannot offer such direct appeals. Its moral basis is more subtle - and indirect - in terms of the opportunities and results it affords." But, they added, "a system based upon rules, property, contracts and initiative is more fair and provides against the arbitrary and unchecked power of the state."

Why, just a couple of months ago even the Chinese Communist Party approved an unprecedented law to protect private property - following more than a quarter-century of market-oriented reforms.

But our challenge today is to bring balance to the ideological debate. In Europe, there is something called the Third Way, which seeks to do this by incorporating the principles of economic deregulation, privatization, and globalization into progressive centre-left policy reform.

And, of course, there's an international think tank for that too. It's called the Policy Network, and it promotes something called the Radical Centre - which takes "the best ideas from left, right, centre, and off-the-spectrum-entirely, and uses them to address fundamental problems in imaginative but pragmatic new ways."

So if you, dear reader, find yourself confused about politics these days, fear not. Just pick a think tank and all will be made clear.

Comments

[EB Christen]

Great article again. Informative and nice way to tie it back to the situation here in Nassau. I don't think our politicians know the first thing about economics though, with the exception of a couple savvy fellows. There is too much emphasis on legal background and not enough on economics in the House. Cheers.

[Carlos Smith]

My comment is in reference to your article of 6th June 2007. Independent organizations such as tink tanks provide objectivity to issues particularly relating to public policy, which is essential for social and economic development. What I have realized as an economist having studied in Boston and now having been home for the past 5 years is that, there is not much appreciation for academia and research. Particularly, where it deals with local issues of development non-affiliated with foreign investment projects. The only time economic indicators or statistics is used or mentioned is when a particular project development is to provide..........jobs and accommodate......visitors. I believe organizations such as the Nassau Institute provide the environment for an appreciable level of public debate.

Our development as nation is dictated and dependent on foreign investment, which may be one of the reasons why we tend not seek and have an interest on studies, publications, rational public debate seem unnecessary. It is my observation that unless we as people realize that we possess the human capital and be confident in our abilities and become creative in finding solutions to our local problems, then we will continue to be on the path where we are currently.