The Ideas Marketplace -- Sans Market?

The Ideas Marketplace -- Sans Market?

Smith Op-Ed in The American Spectator
March 02, 2006

WASHINGTON—The Jack Abramoff scandal has many individual players, but it's also added fuel to an older and broader theme—the quest to purge politics of money. Well, at least, money provided by business. Money provided by government and foundations has largely escaped scrutiny.Political funding has received the most attention, but the idea has now spread well beyond politics into the larger policy world. The goal is to eliminate business funding not only from politics, but from the entire intellectual world. Many major science and medical journals, for example, now impose financial disclosure requirements on their authors, stigmatizing research underwritten by business. Anti-business groups seek to bar from government advisory committees individuals who've consulted with business. And, as the fallout from the Abramoff scandal demonstrates, this assault has now extended to demonizing corporate support for conservative policy groups. Several think tank analysts have already been affected, losing their syndicated columns, and, in one case, their job because of past financial support from interested parties.The underlying theory is that to allow interested parties to provide advice on public policy involves a conflict of interest. Such conflicts might lead to distortions in the "objective" advice needed for sound public policy and, thus, must be driven out of the temple. If the public interest is to be protected, special interests (or, more selectively, business-related special interests) must not be allowed to influence the process.BUT INTEREST GROUP POLITICS is not a new phenomenon. In fact, they date back to the founding of the American republic. The Framers of the Constitution were deeply concerned over how to address competing interest groups, which they called "faction." James Madison defined faction as: "A number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community."Unlike advocates of McCain-Feingold campaign reform, the Framers were not utopian planners; they were well aware of the danger that, in Madison's words, "unworthy candidates" might "practice with success the vicious arts, by which elections are too often carried." They sought a government that was able to act effectively when necessary, but that would pose only a minimal threat to the economic and civil liberties of its citizenry. The Framers' answer was not to drive faction out of politics, but rather a plan to set faction against faction-to use ambition to counter ambition. They didn't restrict faction; they encouraged it.The Constitution accomplished this through its system of checks and balances, and divided and enumerated powers. Its Bill of Rights makes explicit the paramount importance of speech and other aspects of liberty. Liberty produces faction, but that's not an undesirable by-product; it's an essential element. As Madison put it, "it could not be less folly to abolish liberty, which is essential to political life because it nourishes faction, than it would be to wish the annihilation of air because it imparts to fire its destructive agency."That approach is now under attack in the name, ironically, of protecting speech and society. Today's factions run from political organizations to corporations and labor unions to public interest groups having the widest imaginable range of views. Many of these public interest groups form alliances with economic entities that provide the wherewithal for them to better advance their positions. Such alliances are unavoidable because free speech isn't free. Someone must cover the costs of the speaker and the associated costs of seeing that the speech is disseminated. Rich speakers can cover these costs themselves. Some, like George Soros, have used that path most creatively. The revival of modern liberalism owes much to his willingness to use his vast wealth to resurrect liberal ideas after the conservative triumphs over the last few decades. Soros is an ideal example of an individual who garnered wealth as an entrepreneur and now uses that wealth to foster the viewpoints he favors, and the fortunes of those groups that espouse those viewpoints. Other wealthy individuals—although none at this scale—have backed libertarian and conservative causes. And still other wealthy individuals have created foundations that soon become forces themselves. Many of those foundations often have strong views; some support free markets, but most advocate expanded government intervention in areas ranging from the environment to health care to labor and product regulation. With that stance, it is not surprising that many government agencies now fund "educational" efforts by various factions (bureaucrats can be empire-builders and act entrepreneurially too). The EPA, for example, has provided much funding to ensure that the public views its role as critical. BUT THE CURRENT FLURRY OF ASSAULTS has paid little attention to special interest funding by government or individuals or foundations. Rather, recent attempts to purify the policy world have targeted conservative and free market groups. These so-called reformers overlook the labor union connections to "fair-wage" policy groups, and the trial lawyer connections to the Nader-style regulatory advocacy groups. And they overlook the left-leaning philanthropic foundations altogether. If they have their way, there will only be two legitimate funding sources left: government and foundations that support bigger government. If these are the rules of engagement in the war of ideas, then capitalism's prospects-in the United States at least-are bleak indeed. We should reject these skewed moral trip wires. They are not even-handed guidelines, but rather the creation of mainstream media, and their academic allies, advancing an anti-market agenda.Note that even that media itself must be funded. After all, corporate advertisers are an important funding source for both PBS and NPR, and media stars receive hefty speaking fees before business conferences. But does anyone think that such financial links have tempered the often anti-capitalist biases of these outlets? (Why business would underwrite anti-market productions is, perhaps, a more interesting question.) In fact, it was on PBS that I was hit with a question on this very topic. Bill Moyers asked me:

"How can we take you seriously when we know that the Competitive Enterprise Institute is funded by... ExxonMobil, by chemical companies, by tobacco companies, by corporations that have an interest in getting you to say what you say?"

My answer:

"Because how do we take seriously National Public Radio or public television or newspapers? All of those are supported by advertisements that have economic interests in getting their messages out. Corporations are part of [CEI's] support [as are] foundations and individuals. We accept support from [all] willing to tolerate our independence, just like NPR is willing to accept support from groups who are willing to tolerate their editorial independence. We dance with these people. We're not married to these people. And we've taken positions that have lost us corporate support and we undoubtedly will in the future."

That distinction between working alliances and contractual mergers captures, I believe, the uneasy but critical link between free market public interest groups and the business community. Those linkages must be strengthened— not threatened. Conservative and libertarian groups are recent arrivals to the factional wars that define America's future. We've scored some important victories in the war of ideas; moreover, the concept of a "conservative intellectual" is no longer an oxymoron, if it ever was.Yet victory in the war of ideas is not enough to restore America's constitutional vision of a government strong enough to do what is needed, while posing minimal threat to the economic and civil liberties of the citizenry. That will require alliances among all factions that have a stake in that alternative vision to Leviathan. It must include entrepreneurs as well as conservatives. Conservatives must challenge liberal orthodoxy in the war of ideas, but we should have no illusion that our intellectual arguments will persuade many intellectuals. As the economist Joseph Schumpeter noted long ago, the intellectuals' envy of the entrepreneur (if we're so moral and smart, why are they so rich?), coupled with the attraction of government power, will seduce these elites into supporting an ever-expanding centralized government. Thus, if economic liberals are to find allies, they must find them in the business world. Thus, it is clear why statists have embraced the proposition that the only groups that business can legitimately sponsor are those opposed to business. That is a premise that we should reject, and reject proudly. Our groups should be doing more to lead business away from the rent-seeking temptations of today's overly politicized world, to work with them to reduce the barriers that limit their wealth-creating potential. And we must do this while maintaining our integrity. We need to spend more time on the political dance floor. It is critical that business understands and respects our values and independence. It is equally important that we understand the risks they take in opposing their regulatory overseers, and the factors that lead them, too often, to seek short-term political favors. This is our challenge. Conservative groups and our nascent business allies must find ways to improve the policies of the highly compromised world of today, while developing economic liberalization strategies that will ensure America's future. The real danger of the current attack is that one or both of us may retreat, becoming wallflowers while the political dance moves leftward. Such a retreat would be a betrayal not only of the world the Framers left for us, but of the world we will leave for our children.