Thank you, Fred Smith

When I was fresh out of college, I attended a large classical liberal conference. After one day’s sessions wrapped up, I had dinner at a table with a veteran Washington journalist who gave me the best career advice I ever received: “If you ever have the chance, get a job working for Fred Smith.”

I had heard of Fred and the Competitive Enterprise Institute (CEI), the organization he and his wife Fran founded. But I didn’t know much about them. My sudden mentor filled in a few of the gaps. CEI had a more freewheeling personality than other think tanks, which is still true today.

Fred himself was the same way. He was gregarious, whip-smart, stubbornly principled, and he was fun.

Everybody in Washington knew Fred, and Fred knew everybody. Even people who disagreed with everything he stood for couldn’t help but like him. He was always smiling and laughing, even when making serious intellectual arguments. People around him couldn’t help but take on some of his joy. Fred was a Washington institution, in a good way.

It’s sad and a bit weird to write “was” instead of “is.” Fred passed away on November 23, 2024, peacefully and at home. He was 83.

Fred L. Smith, Jr. was born in Jim Crow-era Alabama on the day after Christmas, 1940. His family moved near Slidell, Louisiana when his father got a job as a lock master on the Pearl River. Fred rejected the racism around him, so he figured he was a liberal, and became an activist. He ended up in Washington, working for the newly-founded EPA, and became disillusioned.

His EPA colleagues were focused on growing the agency’s budget, advancing their careers, and signaling their ideology. They were less interested in what Fred cared about, which was discovering the best ways to protect the environment.

Thus began Fred’s embrace of free markets, which led to CEI’s founding in 1984.

I would learn that history later. Fred’s big personality, my journalist friend said, was the secret of CEI’s success.

The reason to work for Fred is that he gave CEI’s scholars the freedom to build their own programs and choose the issues where they could make the biggest difference. If you were principled, driven, and entrepreneurial, Fred built an environment where you could succeed on your own terms.

Fred also gave CEI an independent streak that many DC organizations lack. CEI’s loyalty is to liberal principles, not to any political party, nor to any donor. This stubbornness has lost CEI several supporters over the years, and Fred correctly insisted it was worth it every time.

Fast forward about four years. I worked at a different think tank for a while, and left to attend graduate school. Towards the end of my first year, with no summer classes on offer, that long-ago dinner conversation was still in my mind. I applied for a summer internship at CEI. Everything that journalist said about Fred and CEI was true.

Fred was a dynamo. I worked with his wife Fran, who besides providing a calm counterpoint to Fred’s frenetic energy, is a formidable economist. They made the perfect team, and I knew right away they had created a special place. That’s why, all these years later, I’m still at CEI.

Fred and Fran changed my life. They changed hundreds of lives.

One of my fondest Fred memories is the time we had an argument that lasted for two years.

Our dispute was over rent-seeking. This is the economics term for private companies lobbying for special government favors like subsidies, sweetheart contracts, or regulations that hobble competitors.

At the time, Washington was doling out about $100 billion worth of such corporate welfare. Yet, lobbying was only a $3 billion industry. That’s more than a 30-fold return. For comparison, the stock market only yields about 8 percent. With those kinds of returns, the question isn’t why is there so much rent-seeking, but why so little?

I thought the answer was in economics and incentives. Fred thought the answer was in virtue. He had recently borrowed my copy of Deirdre McCloskey’s Bourgeois Virtues, and had taken it to heart. It reinforced Fred’s longtime belief that most, though not all, business people had a sense of decency and honor that limited their rent-seeking.

For the next two years, every time I walked past his office, Fred would bring up some point about business ethics, and I would counter with some public choice theory argument. We would exchange volleys over email, and even in meetings that were supposed to be about something else.

Fred and I eventually realized we were both right. We also realized that our combined perspectives might make a good paper.

That paper with Fred remains one of the most rewarding projects I’ve ever worked on. Not just for the content, but because of who I got to collaborate with. Since then, I’ve also moved closer to Fred’s side of the argument.

This story has a postscript. Earlier this year, my summer intern was curious about some of the economists we keep talking about at CEI, so we looked through the hallway bookshelves to find him something good to read.

I saw a copy of Bourgeois Virtues. Perfect. I pulled it off the shelf for him. The dustjacket was beaten up, and it had dog-eared pages and Post-It notes sticking out of it.

It also had my name written on the inside cover, in my handwriting. It was my personal copy that I lent to Fred all those years ago, and never got back. I couldn’t stop laughing.

As I told my intern about the memories inside that book, I could see that he got a glimpse of what Fred was like, and that it made him smile. That’s Fred for you. He can win over people he’ll never even meet. That’s how I know his influence will endure.

Thank you for everything, Fred. You and Fran started something wonderful, and now we’ll keep it going. It was a joy working with you. And it was an even greater joy knowing you.