Taking the Right Off Autopilot

I fell in love with politics as a little kid in 1956, when I spotted a big neon sign atop a downtown office building flashing its four capital letters to spell I . . . L I K E . . . I K E. Campaign ad budgets were not as lavish back then.

I did like Ike, especially after I got to shake his hand. My politically active, staunchly Republican father managed to position me directly in President Eisenhower’s path at a Pittsburgh campaign appearance that fall. The press loved the little guy in a plaid blazer presenting the president with a drawing of a Halloween pumpkin, and the photo ran in newspapers across the country. The next day, the president sent me a thank you note from the White House.

The decades that followed were an exciting time to be coming of age in the world of conservative ideas and Republican politics. The journey from Eisenhower to Goldwater to Nixon to Reagan was tumultuous, the intellectual combat fierce, and the eventual triumph exhilarating. I joined the State Department as a political economist in 1982 and went on to serve under three Republican presidents and one centrist Democrat, promoting the policies of the so-called “Washington Consensus”: free trade; bilateral investment; fiscal and monetary prudence; the rule of law; and deregulation of business, labor, and capital. In 2007, I moved to the Heritage Foundation, where I promoted those same policies for the next 15 years as a co-editor of the Foundation’s Index of Economic Freedom.

Missing from my career, though, was the dynamism that had energized my younger self. After carrying Reagan to power, the coalition of economic libertarians, defense hawks, and social conservatives froze in place. The ideas advanced by this “Fusionism” were vital to stimulating economic growth after the stagflation of the 1970s and achieving victory in the Cold War. But once those tasks were complete, there was no second act. The upstart institutions that initially delivered so much change became the establishment and guarded their prerogatives jealously. As the world and its challenges evolved, the conservative movement did not. Instead, its internal contradictions festered.

Conservatives are fond of warning that a government program, once established, never dies. The same, it turns out, can be said of conservative institutions. Fusionist think tanks established strong brands and large payrolls, and if the donors would keep giving, then the Cold War hawks would find new wars to start, the supply-siders new taxes to cut. They are still doing it today.

The Index of Economic Freedom

As a social conservative, I had always assumed that most people at a place like the Heritage Foundation would share my views. For instance, my support of classical liberal economic policies hinged on the assumption that America’s Judeo-Christian ethics and social norms would constrain economic behavior, as they had historically. The very name, “Heritage,” signaled that we were working proudly to protect and strengthen our exceptional American values and economic system.

Many of my economist colleagues thought otherwise. They leaned more heavily toward an unconstrained classical liberalism, unmoored from traditional values, as a desirable goal in and of itself—not only in America, but also around the world. Heritage’s famous “One Voice” policy required that a single institutional position hold on each issue. The longer I worked there, the more I came to understand that libertarians had the loudest voices in determining the one voice that the world would hear from us on economics.

Although it took me many years to realize it, I see now that the annual Index of Economic Freedom is emblematic of the wrong turn that our conservative institutions took after the Cold War’s end and their inability to correct course. First published in 1995, in the hope that Western market democracy would sweep the globe, this “flagship product of the Heritage Foundation” is built on the philosophical foundations of unabashed classical liberalism as articulated by Milton Friedman, F.A. Hayek, and other members of the international Mont Pelerin Society. We published it for many years in partnership with the Wall Street Journal.

As its name suggests, the Index takes “economic freedom” to be an end unto itself—perhaps the ultimate end—and attempts to score each nation’s policy choices accordingly. Economic freedom offers a sort of miraculous poultice for policymakers to apply therapeutically to institutional and structural deformities. Government spending should be held as low as possible and regulatory burdens on labor and capital should be as light as possible. Economies should welcome foreign direct investment and the entry of multinational banks on a level playing field. Barriers to trade should be minimal. Countries would be dinged if they failed to adopt an Anglo-Saxon-style legal system to protect property and root out corruption.

This yields some peculiar results. I remain a strong supporter of the rule of law as a prerequisite for development, but other Index indicators came to trouble me. Because all government spending is taken to impinge on freedom, the most “free” countries on this dimension in 2022 are Haiti, the Democratic Republic of Congo, and Nigeria. Likewise, because the lowest tax rate is always best, petro-states like the United Arab Emirates and Bahrain top the chart for tax burden. Implementing or raising a minimum wage, or providing strong mechanisms for workers to organize and bargain collectively, reduces a country’s score. To say that citizens have less freedom in a society where they pay taxes to fund public services or enjoy some degree of power in the labor market is to misunderstand the concept of freedom. Using that definition as the lodestar for public policy cannot help but recommend bad policy.

Meanwhile, the Index relied upon the World Bank’s Doing Business survey to evaluate a country’s “Judicial Effectiveness” and “Business Freedom,” leading Heritage to rank China and Saudi Arabia alongside the United States on these measures in 2021. Even the World Bank knew something was wrong, and has since uncovered “improper changes” to its data for China and Saudi Arabia and discontinued its own report. At Heritage, no alarm bells ever sounded.

How did the Index run on autopilot for so long? The better question, perhaps, is why wouldn’t it? No one involved with its annual production (myself included, until the last few years) ever really questioned its wisdom. As my doubts about it grew, I faced heavy disincentives to challenging it. Its message was exactly what the media outlets and policymakers advancing a particular agenda needed, so they eagerly amplified its release. That amplification constituted “impact,” which Heritage could show to donors, many of whom favored the same agenda, yielding the funding to do it all again next year. Eisenhower might have recognized all this as the libertarian-foundation complex.

Conservatism on Autopilot

In retrospect, I should have acted earlier on my growing misgivings about Heritage’s economic policy mission. But for most of my years there, I strongly supported the expansion of economic liberalism—indeed, I still do. I thought, and still believe to some extent, that a U.S. economy open to trade and investment was in the national interest. The problem wasn’t the principles, it was the refusal to learn from a changing world or recognize that their application would mean something different in the 2020s than in 1980.

Policy toward the always evolving technology sector provides a quintessential example. After President Trump took office and the GOP took control of Congress, Heritage added a new department on technology policy. Here was an opportunity to bring desperately needed conservative insights to a sector of the economy that was tearing apart America’s social fabric. Instead, we focused only on the undeniable benefits of tech for economic growth. People like me who sought more robust policies on antitrust, Section 230, and elsewhere to rein in Big Tech were mocked inside the building as primitive “sabre-tooth tigers” who would have to be “herded” back in line. “If you don’t like Google, start your own search engine,” has become a punchline, but it’s really something that our liberal economists would say.

On taxing and spending, the logic that pushed Haiti and Bahrain up our economic freedom ranking continues to prevail domestically. Conservative groups produce annual budget blueprints with recommendations to balance the budget through cuts to non-defense discretionary spending. Those cuts never happen—even when Republicans are in power—but the proposals provide cover for also proposing yet another round of tax cuts. This is unrealistic and irresponsible in the face of enormous structural deficits and a skyrocketing national debt.

Neither the budget nor tax cutting of 1980 is appropriate to today’s circumstances. The fusionists’ foundational goal of limited government conflicts somewhat with the challenges now facing American workers and families. Some federal programs should be expanded, for instance, to assist families with children so that one parent can remain at home. Such spending would also serve to incentivize family formation. And why are we still pushing to cut taxes for woke corporations that increasingly view themselves as global citizens and chase profits without regard for the wellbeing of American workers?

Watching this reality unfold, I gave up on my own free-trade fundamentalism. At one time, I wrote in favor of using the World Trade Organization (WTO) to lower trade barriers to China, in hopes of blunting the Chinese Communist Party’s hostility toward America. But it is obvious to me now that China instead worked to gut the effectiveness of the WTO appellate body and water down its enforcement efforts. I now favor some protectionism to enable the U.S. to rebuild our hollowed-out manufacturing base.

The contradictions that are leading to globalization’s collapse have also undermined conservative support for maximum economic efficiency across borders and free global markets at any cost. The benefits to American consumers from cheaper imported goods do not offset the losses we have experienced. I suspect, with its logic gone, the end is near for the Index, too. But change on the Right must happen faster than this—if we are to rescue our broader project before it too slams into the side of a mountain.

Paths to Progress

Like Hollywood studios, conservative think tanks have become addicted to making sequels of the blockbusters that clicked in the past. As a result, it’s clear that too much of the talent has forgotten how to do original, inspiring work. The audience, meanwhile, becomes comfortable with a particular formula, and stops paying to see anything else.

Compounding the problem, the conservative establishment has built its message around an appeal to the vanity of its wealthy donors, which goes something like this: Successful entrepreneurs, business leaders, hedge fund managers, and Silicon Valley titans are the smart ones. They were right to eschew government service and focus instead on making money, because only the latter does anything good for America. By donating, they can further advance the cause by helping the fight against government and for “job creators.”

That narrative will prevent conservatives from ever wielding power effectively. Of course, we need entrepreneurs. But we also need public policy. Young conservatives need to gain experience and knowledge by working in government. Facing a federal bureaucracy that tilts heavily to the left, they will have to compete for career federal jobs and also run for office at every government level. The antiquated, “holier than thou” message tells them instead that government service is bad and they too should become hedge fund managers.

America’s fusionist thinks tanks have traditionally looked condescendingly at think tanks in other countries that are funded by political parties using taxpayer money. In today’s environment, though, that option begins to make sense. Think tanks funded by the Republican Party would of course suffer from dysfunctions of their own. But at least they would not name endowed chairs after, and bestow philanthropic awards upon, Wall Street’s highest bidders. They would be accountable for producing ideas that win elections and cadres prepared to govern.

Existing institutions will change course only if new leaders take the controls with confidence in their own ability to steer. Many think tanks, even under new leadership, still appear wedded to the autopilot. But in this respect, I believe Heritage may be a bright spot. Its new president, Dr. Kevin Roberts, clearly understands the landscape and is determined to adapt Heritage policy priorities to modern challenges. For instance, he has placed Big Tech squarely in his sights, abstract notions of “economic freedom” and faith in “permissionless innovation” be damned.

Whether at Heritage or elsewhere, conservative leaders must be prepared to do three things.

First, narrow the focus to a few high priority issues. The largest think tanks have accumulated enormous rosters of scholars, always adding, rarely pruning. Like 1980s cover bands, they can play every hit you want, but none of them well. Each organization should know what it does well and what unique contribution it is making, and raise the money to do that. This would make existing organizations more effective and leave more space and resources for entrepreneurial new projects to enter the fray.

Second, abandon fusionism. Today’s challenges—from China and globalization, to Big Tech and woke capital, to the decline of the family and the working class—are ones on which libertarians and conservatives fundamentally disagree about both diagnosis and treatment. The contradictions in their alliance render it unworkable. There’s no shame in being a libertarian think tank, or being a conservative think tank, but for an organization to remain relevant and coherent, it will have to choose.

Third, stop with the sequels. So much energy on the right is wasted on glorified fundraisers disguised as PR campaigns, meant to please donors in the short run with high-visibility, issue-oriented projects that generate “sound and fury” but accomplish nothing. In the Tea Party years, Heritage ostentatiously rented an expensive billboard in Times Square that showed the quickly rising U.S. debt under President Obama. Suffice to say, this had no effect on reducing the debt.

Donors, for their part, must hold themselves accountable for the sustainability and success of the projects they fund. If they merely want op-eds written about how wonderful they are, and banquets held in their honor, then so be it. But in my experience, most are patriotic Americans who want to advance broad-based prosperity and the national interest. They don’t recognize how they are in a sense paying to have the cashmere pulled over their own eyes. They need to look at the big picture and ask: What does the post-fusionist conservative movement need from its institutions today to be successful going forward? What does America need?

The answer is not yet another 500-page report on economic freedom.