Dr. Arthur C. Brooks

President, American Enterprise Institute


Arthur Brooks - Employment- President, American Enterprise Institute; held various positions including professor and former senior research associate, Alan K. Campbell Public Affairs Institute, Syracuse University; former consultant and doctoral fellow, RAND Corporation; former assistant professor of public administration and economics, Georgia State University; former professor of french horn, Harid Conservatory of Music, Lynn University; former professional french hornist, Barcelona Symphony Orchestra and Annapolis Brass Quintet.  Works- Author, The Battle: How the Fight Between Free Enterprise and Government Will Shape America's Future (2010), Gross National Happiness (2008), Social Entrepreneurship (2008), and Who Really Cares (2006).  Special Mention- Author of eight books and several articles about various topics.  Education- B.A., Economics, Thomas Edison State College; M.A., Economics, Florida Atlantic University; M.Phil. and Ph.D., Policy Analysis, Pardee RAND Graduate School.  Personal- Father of three; married to Ester; they live in Washington, D.C.


"The Battle"

DR. BROOKS: Thank you. What a delight to be here and an honor to be with all of you tonight, thank you so much for inviting me.  I am also delighted to introduce my colleague Eric Teetsel, who is here with me.  Eric is the Director of our Values and Capitalism Project at the American Enterprise Institute.  The Values and Capitalism Project is on campuses nationwide, every year talking to thousands of college students, young minds, who need to understand that the free enterprise system is not just the best system for creating vast amounts of wealth, which it is; it is also the most moral system for lifting up the least advantaged among us.  It is something that personally, I am very dedicated to and that our entire organization is dedicated to, so if you are interested in learning more about that please talk to Eric tonight.

I am going to talk to you about that free enterprise system.  I am going to tell you what I think is an epic cultural battle in America.  The battle for the culture of free enterprise and furthermore, I’m going to talk to you about how I think we can win that battle - I think that we are - but about the threats that are still ahead of us.  And it is funny to find myself talking to this great group, I mean looking at the list of the people who are going to be here tonight, I was really pretty awestruck.  It occurred to me that if you would have told me twenty years ago that I would be talking to this group of iconic figures in the conservative intellectual movement I would have said, “You’re crazy.”  The reason is because I was not brought up in circles that would mix with this great group.  I was raised in Seattle, Washington, a liberal home of academics and artists, which is to say I basically grew up in the Soviet Union.  I came to my views about free enterprise honestly and without the aid of my parents.  As a matter of fact when I was in my late twenties, they were getting increasingly alarmed with what they thought were aberrant views of politics that they were hearing from me.  I was home, about twenty-nine, visiting my parents for Christmas.  I was cooking dinner in the kitchen with my mother, we were alone and she kind of got quiet. She said, “Arthur, I need to ask you a personal question,” which is never good when it comes from your mother.  Actually, I knew the big one wasn’t out there. I was already married so she knew I liked girls.  But she said, “I need you to tell me the truth, be honest with me. Have you been voting for Republicans?” The truth is that I was.  But it wasn’t because I was a Republican per say, it was because of a passion for the free enterprise system that I had come to enjoy.  And it’s that system that I want to talk about here tonight.  

You know as well as I do that the system has been under assault for the past two years and in fact, since before that.  Well, I am going to tell you three truths about the free enterprise system that we need to become our message over the next two years so that we can continue to win.  Those three truths start with this one: free enterprise is truly main stream.   In today’s brand of Statism as a radical minoritarian taste that is being imposed on the majority of Americans.  I am going to show you the data to prove that fact.  The second truth that has to become part of our message is that we love free enterprise, not just because it makes people rich - although it does - but because it makes people happy, and that is a moral priority.  The third truth that I am going to tell you is that we, unlike the people who oppose our points of view, are the ones who really truly care the most about fairness.  We hear all the time that all we care about is economic efficiency and that they care about fairness and that is false.  I am going to show you that the free enterprise system is truly the fairest system and talk about how we can get that term back.  Now we hear a lot that the last midterm election, November 2nd of 2010, was really about the American economy, about unemployment, about issues surrounding economic growth and that is a narrative that we’ve heard in the main stream press again, and again, and again.  

Now given that narrative, liberals are really surprised that the American people reacted so violently to what had been going on.  I mean after all, it was just a few percentage points to the tax code, it’s unemployment lasting a little longer than we thought, why are people getting so bent out of shape?  At least that’s the argument I got from my family.  The real story of course is that the last election was not about economics, it was about culture, it was about values, it was about whether or not we want to continue to be the culture of free enterprise characterized by a limited government, by enjoying the rewards of our good decisions and facing the consequences of our bad decisions, and about celebrating entrepreneurship or whether or not we want to become just another European style welfare state: A European-style social democracy characterized by a large government, a managed economy, and a great deal of fretting about income and equality.  We were deciding, and we continue to decide, which kind of country we want to be.  So here is my question: Which do Americans want?  I know what I want them to want because I am a free enterprise fanatic.  But that doesn’t mean that they want that.  I’ve got to look at the data for that, and frankly patterns over the last few years, over the past few decades as a matter of fact, they worry me.  If you go back to 1950, twenty-five percent of GDP was soaked up by all levels of government, today that is thirty-nine percent.  That looks an awful lot like a taste for Statism and a taste for redistribution.  So when we ask Americans, what system do you love, what system do you want?  What do they say?  We did that, and I approach this with a lot of trepidation, but I need the truth.  I need the truth - as someone who runs a free enterprise oriented organization - and I need to tell you the truth.  When the Pew Research Center in Washington D.C., a left-leaning organization, went out to the polls in March of 2009 and asked, “Do you believe that the free-market system is the best system for America’s economy despite severe ups and downs?”  To that question, seventy percent said yes.  March of 2009, the scariest point in the current recession, and seven out of ten Americans said that the free enterprise system was still the best, even in spite of the suffering.  Twenty percent disagreed, ten percent couldn’t decide, which is to say they didn’t feel comfortable answering a survey, probably.  This continued all throughout the year and it culminated of course in the November 2 election in 2010.  In exit polls, seventy-four percent of people said they were either dissatisfied or angry with the government and fifty-seven percent say that reducing spending or cutting taxes was the number one priority of public policy makers.  This is a dream come true, for a free enterprise advocate like you or me.  What is says is that free enterprise is truly a main stream taste.  As a matter of fact this even bleeds into attitudes about business.  We are talking about these icons of unbelievable material success, but more importantly these icons of what it means to be successful as an entrepreneur, which goes beyond material things.  I am going to talk about these things around us today that represent something really meaningful.  

So how do people truly feel about business?  Do they share my enthusiasm for this setting tonight?  The answer is yes.  In the middle of 2009, the summer of 2009, Gallup asked, “Do you believe that business is the center of America’s strength?”  Seventy-six percent said yes.  Now here is a paradox, the same poll asked, “Do you trust business?”  To that, seventy-seven percent said no.  So how is this possible?  Three quarters of Americans say the strength of our country is business but three quarters of Americans say but they do not trust business.  How does that work?  This is a little puzzle to me.  So we have a paradox: a majority of Americans think that the strength of our country is business and about the same percentage in the same poll do not trust business.  I was puzzled by this and I was actually working on the book that I will be talking about here tonight and I thought I had a bad poll.  Sometimes you get data that doesn’t work - the poll was administered improperly.  So I was talking about this at dinner one night with my family - which shows how fun it is to have dinner at my house - and I said to my wife, there is a weird thing that I’m getting in my analysis.  I explained that seventy-six percent say the strength of our country is business and seventy-seven percent of the same people say that they don’t trust business.  She said “oh that makes perfect sense.”  I asked what she meant.  She said, “it is just like marriage.”  And I said uh oh. She said, “It is just like marriage - you know everyone says they love the institution of marriage but nobody trusts husbands. That is like business, everybody thinks business is great but nobody trusts businessmen, of course not.”  Look, we know that people are fallen, we know that people are imperfect, we have to keep an eye on each other.  That’s simply a matter of us doing the job that governments have to do in other places.  It is actually a good thing that we don’t trust everybody patently, but we love the institutions of wealth creation and opportunity creation.  This makes perfect sense.  Americans are smart.  That is what this boils down to.  The main point is this: we are a seventy thirty nation.  Seventy percent of Americans celebrate and love the free enterprise system for cultural reasons, thirty percent are against it.  The thirty percent are in charge.  If you want later we can talk about the mathematical reasons why the thirty percent are in charge but you know that they are.  This is a big difference between the Americans and the Europeans, when you ask, “do you believe that the principle role of government is to redistribute funds from the rich to the poor,” thirty-three percent of the Americans, about the thirty percent coalition, say yes.  You ask that question in Spain, seventy-seven percent of Spaniards say yes.  In stark relief, what is the difference between Americans and Europeans?  Look at the riots that have gone on in Greece, public sector workers and unionized bureaucrats throwing Molotov Cocktails, burning down their own buildings, demanding lavish pensions, early retirements and salaries paid by the fellow citizens in the worst recession in fifty years.  What are Americans protesting?  What have Americans been protesting for two years?  They want less government, they want government out of their lives, and they want lower taxes, less regulation, and fewer services.  The Tea Party protestors are protesting against what the Greeks are demanding.  This is real American exceptionalism.  This is something we should be truly proud of that those people – you - are behind those kinds of activities.  The day we lose the Tea Party, and the idea of the Tea Party, and the spirit, is the day that we become a little bit more like Spain and Greece and Ireland and Portugal, and God help us.  So why does the thirty percent in America, that looks a little bit Greek, why do they think that?  Why do they think that the free enterprise system is a bad system?  You know I’ve asked this question in research for years now and we actually have an answer.  If you do a public opinion poll and you asked the thirty percent coalition against free enterprise what the problem with the free enterprise system is, they say there is too much income in inequality.  The rich get rich and the poor stay poor and the rich have too much more than the poor and that is just not right.  It is not fair.  It even makes us unhappy and they have got the data apparently to back it up.  In 2004, the General Social Survey - it is the best, fairest, social data base in America, administered by the University of Chicago - the data showed that if you made more than seventy-five thousand dollars a year you were twice as likely to say you were a very happy person than if you made less than twenty-five thousand dollars a year.  There are even laboratory experiments that appear to back this up.  In the mid 90’s, the Harvard School of Public Health did a famous laboratory experiment using human subjects and who were given two choices: to live in a society in which you earn fifty thousand dollars a year but all your neighbors earn twenty-five thousand dollars a year, or earn one hundred thousand dollars a year but all your neighbors earn two hundred thousand dollars a year.  Which society do you think most people in the experiment chose?  The answer was society number one by about sixty percent of the population.  Why?  Because it is lousy to be poorer than your neighbors.  It is actually better to be absolutely poor than to be poorer than the guy next door.  That is what it appears to show; it is kind of a window on the soul.  When I was a kid my dad would say “Son, it is not enough to win, your friends have to lose, too.”  It is kind of like that.  It would appear that’s how people would behave - they want to have more than other people.  Now the implication of that to a lot of liberal policy makers and academics is you’ve got to equalize.  If the rich are richer, happier, only because they are rich, they are not earning anything.  And if you’re unhappy because you are poor, you don’t deserve to be unhappy. So what do we do?  Tax you and pass it out to other people.  Programs that redistribute wealth will create a healthier, happier, more just society.  Now that is not just crazy sounding, it is factually wrong, and we have the data to prove it.  

A huge part of the redistribution policy of the Obama Administration, of the academic industrial complex of liberal thinking for the past five decades, is based on a false reading of the data.  The reason is because there is one key variable that is always left out of these analyses.  And that variable is called “earned success.”  Earned success is the belief that you have created value in your life and the life of other people.  If you believe that you have earned your success, no matter how it is denominated, if it is denominated in dollars, or souls saved, or parks cleaned up, or kids not going to bed hungry, or a beautiful piece of art, or your own children happy, however you define your earned success, if you believe that you have earned success you will be happy.  In 2004, once again the General Social Survey found that two people, both of them believing that they have earned a lot of success in their lives, the same in education, same in their region of residence, their race and age, their religion, and everything, but one earns eight times as much as the second, the data shows that they will be equally happy because their earned success is the same.  Now, in a market economy, if you earn a lot of success, it will draw money to you.  But it is the earned success and not the money that explains happiness differences between people.  This is important, because the government can spread money around, the government can’t spread earned success around.  Who does that?  The answer is all of us with what we do in our lives, and all of us as entrepreneurs who create the growth of jobs and opportunity for our fellow citizens.  That is not the government’s job and the government cannot achieve it as such.  When the government actually tries to create more happiness - here is the paradox - they create misery.  The government redistribution programs are hated by the population precisely because they are promising one thing that they can’t deliver: more happiness.  

Here are three truths about income and equality.  Number one, it doesn’t bring unhappiness.  Number two, redistribution programs don’t bring happiness.  Number three, when you redistribute income, you lower the returns on entrepreneurial activity, people earn less success and they become less happy.  That is the reason that every time a bureaucrat promises greater happiness through redistribution, that bureaucrat is about to deliver more misery to the American people.  Now that tells us something about the free enterprise system, which is this:  The free enterprise system is not an economic alternative, which is what we hear, just one economic alternative among many maybe very efficient systems.  When I go from economic efficiency to the happiness of you and your neighbors and my children and grandchildren, I have taken out economic efficiency entirely.  I have taken it to the level of morality.  And until we can say that this is a moral case, until we can say this is about right and wrong and happiness, until we can make that case effectively, we are not really going to win this fight.  They say they’ve got the happiness argument - we actually own it, let’s take it.  

Now, there is one other part of happiness I want to get to for my third point.  What is the fairest system?  When the President of the United States was asked, “Why do you want to rescind the Bush tax cuts?” “Why do you want to raise taxes on families making over two hundred and fifty thousand dollars a year?” President Obama said, “I think we need more of a sense of fairness and balance in our tax code.”  There is only one way to interpret that, if we take more from the top and we distribute it to the bottom, we are going to get more equality and that is more fair.  Okay, now is that really fair?  Right now do we have a fair system?  Is it getting fairer?  At the moment, one percent of the population pays forty percent of the taxes.  The bottom, approximately fifty percent of earners, pay zero percent in federal taxes, and that is getting more extreme.  Under this President, one percent will be paying more like fifty percent, and over half the federal taxpayers will pay nothing or less than nothing. What do Americans think about this? Sixty-nine percent of Americans today think that the top tax rate that anyone should pay state, local and federal, should be less than twenty percent.  It is not less than twenty percent, the top marginal tax rate these days is thirty-five percent federal, plus state, plus local.  If you are lucky enough to live in Florida, state tax is zero. But in point, Americans think the system is unfair.  Sixty-six percent believe that everybody should pay something so that we all have skin in the game, it is part of citizenship.  What is the fairest system?  Americans will tell you that the fairest system is one that rewards hard work, merit, excellence and innovation.  It is also, and here is the inconvenient part, one that penalizes corruption, laziness, stupidity, and incompetence.  We don’t like to talk about that because it is politically incorrect, but that is the fairest system according to Americans.  So what is the system that rewards merit and gives consequences from corruption and laziness? That is the free enterprise system.  We should be talking about fairness at every possible opportunity, because we own it.  The free enterprise system is the fairest system for the vast majority of Americans, and as long as they keep saying fairness, fairness, fairness, fairness - they are going to walk off with voters eighteen to twenty-nine, and it’s got to stop.  If the free enterprise movement wants to win in 2012 and beyond, that has to stop and it has to stop now.  

So here are the big lessons again.  Here are the three messages for the next two years.  Number one, free enterprise is main stream, it’s as American as apple pie, stateism is a thirty percent taste at most.  Number two, free enterprise is not just best for wealth, it’s best for happiness, and we have the data to prove it.  Point three, free enterprise is the fairest system; it is the fairest system that we can possibly find.  So are we winning this fight?  You might look back on November 2nd and say yeah, it’s looking really good.  It looks like a great victory for the free enterprise column.  It’s not because Republicanism has ascended, because point in fact Republicans today are actually less popular with the public than Democrats.  Republicans don’t like to talk about that very much but forty-three percent of Americans today, this week, have an unfavorable impression of Republicans; forty-two percent have an unfavorable impression of Democrats.  Republicanism is not ascended, free enterprise is, and it was under threat.  That is what happened November 2nd and to be truthful, the wolf is still at the door.  There is a threat and it is not Democrats, it is us.  The reason I say that is because Resurgent Republic does wonderful polling these days, nobody can accuse it of being a liberal organization, and what they find is that forty-nine percent of Americans say that the government should do more for Americans and only forty-six percent say that they should do less.  Despite our enthusiasm for free enterprise we are only too willing to take whatever the government hands out to us.  We have to fight that, and if we don’t fight that, we lose.  The road to serfdom in America does not come from a jack booted thug or a knock in the knee.  The road to serfdom in America comes from a smooth talking politician that gives us one little redistributive policy after another and the only thing that stands between us and an unprincipled government that makes us into European style statists is you.  Your organization, you are the real hero’s here.  This is my last word.  November 2nd was not the end of the fight for the free enterprise, it was only the beginning.  Who are the fighters?  They are the CNP, the American Enterprise Institute, they are all of you.  For what you are doing with your time and your talent and your treasure for the free enterprise system which benefits me and my kids and my grandkids, my last word tonight to you is thank you.  

ATTENDEE: My question goes to the baseline assumption, which is not just that disparities in wealth cause differential happiness, but you find paired with that often the certainty that whatever wealth was achieved was gotten through exploitation - and that is a word which will crop up all the time - the assumption that if somebody is wealthy, they only got that way because they took advantage unfairly of others.  Obviously there are Mark Zuckerberg’s in the world, but it doesn’t seem to connect in these people’s minds that people do create wealth without exploitation.  How are you trying to tackle that aspect of the fundamental immoral case for capitalism as it is expressed by the Left?
DR. BROOKS: Thank you. That is a great question.  There was a survey about five years ago that was looking at favorability ratings of major world figures and one of them on the list was Bill Gates.  It was a survey that was going around that was administered in many countries.  And the most striking difference was between the United States and France.  I’m going to cut to the chase about what it actually said.  In a nutshell, Americans basically said I want my kid to be the next Bill Gates.  The French basically said, let’s take his stuff and burn his house.  That is the difference between the Americans and the French for all intensive purposes.  Americans are not envious people, European Social Democrats are.  The root of redistribution is envy.  When we actually give in to a redistributive system, that doesn’t ennoble the free enterprise system, we’ve said envy wins.  So the key thing in America is making sure that Americans continue to understand that they have pathways to earn success. This is the other moral imperative beyond just the free enterprise system.  It is making sure that pathways to earn success really still are open and people understand that.   There are simply too many people in America who, with the thirty percent coalition and even beyond that, believe that those pathways are cut off for them.  There are too many people who believe they are open for you and me but for them, the game is kind of rigged.  What are we doing today to create more earned success from more people?  Those of you who are entrepreneurs, you are creating growth and jobs, that’s a heroic activity.  That is truly important because that’s the difference between an invidious society and a non-invidious society and that is our best guarantee that people will continue to love in their hearts the concept of free enterprise.  

ATTENDEE: What is your solution to the current high unemployment?

DR. BROOKS: The current high unemployment rate is something that we actually always see following a financial market crisis.  A recession that is based on financial markets always lasts longer than a typical recession.  The answer is, has always been, and will continue to be, get out of the way of entrepreneurs.  Now, you can’t cut it immediately, overnight, to four percent unless you have radical job programs and force people into those slots, and that is obviously an absurd abridgement of freedom and it would not last and it would be horribly expensive.  The only way that we can get back to full employment as fast as the macro economy will let us do it, is to get out of your way.  We have the data to show that we have to get out of the way in terms of taxes and regulations and culture from entrepreneurs.  That is the only way that meaningful jobs are going to be created.  The Federal Government, in the past twelve months, has created eighty-six thousand permanent jobs.  Those are not the kind of jobs that are ultimately going to fuel a long run decrease in unemployment and furthermore, they are not going to fuel an increase in happiness, I know that for a fact.  I have the data on who is happiest.  Guess who: small business owners and entrepreneurs. And here is another factoid, small business owners and entrepreneurs, on average, earn less money then bureaucrats and people who work in unionized manufacturing.  It is not about the money, we have proof that it is not about the money.  My solution is to get out of your way.  Every policy we proposed at AEI is based on staying out of the entrepreneurs’ way.  

ATTENDEE:  If I can sum up what I think I heard you say, is that we are - at least the thirty percent in key places - rapidly making us believe that we are a culture that has become one where earning money doesn’t guarantee that you have claim to it, but wanting money does.  How is it that at a time when we have to deal with issues, public policy issues - raising the debt ceiling or dealing with entitlements - culturally, how do we fight that?  Not just politically, but culturally, how do we fight it?  

DR. BROOKS: Earned versus unearned success effectively?  Culture never is changed by the government.  Thank God we are not at the point yet where we think that the government is actually going to change our culture.  That is in our hands as leaders in the intellectual world.  We need to be talking as much about the culture of earned success and the culture of unearned rewards as we should be talking about mechanically changing public policy.  Changing culture is actually more important than changing policy, it is a really weird thing coming from the President of the American Enterprise Institute for Public Policy Research, but it is true.  It is an axiomatic truth.  We need to continue to be an opportunity society and not to become an entitlement society.  How do we do that?  Well, one of the ways that we do that is by demonstrating some fundamental truths that are based on the data.  I have data on lottery winners, I have data on people who inherit, I have data on welfare recipients, and I can tell you without any doubt and any hesitation at all that unearned income brings you zero happiness.  As a matter of fact, earned income doesn’t bring you any happiness either.  It is the earned success that is being measured by that money.  Now that is just another argument for the fact that we have created the cultural preconditions, we have to do the cultural spade work as opposed to just changing policy.  The hard digging that says what we are going to do today to remind the next generation that earned success is the key.  That is the reason that Eric and I are doing the Values and Capitalism Project, so far on thirty campuses, a year from now on sixty campuses, and on and on and on with our friends at The Heritage Foundation and other organizations.  We’ve got to change the hearts and minds so people understand this fact.

ATTENDEE:  It seems like what you are saying is that because of our own desire for joy, Atlas will never shrug.  Are you really sure? What I heard you saying was that it’s not making money, it is the pleasure of success.  I talk to a lot of small business people who say if I could find some place, I could take what I have, be safe, have my family, I would stop.  I hear that more and more every day.  And I guess what you are saying is pretty hopeful - that you’re not worried with the movie coming out next year, that Atlas is going to shrug.

DR. BROOKS: Well, security matters a lot.  I care an awful lot about being able to pay my mortgage.  And if there is some way to make it a little safer, generally speaking, I’m going to take it.  But look at this, look at where we are. I bet you pass some lean times.  I bet there were some scary times early on, right?  I bet you wondered if you were going to make payroll and in fact the sweetness of this wouldn’t be as sweet if you actually hadn’t gone past those times.  The cadence of earned success requires sacrifice.  We need to be able to suffer.  You can’t win unless you are also able to lose.  Here is the truth about how the current administration wants to structure the economy.  They want to privatize gains and socialize losses.  Well guess what you get?  You get socialized gains and socialized losses.  That is how socialism works actually with the concept that you can privatize the gains and socialize the losses.  So I understand and I’m sympathetic to the insecurity that people feel.  And there are all kinds of ways to create a safety net that is a minimum basic standard.  Hayek actually said that there are two basic functions of government.  The number one function is creating a minimum basic standard of living for people so that we are not stepping over starving kids.  Number two, is stepping in where markets fail.  Now, what does all that stuff mean?  That’s what we’ve talked about all day long at AEI.  It is senseless for us to suggest that just because we believe in earned success and we believe that entrepreneurs should be able to take risks and we should actually be faced with the consequences of our action that we shouldn’t have a minimum basic standard of living, too.  My friend Paul Ryan, some of you may know him, my co-author on certain projects with me of these subjects, reminds me all the time that we have a government. Well, you know who I want in charge of working out what the minimum basic standard of living is?  I want that to come from entrepreneurs who remember the hard times and remember the floor below which we shouldn’t be able to fall.  Then we start getting into an interesting conversation and it gets beyond just all or nothing.  Because in point in fact, we can’t live in that rare oxygen and we can do better.

ATTENDEE:  This is a critical issue to determine how much government regulation is appropriate and our Fed Chairman has been quoted in the past saying that the American free enterprise system and Capitalism are inherently based off of fair dealings and trust.  And as you have said, we are all fallen people.  So it is hard to assume that industry itself can regulate itself.  We see in the movie industry, it’s hard for movie producers to regulate themselves.  We need a referee.  What level of refereeing - in a nation of laws - what level of regulation is appropriate?  Maybe its providing opportunity while still maintaining protection of consumers?  Maybe the consumer is some of the referee?  But you still need government or some law giver, some referee, protector to provide for some kind of regulation in an American free enterprise system.  What is your comment on that?
DR. BROOKS: Once again, I go back to our philosophical hero, Hayek, among them, or Milton Friedman for that matter.  What would he say?  What would he say about The American Enterprise Institute?  What do people of good will who believe in free enterprise understand?  We are not a narco capitalist; we don’t believe that we should have no say.  In point of fact, we understand that the government has a useful function.  Our Founders understood that, they pointed out that men are not angels.  So what are the basic rules of the road?  What should the government do and what should the government not do?  I just said the government should do two things, minimum basic standard of living and solving market failures when it is efficient to do so.  What are the market failures? Number one, monopoly.  Number two, externalities, outsider market signals, where creating conditions for life is worse for others.  Number three, public goods, like the Army.  Number four, predation, where people are preying on each other, which is why we need the rule of law, a police force.  Now those are pretty minimal standards.  What should the government not do?  Let me give you a few categories. First, social engineering, like busing your children across town, because of the criteria of judges.  What else should they not do?  Pick winners and losers, bailouts, pork barrel spending and you know what?  That’s what soaks up the vast bulk of what is now about fourteen trillion dollars in Government and Federal Government debt.  We can come up with a governing philosophy that doesn’t say zero government, that actually talks about what the road should be and which would zero out the debt.  The conservative movement, the free enterprise movement, actually has answers to these questions, the idea that everything is insoluble.  Conservatives say to cut the debt, but they don’t have any real solution, that’s nonsense.  We can solve these problems but we have to start with a governing philosophy.  And a governing philosophy is not government should do good.  That is not a governing philosophy that is the way that we get down the road to serfdom one policy at a time.  So stay tuned, this is what AEI is actually doing in a major project over the next two years.  How do we maintain the culture of free enterprise while still understanding that our Founders told us we should and can have a good government that’s limited and helps us to govern ourselves as free enterprise loving people.  I’m standing between you and your dinners and so at this point I have to say once again, I’m honored to be with you, thank you for having me.


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