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Betting on People the Olin Foundation’S Support for Law and Eco- Nomics Was Part of a Larger Success in ­Public-Policy Philanthropy

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Betting on People the Olin Foundation’S Support for Law and Eco- Nomics Was Part of a Larger Success in ­Public-Policy Philanthropy 4 Betting on People The Olin Foundation’s support for law and eco- nomics was part of a larger success in public-policy philanthropy. The foundation wanted to build up an alternative intellectual infrastructure that could compete with entrenched academic and media elites at generating new ideas for the governance of American society. “What we desperately need in America today is a powerful counterintelligentsia,” wrote longtime Olin president William Simon in his 1978 bestselling book, A Time for Truth. He wanted 50 to bolster thinkers dedicated to “individual liberty...meritocracy...and the free market.... Such an intelligentsia exists, and an audience awaits its views.” Just about every aspect of the Olin Foundation’s philanthropy involved meeting that long-term goal. It was a monumental challenge. Though much of the funder’s grantmaking focused on scholars at col- leges and universities, today left-wing orthodoxies are even more dom- inant on campuses than when the foundation first started to address this problem in the 1970s. Can we consider Olin to have succeeded in fostering fresh thinking that translates into altered public policies? First, it’s important to note that Olin had a few savvy allies in its cause. The earliest efforts in this area were made by the William Volker Fund way back in the 1940s. In 1947, the Volker Fund agreed to help a group of 17 economists fly from the United States to Switzerland for the first meeting of the Mont Pelerin Society, an organization of libertarian economists founded by Friedrich Hayek to promote free markets and refute socialism. Hayek was the author of The Road to Serfdom, published in 1944 and never out of print since. It is an enduringly convincing and popular account of why government control of the economy leads to tyranny. The University of Chicago professor who helped create the law and economics movement, Aaron Director, helped Hayek secure a contract for publication of The Road to Serfdom by the University of Chicago Press. Then in April 1945 Reader’s Digest ran a condensed version of the work, touting it as “one of the most important books of our generation” and giving it a massive audience. Hayek’s little volume made a deep impression in the United States, especially among business owners like William Volker of Kansas City, Missouri. When Hayek’s efforts to orga- nize the Mont Pelerin Society came to the attention of Volker’s neph- ew and partner, Harold Luhnow, the Volker Fund offered up a check that allowed figures such as Director, Milton Friedman, Henry Hazlett, Leonard Reed, George Stigler, and Ludwig von Mises to make the trip to Europe. The Mont Pelerin Society went on to become a hub of free-market ideas. Eight of its members won the Nobel Prize in economics. Others served in government. Many more became professors at colleges and universities around the world. Under the influence of Luhnow, the Volker Fund played a crucial role in the emergence of free-market ideas after the Second World War. It supported Agenda Setting 51 BETTING ON PEOPLE groups that worked to influence economic teaching, such as the Founda- tion for Economic Education, the Institute for Humane Studies, and the Intercollegiate Studies Institute. In 1956, it sponsored a series of lectures at Wabash College by Milton Friedman, which evolved into Capitalism and Freedom, one of Friedman’s most significant works. (“This series of confer- ences stands out as among the most stimulating intellectual experiences of my life,” wrote Friedman in the preface.) The Volker Fund also underwrote the fellowship that allowed Hayek to teach at the University of Chicago for many years, and the grants that supported von Mises at New York University. “Ideas do not originate in monuments but in the minds of creative individ- uals,” said the Volker Fund’s statement of policy, explaining why it chose to underwrite people rather than things like university buildings. The Volker Fund was active at a time when few other philanthropists showed an interest in supporting the ideas behind free enterprise, so it had an outsized influence. It aided an important platoon of intellectuals as they wrote books and articles, trained graduate students, and otherwise prepared a powerful vision of economics that differed radically from the centrally planned welfare states that swept Europe and much of the rest of the world during the socialist and modernist wave of the 1930s-1960s. Eventually, the market model would emphatically surpass socialism, but that day was in the future. Many of the individuals supported by Volker saw themselves as a “remnant” (a term coined by Albert Jay Nock in 1936) who kept ancient, time-tested ideas alive. “They are obscure, unorganized...each one rub- bing along as best he can,” wrote Nock. “They need to be encouraged and braced up, because when everything has gone completely to the dogs, they are the ones who will come back and build a new society.” In the 1940s and 1950s, the philanthropy of the Volker Fund did much of this encouraging and bracing up. In doing so, the skeleton of a true conservative counterintelligentsia was created, for fleshing out later on. In time, about a score of foundations of varying size would become involved in funding this movement. The largest contributors were the Lynde and Harry Bradley Foundation, the Sarah Scaife Foundation, the Smith Richardson Foundation, and Olin. Others included Volker, the Carthage, Earhart, W. H. Brady, Charles Koch, David Koch, and Claude Lambe foundations, the Searle Freedom Trust, and the Philip McKenna, JM, Samuel Roberts Noble, Randolph, and Henry Salvatori foundations. The combined assets of these funders favoring conservative or lib- ertarian public policies did not approach the massive endowments of 52 their liberal counterparts. Left-wing foundations have wildly outspent right-wing foundations for more than a half century. In their book The New Leviathan, David Horowitz and Jacob Laksin calculated that, “as of 2009, the financial assets of the 115 major tax-exempt foundations of the Left identified by our researchers added up to $104.6 billion,” while “the financial assets of the 75 foundations of the Right” cumulated to a collective $10.3 billion. The rightward foundations spent a total of $0.8 billion on conservative causes, while the leftward foundations provided $8.8 billion for liberal causes. In other words, public-policy philanthropy that aims left gets about eleven times as much foundation money as that which aims right. (Indi- vidual donors are more evenly split, though there are still more on the left.) The Washington Post once observed that the Ford Foundation alone has given more to liberal causes in one year than donor Richard Mellon The powerful influence of the Olin Foundation was less a matter of its wealth (quite modest in fact) than of the perspicacity and persistence with which it invested. Scaife (sometimes called the Daddy Warbucks of the Right during the 1990s) gave to conservative causes in 40 years. Despite their size disadvantage, the right-leaning donors have had many successes. The powerful influence of the Olin Foundation was less a matter of its wealth (quite modest in fact) than of the perspicacity and persistence with which it invested. Through the 1950s and into the 1960s, most of Olin’s giving had taken the form of quite traditional char- ity, like support for Cornell University, his alma mater, and Washington University, in St. Louis, where he lived. In the 1960s, however, as the political and social trends of the day worried the industrialist, his philan- thropy turned in the direction of public policy. In 1969, black militants at Cornell occupied the student union, bran- dished rifles, threatened certain professors, and issued a list of demands that included full pardons for their vandalism and threats. Olin was appalled when the administration capitulated within a day and a half, allowing the gun-toting radicals to march out in triumph. By 1973 he had decided to reorient his philanthropy. “I would like to use this fortune Agenda Setting 53 BETTING ON PEOPLE to help to preserve the system which made its accumulation possible,” he told Frank O’Connell, who managed Olin’s giving. With those words, the John M. Olin Foundation turned into an investment fund for per- sons and groups defending individual liberty, economic freedom, and Western traditions. The foundation sustained many of the people and organizations that led the conservative intellectual revival. It became a generous supporter of think tanks, giving more than $9 million to the American Enterprise Institute and over $6 million to the Hoover Institution. Olin was willing to back brand-new institutions as well as established ones. In 1975, it offered $10,000 to the recently formed Heritage Foundation. Another $10 million would follow over the next quarter century. Olin helped finance Free to Choose, the popular public-television series on free-market economics hosted by Milton Friedman. It financed the creation of journals such as the New Criterion, which focused on arts and culture, and the National Interest, which concentrated on foreign policy. The foundation gave only small grants to the Public Interest, the influential social-issues quarterly edited by Irving Kristol, but it under- wrote Kristol’s positions at New York University and the American Enterprise Institute. For the most part, these were off-campus investments. Yet the Olin Foundation, as we’ve seen, also pursued a special interest in the academy, knowing that if new philosophical paradigms were really going to thrive, proponents would have to find perches at colleges and universities. Its support for campus law and economics centers reflected this belief, and so did a number of other projects.
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