Issue No. 2, May 2014

Enterprise Report Restoring Liberty, Opportunity, and Enterprise in America

Building a Free Enterprise Movement by AEI President Arthur Brooks

The most vulnerable among us need three things from any social justice agenda or antipoverty program: transformation, relief, and opportunity. There are no short- cuts on the path to a flourishing and satisfying life, but the free enterprise system delivers transformation, relief, and opportunity better than any other. That makes AEI’s free enterprise mission a moral one. All of us here are fortu- nate and grateful to be a part of the fight to bring freedom, opportunity, and the earned success and true happiness that can follow, to all Americans. And who better to discuss the achievement of happiness, free enterprise, and the moral link between them than the Dalai Lama, who visited AEI for a two-day summit in February? His Holiness reminded us that personal moral transformation is the essential foundation of a flourishing life. “Happiness,” as the Dalai Lama put it, “comes from within.” We get that transformation by wholeheartedly engaging in four things— faith, family, community, and work. We were delighted that the Dalai Lama found the conversation enlightening as well. He “develop[ed] more respect for capitalism,” he said, after discussing just how important the free enterprise system is to Americans’ engagement in faith, family, community, and work. The Dalai Lama was followed in short order by Bill Gates, who visited AEI in March for a conversation about how, through free enterprise, policymakers and private charity can combine Arthur Brooks forces to fight poverty around the world. President, AEI Philanthropists like Bill and Melinda Gates focus on the second pillar of human flourish- ing—material relief. The Gates Foundation’s work in Africa, for example, prevents disease and modernizes agriculture, bringing relief in a targeted, data-driven way to millions of the world’s poorest. But private philanthropy alone cannot lift up the millions who suffer. Fifteen percent of Americans live below the poverty line in a country where charitable giving totals more than the GDPs of many European countries. A genuine, limited social safety net is indispensable to a free and prosperous society, which is why AEI scholars are working on reforms that will strengthen and preserve our safety net. The third pillar of human flourishing is opportunity. AEI’s are studying the barriers to education, employment, and credit for all Americans, particularly for the poorest among us. Robert Doar, the former human resources commissioner of City, has joined AEI as our new Morgridge Fellow in Poverty Studies. Kevin Corinth, an finishing his dissertation on homelessness at the University of Chicago, will join Robert at AEI in June. To help AEI communicate our moral case for free enterprise as persuasively as possible to every American, we have launched the Campaign for Free Enterprise and American Progress. AEI’s donors are justly proud of the Institute’s 75-year legacy and are MurrayIn Memoriam Weidenbaum, 1927–2014 showing tremendous support as we expand AEI’s communications and research to rise to the challenges At the heart of AEI’s long legacy have of the next 75 years. always been our scholars. One of A critical part of meeting those challenges will the giants in AEI’s history, Murray be developing the next generation of free enterprise Weidenbaum, passed away on leaders. You can read in the following pages about March 20. He was one of AEI’s all that AEI is doing with college students on 400-plus most respected and tireless defenders campuses and with scores of young professionals of free enterprise and was a towering figure in the whose careers are shaped early on by AEI. deregulation debates of the 1980s. (“Don’t just stand Thank you for your commitment to our fight. there, undo something!” he used to admonish us.) He was an economist in five different presidential administrations—most notably in ’s as the first chairman of his Council of Economic Advisers. He served over the years as an AEI scholar, a member of our Council of Academic Advisers, and a coeditor of our influential magazine Regulation.

Photo courtesy of Washington University in St. Louis AEI’s $100 Million Capital Campaign New Building Will Extend Reach and Impact

AEI has raised $70 million toward the campaign goal of $100 million.

AEI wishes to thank the following donors who have agreed to be publicly recognized for their gifts:

THE ANSCHUTZ FOUNDATION LAUREL AND CLIFF ASNESS BNSF RAILWAY COMPANY ESTER AND ARTHUR BROOKS ROBERT CASTELLINI PETE AND MARILYN COORS HARLAN AND KATHY CROW BETH AND RAVENEL CURRY DANIEL A. D’ANIELLO DOUG AND MARIA DEVOS FRANK AND SALLY HANNA AEI is turning a new page in its 75-year headquarters will provide a cutting-edge JENNIFER AND MARC LIPSCHULTZ history. We have launched a $100 mil- communications and media facility, a ROBERT H. MALOTT lion Campaign for Free Enterprise and modern events space, and classrooms DANIEL AND KATHLEEN MEZZALINGUA American Progress, knowing that now to train the next generation of free enter- JOE RICKETTS is the time to redouble our fight for prise leaders. GEORGE R. ROBERTS freedom, prosperity, and flourishing We are creating a number of CHARLES RYAN in America. research chairs and programs and STATE FARM This campaign will allow AEI funding new outreach efforts that will BARBARA AND BILL TAYLOR to move into a permanent home— take advantage of the capacities in E. L. WIEGAND FOUNDATION which we are proud to name after our new building. the vice chairman of AEI’s board, AEI has made tremendous strides Daniel A. D’Aniello—after more than in recent years thanks to our community 40 years leasing space in Washing- of scholars and investors. We are sett- they place in us each day as we fight ton. The location of our future head- ing the bar even higher for the years for our shared values. quarters could not be more fitting: ahead—together we will write the the building is a National Historic next century of the free enterprise For more information on AEI’s Campaign Landmark, and was once home story. for Free Enterprise and American to US secretary of the treasury We are enormously grateful for Progress, please contact Jason Bertsch, Andrew Mellon. the steadfast support of our donors. vice president of development, But this campaign is about much This campaign, and more importantly, ([email protected]; 202.862.5873) more than bricks and mortar. Our new AEI, would not exist without the trust that or visit campaign.aei.org.

3 AEI’s Program on Human Flourishing Why Free Enterprise Gives the Most People the Greatest Opportunity to Better Their Lives

The free enterprise system is the greatest anti-poverty program in human history. It is also the system that puts Americans in the best position to build flourishing families, communities, careers, and spiritual lives—that is, to pursue happiness. AEI scholars are pursuing ideas and policies that will unlock the benefits of free enterprise for more people, especially the poor and vulnerable, through our new Program on Human Flourishing.

“Strictly speaking, I am leftist. But His Holiness the Dalai Lama at AEI rightists are also human beings. AEI’s main purpose is to build a A partnership between AEI and the Mind & Life Institute (an organization that began as an intellectual experiment between the Dalai Lama, entrepreneurs, and happy society, so therefore I neuroscientists) brought His Holiness to AEI headquarters for a summit on free accepted their invitation. In the enterprise and human flourishing on February 19–20. The event drew internation- past, I thought capitalists only al attention, with Radio Free Asia providing simultaneous translation in Tibetan take money—then exploitation. and Mandarin and headline coverage in Vanity Fair, the New York Times, the Now, I have developed more Washington Post, the Wall Street Journal, the Huffington Post, Yahoo! News, and respect for capitalism.” numerous other outlets.

“We are selfish. It’s important for our survival. But because things are interdependent, it’s in your own interest to take care of others. It should be wise selfish, not fool- ish selfish. If you take care of oth- ers, you get more benefit.”

—His Holiness the Dalai Lama

His Holiness the Dalai Lama and Arthur Brooks

Jonathan Haidt (NYU business ethicist), Daniel Loeb His Holiness shares lunch with AEI vice (founder, Third Point LLC), and Glenn Hubbard (not chairman Daniel D’Aniello and AEI board pictured, dean of Columbia Business School) join the chairman Tully Friedman. panel discussion of the morality of free enterprise. 4 Bill Gates Comes to AEI New Morgridge Fellow in Poverty Studies leads AEI’s Economic Opportunity Research

As ’s human resources commissioner under Mayor Michael Bloomberg, Robert Doar oversaw the largest social services agency in the country and helped more than 500,000 New Yorkers transition to work and begin to earn their own success. Robert brings this experi- ence to his work building a policy consensus on how to help the poor and vulnerable move up the socioeconomic ladder. A Wall Street “When people say we should Journal op-ed he wrote recently explained how charities and shelters that focus raise the minimum wage—I know on transformation, relief, and opportunity for the homeless are more successful some economists disagree—but than those that provide only material relief and ignore the other two pillars of human flourishing. I worry about what that does to job creation—intentionally Joining Robert in expanding AEI’s work on poverty research dampening demand in the part is Kevin Corinth, a new AEI fellow who finishes his PhD of the labor spectrum that I’m at the University of Chicago this summer. He uses survey most worried about.” data to compare the effectiveness of homeless shelters and other sources of basic material relief for the poor. At AEI, —Bill Gates he will help policymakers ask what the most vulnerable Americans really need and how current government policies could do more to Bill Gates joined Arthur Brooks for a actually improve their lives. conversation titled “From Poverty to Prosperity” at AEI headquarters on March 13. Their conversation touched AEI Scholars’ Latest Efforts: Strengthening Opportunity on a range of topics, including how for Vulnerable Americans the Bill & Melinda Gates Foundation is bringing material relief to Africa’s poor Aparna Mathur, AEI resident scholar, has studied wages by leading disease prevention and and income taxation for more than a decade. In recent public health campaigns and working testimony before the US Congress Joint Economic Commit- to open up free markets for farmers tee, she explained why she has turned her attention to an on that continent. Gates then talked opportunity agenda for the very poorest Americans: “What about the foundation’s emphasis on is often lost in this back and forth [over income inequality] is the focus on the poor, because a change in income distribution says little about domestic education reform, and its how people are faring in absolute terms at the bottom.” efforts to unlock greater opportunity for thousands of young Americans. Charles Murray is working on a new book, By the People, Much greater opportunity for working on the health of community ties in the . While Americans, Gates noted, is also within Murray concedes that the American landscape may no reach, as long as we enact the right longer resemble the system our founders envisioned, he is economic policies. After hearing optimistic about trends in community life over the last 30 Gates’s thoughts on domestic and years that point to a reincarnation of some of America’s international economics, the audience most dynamic qualities—ones that lay dormant during the New Deal era. might have been forgiven for mistaking Look for By the People early next year, and Murray’s latest, The Curmudgeon’s him for an AEI scholar. Guide to Getting Ahead, in bookstores now.

5 AEI on Campus Doubling Number of Executive Councils

Ambitious, intellectually curious college students are often disillusioned by the political scene they find when they get to campus. They can join the entrenched left-leaning intellectual and social main- stream or the isolated conservative minority, but rarely do the two sides engage each other. AEI now gives students a third option: join a community of scholars, policy leaders, and entrepreneurs whose

positive message—that free enterprise unlocks the most opportunity for all of influential students who see AEI The University of Southern Americans, especially the poor—is as the home of reasoned discourse California Executive Council introduced reshaping the right and attracting on campus. AEI’s policy work to a completely new

some very nontraditional allies. At Boston College, AEI’s Executive audience by cohosting a recent event on

AEI Executive Councils—groups of Council hosts Coffee & Conversation the US response to Putin with the Russian

four to five handpicked student leaders each month for a rotating cast of stand- Culture Club. In a high-profile campus with the greatest potential for impact— out students and professors. The council appearance, AEI director of Russian

launched on 25 select campuses last includes BC’s student government presi- Studies Leon Aron talked via Skype to fall. Executive councils direct AEI pro- dent and other campus leaders capable a packed lecture hall about the stakes grams on their campuses and gather of drawing these peers into serious involved in the Sochi Winter Olympics. in Washington, DC, for leadership public policy discussions. AEI’s Campus Programs team later conferences throughout the year. The five members of the University organized a virtual town hall on These teams of student government of Texas Executive Council each meet for the Ukrainian crisis in response to presidents, campus newspaper editors, lunch with 10 other campus leaders student demand at a number of schools and Ivy League quarterbacks are throughout the year, building a strategic across the country, and many executive charged with bringing student leaders set of campus allies. One council mem- councils have taken the opportunity to of every stripe into the debate. Execu- ber has interned in the office of connect with Russian and Slavic student tive councils develop a wide network Republican governor Rick Perry and clubs that are especially interested in another in the Obama White US foreign policy. House, so their network spans Already this spring, AEI has the political spectrum. The launched 10 new executive councils, students have brought five and we are on target to be on AEI scholars to UT since the 50 campuses by the end of the school fall, hosting events with campus year. Slowly but surely, these student groups from the right and left leaders are raising the tone of political and with the University’s conversation on campus and engaging Clements Center for History, their peers in a battle of ideas that The Dalai Lama with students from AEI’s Executive Councils. Strategy, and Statecraft. AEI has equipped them to win.

6

degree, so that you have an understand- ing of how you will use it. Katherine Zimmerman What’s the biggest misconception Making Her Mark on policymakers and the public have the Policy Community about al Qaeda? What have you learned from your research that surprised you? AEI Critical Threats Project senior analyst Katherine Zimmerman is drawing attention for her work on al Qaeda. Since graduating from Yale University in 2009 and coming I have to explain the definition of al to AEI, she has testified before Congress on al Qaeda’s global expansion, written for Qaeda all the time. It’s a game of the Washington Post and Wall Street Journal op-ed pages (editors praised her piece as semantics, but it’s an important one. “a service to Journal readers and to Americans generally”), appeared on national The administration uses “al Qaeda” news programs, and corresponded with top generals about the al Qaeda threat. to name the group now led by al Zawahiri in Pakistan, and very rarely Growing up, did you want to minds, and one of the most rewarding do officials talk about the broader study the Middle East? experiences I’ve had has been working “al Qaeda” network. So while we with my interns and developing them have dedicated enormous attention I’ve been fascinated with the region into junior analysts. When I was a stu- to al Qaeda in Pakistan, we are only since high school and even tried to dent, I wish I had had the perspective fighting a fraction of the network. learn Arabic as an independent of someone 5 or 10 years older who In fact, al Qaeda’s primary threat to study, but was foiled. I went to college could provide advice on how to break Americans appears to come from knowing that I wanted to end up into the DC job market. its group in Yemen, which has targeted working on the region. our homeland at least three times in the When I came to AEI as an intern, You went from AEI intern to senior past five years. the Critical Threats Project (CTP) was analyst with a rising profile in the just beginning. I had never studied ter- defense and intelligence community. Where’s al Qaeda headed in the rorism and knew very little about some How has the environment at AEI next 5 years? 10? of the most volatile countries, but I guided your development? I will not predict the future of al Qaeda, learned on the job and enjoyed the I have benefited from great advice and but over the past few years, conditions analytical work. Part of what we do is fantastic mentors at AEI, starting with my have tilted considerably in its favor. put together bits and pieces of a puzzle now-former colleague who offered me New governments swept in by the gleaned from open sources and then try an internship and including Frederick Arab Spring have their hands full, to describe what it’s showing. Kagan, director of CTP; Danielle Pletka, and fighting al Qaeda’s growth may AEI didn’t have a campus program vice president of Foreign and Defense not be their first priority. when you were in college. What Policy Studies; and Veronique Rodman, are some of the opportunities director of public affairs. To read Katherine’s work, visit her now offered that you would have scholar page at www.aei.org/scholar benefited from? What advice would you give a /katherine-zimmerman and visit college student who is thinking I’ve enjoyed working with AEI on www.criticalthreats.org. about a career as a scholar? Campus and recently returned to my alma mater, Yale, to talk to students Spend some time in the professional there. AEI attracts very bright young world before pursuing an advanced

7 Cybersecurity Expert Shane Tews Joins AEI

The United States, the absence of US Internet governance? visiting fellow Shane Tews brings experi- prompted by interna- Will the Internet remain “borderless,” or ence from the White House, Capitol Hill, tional backlash over will governments begin to censor and and executive roles at a web hosting revelations of National control it within their realms? And how and security giant and a boutique com- Security Agency spy- can businesses, whose cybersecurity munications firm to her role at AEI. ing, recently interests often diverge from govern- AEI will produce regular reports on announced that it will give up the last of ment’s, contribute effectively to US cyber- the issues and plans to bring business its roles administering the Internet. The security and national security policy? leaders and policymakers together for news prompted a flurry of cybersecurity New AEI Center for Internet, working groups on cybersecurity and questions: who will safeguard users in Communications, and Technology Policy Internet governance.

The Baupost Group’s Seth Klarman Elected to AEI Board of Trustees

AEI is pleased to helped him earn his own success,” the seminal value investing textbook to announce that said president Arthur Brooks. “We are which Warren Buffett and others have Seth Klarman, presi- grateful for his service since March credited their success. Mr. Klarman dent and CEO of 2013 as a co-chair of AEI’s National has also been featured in a variety The Baupost Group, Council, and are honored to have him of investment industry publications. has joined the Insti- alongside us in the fight to expand In addition to his leadership tute’s Board of Trustees. Mr. Klarman freedom, opportunity, and enterprise in at AEI, Mr. Klarman serves as has had primary responsibility for America and around the world.” cochairman of the board of trustees managing the investments of Baupost The author of modern-day value of Facing History and Ourselves since the firm’s founding in 1982. investing classic Margin of Safety and serves on several other nonprofit “Seth brings to AEI his tremendous (1991), Mr. Klarman was chosen as boards. He and his wife, Beth, live experience, leadership, and passion lead editor for the sixth edition of in Boston. for free enterprise—the system that has Graham and Dodd’s Security Analysis,

The American Enterprise Institute is a community of scholars and supporters committed to expanding liberty, increasing individual opportunity, and strengthening free enterprise. AEI’s work is made possible only by the financial 1150 Seventeenth Street, NW backing of those who share our values and support our aims. Washington DC 20036 202.862.5800 | www.aei.org To learn more about AEI’s scholars and their work, visit www.aei.org | www.american.com | www.aei-ideas.org www.aei.org/rss

www.facebook.com/AEIonline To find out how you can invest in our scholars’ work, visit @AEI www.aei.org/support www.youtube.com/AEIVideos

8