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Business: The Other Think Tank

5 minute read

G.O.P. government in exile

Ever since New Deal days, the Brookings Institution has wielded immense influence in Washington’s corridors of power as the nation’s pre-eminent liberal think tank—to the discomfort of conservatives who respected its solidly researched studies of wide-ranging economic issues enough to wish that their side could produce equally good ones. Now it can, through the American Enterprise Institute for Public Policy Research. The Washington-based A.E.I., founded back in 1943, long languished in obscurity, but during the 1970s it has steadily gained enough intellectual weight to become a sort of Republican Brookings.

A.E.I.’s influence, ironically, is being magnified by the G.O.P.’s defeat in last year’s presidential election. Out-of-office Republicans have been flocking to A.E.I. in such numbers that, echoing a joke often made about Brookings during the Nixon-Ford years, the institute could be described as almost a Republican government in exile. Unlike Brookings, where most appointments are full time, A.E.I. has only a small core of a dozen program directors and six resident scholars, and depends heavily on a large and highly prestigious group of outside consultants and experts. Paul W. McCracken, once chairman of President Nixon’s Council of Economic Advisers, serves part time as head of A.E.I.’s “council of academic advisers” and plays a leading role in choosing what subjects the institute will study and who will investigate them. Others helping A.E.I. on a part-time basis to build up expertise include two leaders of the Nixon Cabinet: Melvin Laird, former Secretary of Defense, who has just finished an A.E.I. report on energy problems, and William Simon, Secretary of the Treasury until last January, who is starting an A.E.I. study of tax policy.

Then, in addition to a permanent staff and the part-timers, there is a category of “senior fellows,” who often undertake research projects. Among the senior fellows are Laurence Silberman, a former Deputy Attorney General; John Robson, former chairman of the Civil Aeronautics Board; and—oh, yes—one Gerald R. Ford, the institute’s only “distinguished fellow.” The former President, who maintains an office at the institute and draws $40,000 a year from A.E.I., will participate in seminars or conferences at ten colleges and universities this fall under A.E.I. auspices. For further prestige, A.E.I. can boast the consulting services of Academic Adviser Milton Friedman, winner of the 1976 Nobel Prize in Economics, and Senior Fellows Irving Kristol, Henry Luce Professor of Urban Values at N.Y.U., and Ben Wallenberg, the conservative Democratic election analyst.

Not surprisingly, in view of the conservative lineup—and its origins as a business lobby—the institute is committed to free markets. In analyzing economic problems, says Institute President William Baroody, the son of a Lebanese immigrant, “our guys will look first for a market solution. If they can’t find one, they’ll seek a mixed market-Government solution. If they can’t find that either, then :hey’ll suggest a Government solution.” One of A.E.I.’s preoccupations is pointing out the distorting effects of Government regulation on the economy. Laird’s energy study goes so far as to assert that the U.S. has no energy shortage as such but a “production shortage,” brought about by Government regulation that has artificially heightened demand and held down exploration and development by keeping prices unrealistically low.

Yet A.E.I. is no party-line outfit. Wiliam Fellner, a onetime Republican member of the Council of Economic Advisers and now an institute associate, once wrote a report contending that the Nixon Administration’s initial fiscal and monetary policies were overly restrictive. This year another A.E.I. report sided with President Carter’s decision to stop the Clinch River nuclear breeder-reactor project—in opposition to the views of Distinguished Fellow Ford, who wanted continued development.

Gauging A.E.I.’s influence is difficult, as the institute concentrates on trying to develop conservative economic and political ideas, and rarely takes a formal position on particular measures. But institute members can point to some specific successes. Sharp criticism by Murray Weidenbaum, an A.E.I. fellow and member of TIME’S Board of Economists, helped kill a 1975 proposal by then Vice President Nelson Rockefeller to pour $100 billion of federal money into an emergency energy program. Earlier this year the institute insistently pointed out what it saw as the bureaucratic dangers of the proposed Agency for Consumer Advocacy, which now seems dead. More generally, Tom Dernburg, chief economist for the Joint Economic Committee of Congress, says: “I certainly take their work seriously. A lot of it is very high quality.” Winning such respect from moderate and liberal Democrats is undoubtedly the institute’s biggest success.

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