• How to Start and Grow a Think Tank
  • Prologue
  • Planning
    • Guiding Principles for State Think Tanks
    • Principles, Specialization, and Free-Market Think Tanks
    • SPN Professional Peer Mentoring Program
    • Do's and Don'ts for Lobbying Group: Charity Activity in an Election Year
    • Holding Think Tanks to High Standards
    • A Think Tank's Bottom Line
    • Measure Success, Not Just Output
    • Waging the War of Ideas: Measuring Success, Maximizing Impact
    • Sample Business Plan
  • Legal Documents
  • Staff
  • Board
  • Sample Board Job Descriptions
  • Infrastructure
  • Fundraising
  • Events
  • Networking and Outreach
  • PR and Marketing
  • General Management
  • Resources
• Grassroots Leadership Guide to K-12 Education Reform
• Taking Donors Seriously
• Fundraising Fundamentals

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Principles, Specialization, and Free-Market Think Tanks

Joseph L. Bast, Heartland Institute

During the past 21 years I have observed a dramatic change in how free-market think tanks are organized, their tactics and measures of success, and also their influence. Knowing how and why the movement has changed can help think tank leaders and philanthropists better understand what we are trying to accomplish and why our strategies and tactics have changed.

The Founders' Vision

Pioneers of the modern free-market (or "classical-liberal") movement such as Friedrich Hayek, Milton Friedman, and Leonard Read, believed intellectuals play a key role in influencing public opinion and eventually public policy. Their theory of political change was famously expressed by John Maynard Keynes:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe they are quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

Targeting economists and other intellectuals before they become defunct is therefore a highly leveraged way to influence the views and actions of practical men and women.

According to the founders' model, ideas are like bombs tossed out in hopes of hitting one of the other side's intellectuals and turning him (or her) in our direction. The think tank's principal weapon is publications: paradigm-shifting books, such as Hayek's The Road to Serfdom, and shorter policy studies and reports applying free-market ideas and insights to the issues of the day.

Communicating with politicians, while not prohibited under this model, is nevertheless discouraged. Typical was Lord Harris's warning, "You don't want to get drawn in behind the chariot wheels of politicians, who will use you and misuse you if you're not very careful."

What Do We Do After the War?

In the years since 1947, when Hayek convened the meeting that led to the creation of the Mont Pelerin Society, socialist dominance in the public-policy debate has gradually given way to superior analysis and reasoning, as well as the grim evidence of experience. By the end of the 1980s, some of us perceived that the war of ideas was over and free-market ideas had triumphed. The new challenge was to turn that victory into real public policies.

Free-market think tanks were now free to (a) declare victory and go out of business, (b) keep fighting the war to ensure that statist ideas do not make a comeback, or (c) specialize by topic, tactics, or geographic areas to acquire greater expertise and have greater impact on political institutions.

Think tanks have pursued all three paths, though I can think of only one, the Bionomics Institute, that was shuttered when its principals concluded its job was finished. Some keep fighting the war of ideas -- I call them traditional think tanks -- while others have evolved into wholesalers and retailers of intellectual products taken largely, but not entirely, from traditional think tanks.

Traditional think tanks, which resemble the think tanks described by the founders of the modern-day free-market movement, are still urgently needed. No victory in the realm of ideas is ever permanent. As Milton Friedman said in a Reason interview, "All battles are perpetual. You go back in the literature of economics, and you'll find the same kind of silly statements 100 years ago, 200 years ago. And you'll find the same sensible statements the other way."

Specialization

The third path, after going out of business and continuing to fight the war of ideas, is specialization. Think tanks that specialize are often characterized as "action tanks" rather than "think tanks," but there is a lot of thinking going on behind their doors. It is reliance on or use of theory and principles that distinguishes them from mere advocacy and special interest groups, and therefore ought to be emphasized, rather than overlooked, if we want these groups to remain true to free-market principles.

The free-market movement has many organizations that focus on one or a small number of topics. To mention only a few, those that focus on taxes include Americans for Tax Reform, Tax Foundation, National Taxpayers Union, and Institute for Research on the Economics of Taxation (IRET); on regulation, Mercatus Center, Center for Regulatory Effectiveness, and AEI-Brookings Joint Center for Regulatory Studies; on environment, PERC, Competitive Enterprise Institute, George Marshall Institute; on health care, the Galen Institute and the Center for Long-Term Care Finance; on school reform, the Education Intelligence Agency, Education Policy Institute, Thomas Fordham Foundation, Milton and Rose Friedman Foundation, and Alliance for School Choice; on second amendment issues, the National Rifle Association and Gun Owners of America; on the "war on drugs," the Drug Policy Foundation and NORML; and on legal reform, the Institute for Justice, Pacific Legal Foundation, and Landmark Legal Foundation.

Some think tanks, such as The Heartland Institute, focus on promoting the work of other think tanks rather than producing it themselves. Others, such as Americans for Limited Government, have developed skill in grassroots organizing. And still others concentrate on reaching college students (Young Americas Foundation) or training the next generation of free-market leaders (The Leadership Institute). The success of each type of group needs to be measured by different outputs and each type has its greatest impact on different stages in the evolution of a public policy issue.

A study available on The Heartland Institute's Web site catalogues 275 U.S. think tanks according to the 11 activities found in the taxonomy. (See the Appendix to "A Guide to Classical-Liberal Think Tanks" at http://www.heartland.org/pdf/16422.pdf) Contact information for every group is easily found on the Internet, or by going to the "links" section of The Heartland Institute's Web site at www.heartland.org.

Too Many Think Tanks?

In the years since the early 1980s, traditional free-market think tanks have grown enormously in budgets, staffs, and output (publications), but not very much in number. The same time period saw rapid growth in the number of smaller think tanks that specialize by topic, audience, strategy, or geography.

The sheer number of free-market think tanks has led some to suggest there are too many. Milton Friedman told Reason's Brian Doherty in 1995, "You have Reason magazine, you have Liberty magazine. You've got all of this stuff that spouts out from the Cato Institute and the Competitive Enterprise Institute and a half dozen other think tanks. In fact, I think there are too damn many think tanks now." Doherty asked, "Why do you say there are too many?" Friedman replied, "You don't have the talent for it."

It is worth pondering the possibility that there are too many think tanks, particularly since nearly all think tanks are nonprofit organizations that respond to market signals only imperfectly. Donors give for many reasons, only one of which is the effectiveness of the beneficiary in actually accomplishing its stated mission. It would be quite surprising if there weren't some free-market think tanks that continue to exist only because of the egos, loyalty, legacies, or poor judgment of a few large benefactors.

However, there is a stronger argument to be made that there are not too many free-market think tanks. Adam Smith taught us that the principal benefits of specialization come not from the expertise that comes with doing one task over and over again, but from resources being devoted to where they are most efficiently applied. Trade then allows that greater efficiency to benefit both parties to every voluntary transaction.

Smith also observed that specialization is limited by the size of the market. Since the market for free-market solutions has expanded during the past half-century, so too have opportunities to create new think tanks specializing in particular subjects, tactics, or geographically defined areas.

Milton Friedman, just before making his "too damn many think tanks" remark, said:

But I think the libertarian movement is doing fine. I think that Reason magazine has been remarkably good; it has been very effective. It takes many kinds of people to make a movement. And one of the most important things are publications. In any activity you have manufacturers, wholesalers, and retailers; and all three are essential and necessary. There are only a relatively small number of manufacturers of ideas. But there can be a very large number of wholesalers and retailers.

State-Based Think Tanks

Geographic specialization is represented by the state-based think-tank movement. There are at least 48 such organizations (the number who belong to State Policy Network) in the U.S., busily bringing free-market ideas to bear on issues of concern to state and local elected officials.

Being on the ground in their respective states' capitals or major media centers, state-based think tanks are better able than national organizations to tap into what Friedrich Hayek called "knowledge of the particular circumstances of time and place." Because they are locally organized and primarily locally funded, their senior management is also more likely to act appropriately on that information, rather than allow national figures to dictate their priorities and choices.

The deliberate choice being made by many state-based think tanks to focus on action instead of theory is shown by the results of a survey of the members of State Policy Network, an organization created to support state-based free-market think tanks, conducted during August and September 2004.

When asked "What policy issue in your state needs additional policy research/data assistance," only 1 percent said "limiting the role of government." By contrast, 24 percent said health care/Medicaid, 18 percent said fiscal management, 17 percent said education reform, and 7 percent said tax policies.

When asked to name the "issue your organization is most concerned about," only 6 percent said "defining role of government," while 26 percent said education reform, 25 percent said budget deficits/overspending, and 22 percent said tax reform. When asked to rank a list of activities according to "how effective each activity would be in influencing the policy discussion in your state," 87 percent said media outreach, 85 percent said grassroots/coalition building, 78 percent said influencing legislators, and 70 percent said litigation support were "somewhat" or "very" effective. Identifying, supporting, and influencing academics wasn't even in the list.

It is striking how the tactics and priorities of these think tanks differ from those of traditional national think tanks. Many of them would probably be unrecognizable to Lord Harris and other founders of the first generation of think tanks. None of them identifies academics as their main audience anymore, or the philosophy of limited government as their main message, or producing "paradigm-changing" books as one of their expected outputs.

SPN members have clearly internalized the message that the "war of ideas" has been won and it is time to change public policies through effective media campaigns, grassroots organizing, and direct interaction with elected officials.  My organization, The Heartland Institute, has made the same transition other think tanks have, devoting less time to academics and much more to elected officials. In fact, our primary audience is state elected officials, and our publications are designed to reflect input we solicited from them. The average length of a Heartland-sponsored publication is now about 1,400 words, and it is rapidly converging with the length of the average newspaper story (1,000 words).

A Changing Environment

Think tanks have also had to change to respond to changes in the environment in which they operate. For example, FreedomWorks and Americans for Prosperity are using a franchising model to lower costs and reduce the risk of failure for start-ups. TechCentral Station is a hybrid think tank and public affairs company, while the American Institute for Academic Research has an investment subsidiary that subsidizes the think tank. The "cottage industry" model favored by the founders in the 1940s and advocated even in the 1980s and 1990s by the Atlas Economic Research Foundation and many funders is unlikely to still be the best organizational form.

The use of litigation to change public policy was rare when the founders were giving advice on the organization and mission of think tanks. Now ambitious state attorneys general are attempting to set national policy on everything from tobacco and consumer protection laws to the price of prescription drugs and emissions from cars and trucks. Many think tanks now have litigation divisions or participate in lawsuits brought by think tanks that specialize in litigation.

Immigration, demographic change, and feminism have made America a more diverse place than it was during the 1940s and 1950s. More blacks, Latinos, and women are now intellectuals and opinion leaders and they form important voting blocs. Think tanks must now take time to translate their assumptions and ideas into terms that these groups can understand and embrace.

A steep decline in popular literacy, partly attributable to television and video games, has made the job of a think tank more difficult than it was 50 or even 20 years ago. Today's high school and college graduates have read much less than their counterparts of a few decades ago. Economics and history, two key disciplines for understanding classical liberalism, are almost entirely missing from the curricula of many high schools and colleges.

Of course, this list could go on. It makes apparent why today's think tanks necessarily are organized differently, use different tactics, and have missions different from those envisioned by the founders of the modern free-market movement.

Conclusion

Victory in the war of ideas between classical liberals and socialists gave free-market think tanks more resources to pour into basic research on the intellectual foundation of classical liberalism, as well as the opportunity to launch organizations more adept at influencing public policy. Thanks to these new think tanks, the free-market movement today is decentralized, innovative, and growing.

Groups such as the Philadelphia Society, State Policy Network, and The Heritage Foundation are performing a vital service by making sure the staffs of the groups that make up the free-market movement meet frequently to trade ideas and experiences, and thus learn what works, what does not, and who they can "trade" with to increase their own efficiency.

Today is not 1944, when The Road to Serfdom was published, or 1962, when Capitalism and Freedom was published, or even 1980, when Ronald Reagan was elected President. We need twenty-first century tactics to fight a twenty-first century foe. Thankfully, free-market think tanks have evolved to meet that challenge.

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Joseph L. Bast is president of The Heartland Institute and coauthor of nine books, most recently (with Herbert Walberg) Education and Capitalism (Hoover Press, 2004).