Selling Ideas in a Rationally Ignorant World

by Fred Smith

CONSERVATIVE INTELLECTUALS ARE INCREASINGLY frustrated at the policy impasse of the last five years. Weren’t we told that if we built a better mousetrap, the world would beat a path to our door? With a Republican Congress, shouldn’t we have expected more reform? We seem to be winning the War of Ideas – why aren’t we winning the war?

The answer, in part, is better marketing. Selling is necessary whether we’re dealing with soap or school choice initiatives. Neither a policy reform idea or a bar of soap is likely to walk off the shelf by itself. We’ve become pretty good at analysis but we must improve our marketing skills. This problem isn’t new, of course. We’ve dominated the think tank world, but few intellectuals are natural marketers. Over the last decade, most of our groups have recognized this lack, and we’ve added marketing staff and mounted aggressive outreach programs. Still, the problem persists. Why?

Let me suggest that neither conservatives nor libertarians have yet fully understood the ways in which the marketing of policy differs from the marketing of product. You can’t sell welfare reform in the same way you sell soap. Conventional marketing is a three-stage process: Analyze the problem, find a solution, and educate the customer. Marketing Science 101!

And, indeed, in the private sector, this type of fact-based marketing strategy can be very effective. Unfortunately, think tanks have tried to replicate that strategy in the policy marketing world: We’ve analyzed government programs, developed appropriate reforms, and then sought to educate the public on their merits. Indeed, we’ve inundated them with policy papers, monographs, books and conferences. But they don’t seem to be reading them – why not?

After all, comparable efforts in the private sector do work. Marketing materials informing consumers about the virtues of a specific college or pension plan or home refinancing option are sought after by potential customers. In the private sector a quality product combined with a thoughtful consumer education campaign will generally succeed. The reason is that facts influence our choice and our choice directly affects our welfare.

And it is this last point that makes policy marketing so very different from product marketing. Policy facts are interesting – some people will read them – but then, so what? Sure we’re affected by regulations and taxes and myriad other government policies, but what can we do about them? For most people, the answer is “Not much!” As a result, the reasonable man will spend little time on political issues. And, indeed surveys show that many Americans know the names of neither of their senators. Now to us policy wonks, this may seem a horrible dereliction of civic duty. But to people in the real world, does it really matter whether their senator’s name is Murkowski or Milkulski?

Americans are busy people. They have real lives. They don’t have time to become expert on everything. And they most assuredly don’t read the Federal Register before dozing off each night. They rationally devote time to becoming informed about those things they can do something about, which means that they are rationally ignorant about most things in the political realm. Yet, we in the policy world keep trying to educate them, to make them as knowledgeable as we are! Bad idea.

In politics, people aren’t stupid because they’re stupid!
They’re stupid because they’re smart!
And, if we try to make them smart,
We’re being stupid!

Yet, although people will not be knowledgeable, they will have opinions. And public opinion is important in our democracy, because it defines the bounds of the politically feasible.

But do we have to lose, just because we’re right? No! Yet if knowledge doesn’t determine public opinion, and if we can’t rely on policy papers, how can we influence public opinion? The answer, suggested by the late political scientist Aaron Wildavsky, is a values-based (rather than a fact-based) marketing strategy. People encounter a policy proposal and quickly assess whether the reform idea seems to advance or threaten their core values – then they support or oppose the idea accordingly. Not much time is spent on this assessment; but the results are important, and we should seek ways to show how our policies advance their values. There’s not much we can do to change people’s values, and issues are what they are. But, we can (and should) positively link our policies with their values.

So, what political values are important? Wildavsky suggested three: Individualism (How would the policy affect freedom or liberty?); Hierarchy (How would the policy affect the ability of our society to function or to produce wealth?); and Egalitarianism (How would the policy affect fairness or the fate of the less fortunate in our society?).

Free market and conservative think tank staff have naturally tended to emphasize freedom and economic growth values. These are the values that have motivated most of us to enter the policy world. And prior to the Reagan Revolution, they worked. With the economy in disarray and the Evil Empire seemingly becoming ever stronger, these values were dominant. When times are bad, the “Get off our backs!” and “It’s the economy Stupid!” strategies can be very compelling. Indeed, the Republicans’ appeal to these values brought them much success – checking the growth of taxes and regulations and the ending of the Cold War. But those successes changed the values landscape. Once freedom and wealth seemed secure, fairness moved to center stage. America is now focused on how policy affectsminorities, the elderly, and, of course, the children. And in our relatively wealthy and free America, these egalitarian concerns will only become more salient.

Unfortunately, neither conservatives nor libertarians address such egalitarian fairness issues very well. We seem to care more about money than the health of people or our planet. We focus on freedom (to many an abstract concept) rather than on explaining how the less fortunate might take advantage of such freedom. To egalitarians, freedom sometimes seems merely a tactic to evade responsibility – “freedom,” they think, “is just another word for nothing left to lose!” Our side seems obsessed with arcane budget battles and the nuances of tax policy. Our advocacy arguments sound harsh and our factual arguments are not really heard (because of the rational ignorance problem again).

We can do better. Tax reform advocates might well focus less on the “It’s your money!” argument and more on how reduced taxes would extend the job expansion trends of the last few decades. We should note that the greater tax and regulatory burden in Europe has made their unemployment problem much worse and much more unfair. That is, we could and should argue tax reform on egalitarian grounds. To date, we haven’t even tried.

Or consider the gun control debate. Our arguments have focused on the Constitution and individual rights. Valid arguments, but those finding these arguments persuasive are already opposed to such restrictions. We’ve done too little to dramatize how private gun ownership has made the world safer for the more vulnerable, namely the residents in lawless inner city areas or single females. We’ve barely attempted to rethink the arguments that once portrayed the gun as the Great Equalizer – bringing egalitarian fairness to a lawless frontier society.

We’re learning, though. The case for school choice is increasingly made on the impact such programs will have on the inner city poor. Even here, however, we often slip into the technical details of how school choice leads to improved SAT scores rather than how it democratizes education, making it possible for inner city Johnnies to read just as well as their suburban counterparts.

Welfare reform, too, became a successful issue only after we began to point out that it was a way of helping the poor regain dignity and to expand their opportunities – not simply a way of saving money and reducing bureaucracy. Indeed, the “compassionate conservatism” term can itself best be viewed as a conservative challenge to the liberal dominance of the egalitarian moral high ground.

None of this means that we should abandon our principles or pander. There is no inconsistency between policies that advance liberty, improve the economy, and expand opportunity. America is a fairer nation because we are wealthier and freer! We are the nation that democratized the privileges of the elites in Europe. They invented the car; we put the world on wheels. But, we must ensure that we make that point – that we talk about how our policies help the little guy as well as the entrepreneur. In effect, our challenge is to find ways to “wrap” our policies (which truly are fair) in an “egalitarian” wrapping paper. Besides, if we can persuade egalitarians to look at our reform ideas, they might just like them.

It may seem like a cliché, but in the political world of rational ignorance, people don’t care what we know until they know that we care! We do care. We should say so.

Mr. Smith is Founder and President of the Competitive Enterprise Institute. This article is based on a presentation he made at the 1999 State Policy Network Annual Meeting in Dallas.

Empowering Health Care Consumers through Tax Reform

by Grace-Marie Arnett

FOR DECADES, POLICY MAKERS at all levels of government have been searching for ways to help Americans gain greater access to affordable health care. As costs and the number of uninsured continue to rise, a different approach clearly is needed. In Empowering Health Care Consumers through Tax Reform, policy experts, known as the Health Policy Consensus Group, explore the intersection of health and tax policy for solutions. These economists and other health policy advisors, business group and union representatives, physicians, and political leaders describe the distortions to the health care system caused by a 50-year-old provision in the tax code, and they paint their vision of a revived free-market system.

According to the U.S. Bureau of the Census, more than 43 million Americans lacked health insurance at some point in 1998. Those with insurance fear they will lose it if they lose their jobs and are increasingly angry over managed care restrictions negotiated by their employers. Health care and health insurance costs continue to price millions of people out of the market. Those without health insurance are primarily working Americans and their dependents who do not get coverage through their jobs and who make too much to qualify for public programs and too little to buy their own expensive health polices.

In their “Vision for Reform,” the Consensus Group charts a clear objective: “Rather than replace the current structure with a government-driven system, we propose a mechanism to achieve genuine reform by creating a competitive, consumer-driven marketplace.”

And, to accomplish this goal, the following are core principles—identified by the Consensus Group after intense debate—to guide policymakers and the public in making key decisions about creating a true consumer-driven health care system.

Consumer choice: Individuals should have choices in the medical care and health coverage they obtain, whether they secure coverage as individuals or through their employers or other groups. Government policies should expand the opportunities for individual choice without dictating or distorting these choices.

Competition: Consumers of medical services will receive the best value when providers are competing to offer the best price, quality, and services. Therefore, the system should rely on market competition, not government regulation or price controls, to promote efficiency, quality, and value.

Responsible budgeting: Government incentives to help targeted populations obtain private health coverage should be explicit, on budget, and reviewable.

Fixed and limited incentive: Individuals and families with the same incomes should receive the same benefit when purchasing health insurance, regardless of their employment status or whether their employers offer health insurance. Individuals should not be able to increase their claim on taxpayer revenues by purchasing more health coverage.

Expanded access: In a market based upon consumer choice, a more attractive range of options for health coverage would be available to a wider range of people, including those currently without health insurance. Once the market is functioning more efficiently, it will be clear whether further legislation is needed to enhance people’s ability to secure health coverage.

Responsible insurance: Health coverage should provide, at a minimum, protection against catastrophic loss—namely, high-cost, low-probability medical events. The tax system has encouraged movement away from the basic principles of insurance; instead, health coverage has become a way to pre-pay routine medical bills. A first step toward reducing the number of Americans without health insurance is through insurance that provides access to medical care and protection against large expenses in the event of catastrophic medical events.

Public-sector choice: Given the rapidly rising costs in federal health care programs, especially Medicare and Medicaid, the federal government should make full use of private-sector competition to control costs by giving beneficiaries more options to participate in the private market.

Cost awareness: Programs that enhance individual purchasing power will be more efficient because costs will be more visible to consumers. Programs and plans that make payments directly to providers insulate consumers from costs, artificially increase demand, and distort the health care marketplace.

Full information: Employers who provide health insurance should periodically inform their employees about how much of their compensation is being spent on health benefits and that this spending has reduced their cash wages by a commensurate amount.

Community versatility: The strength, diversity, and vitality of private-sector community organizations are an important resource in the health sector. Communities should experiment with public-private partnerships and other solutions for providing health care to low-income citizens, utilizing local resources to solve unique community problems.

Group purchasing: Tax and regulatory barriers to creating competitive private health care purchasing groups should be eliminated. Barriers to the creation of innovative provider groups should also be eliminated.

Value: As a result of implementing these principles, consumers will obtain better value for their health care dollars. The price system will convey consumers’ needs and demands. Competition will facilitate more efficient use of technology and continued innovation in products and service delivery, and will reduce waste and duplication.

The key to reform of the health care system is giving individuals freedom of choice in an open and competitive marketplace. Whoever controls the money also controls the choices. Will it continue to be private-sector bureaucracies through employers, health insurance companies, and managed care organizations? Will it be through expansion of government bureaucracies? Or will the resources be controlled by individuals with the resources and the authority to transform the health care system into one that caters to millions of individuals’ needs?

It is no coincidence that the United States offers the highest quality health care in the world and that, during the twentieth century, it repeatedly has turned its back on socialized medicine. The challenge for the twenty-first century is to modernize tax policy decisions made more than 50 years ago so that this high-quality health care is accessible and affordable for all Americans. That will come not through the collective solutions that have been attempted again and again this century, but through solutions that focus on individual authority, competition, diversity, and freedom of choice that will drive the rest of the economy in the twenty-first century.

Ultimately, the road to health care reform will run through tax reform. The invisible and regressive tax break for health insurance will be brought to light when the country debates a major overhaul of the tax code. As a result, the route to the health care reform that has eluded policymakers for decades may very well be through a simpler, fairer, and flatter tax system.

Ms. Arnett is President of the Galen Institute, a public policy research organization based in Alexandria, Va., that focuses on health and tax policy and coordinates and facilitates the work of the Consensus Group.

Back To School and Ready for Straight A’s!

by Nina Shokraii Rees

SUMMER IS OVER, and across the nation students, parents, teachers, and principals are preparing for the new school year. With the issue of education repeatedly topping the opinion polls as a concern, politicians also are gearing up to focus on education reforms—and they will surely capitalize on the back-to-school frenzy to draw attention to their pet projects. Secretary of Education Riley plans to tour the South by bus to tout the President’s 600-page education plan, and Members of Congress plan to push different alternatives. Despite all the talk, many of the proposals put forth will have little direct impact on either students or schools.

But one congressional plan may capture the spotlight on reform and shed a new light on Washington’s hefty investment in education. Known as the “Straight A’s” Act, or Academic Achievement for All, this proposal would shift the focus of education policy from inputs to real academic outcomes. And it would zero in on ways to close the achievement gap between rich and poor students while rewarding success and punishing failure. In many ways, Senator Slade Gorton and House Education Committee Chairman Bill Goodling may have put forth a Washington-driven idea that could actually help students make the grade.

First, the problem: America’s schools are not performing well. Despite federal spending of $358 million per year to train teachers in math and science, students in 12th grade across America ranked 19th out of 21 in mathematics and dead last in advanced physics in a survey of industrialized countries. Moreover, after 34 years and despite spending $120 billion on Title I, Aid to Disadvantaged Students—the cornerstone of federal investment in K-12 education—only 13 percent of low-income 4th graders scored at or above the “proficient” level on national reading tests, compared with 40 percent of upper-income students.

Other federal programs are having similarly discouraging results. For example, although the Safe and Drug Free Schools and Communities program has spent $6 billion since 1986 , according to the Administration’s drug czar, General Barry R. McCaffrey, this program simply “mails out checks.”

Fundamentally, the federal role in education is proving to be irrelevant in some states and a clear barrier to reform in states that are implementing serious reforms. For example, in Florida, six times as many state personnel are required to administer one federal dollar compared with one state dollar. But Florida cannot use one federal penny to complement state dollars that offer students trapped in failing schools alternatives. Though Pennsylvania is implementing an innovative plan to boost teacher quality, federal dollars are bypassing the state’s program to fund initiatives, such as professional development, that show little correlation with improved student outcomes.

The Administration and some Members of Congress have put forth proposals to address these concerns, but their plans are based on the same faulty one-size-fits-all premise, which will make Washington less able to meet the varying needs of the states.

Now, a remedy: Straight A’s, in many ways, resembles charter school laws at the state level. Today, 35 states and the District of Columbia have enacted charter school laws to give principals considerable fiscal and legal autonomy in their schools in exchange for agreed-upon academic improvements. If a charter school fails to adhere to the terms of its charter, it will be shut down. If it succeeds, it will likely attract more students and funding.

Straight A’s adopts the same approach. It would allow the states (or school districts) to spend their share of federal K_12 dollars on specific reforms of their choosing, in exchange for specified academic results. If a state decides to participate in Straight A’s, it would select certain formula-based K_12 programs and commingle their federal funds. It would then outline in a contract or charter agreement with Washington 1) how it plans to spend those funds, and 2) how much it hopes to increase test results and decrease achievement gaps between rich and poor students.

Next, the state would provide the U.S. Secretary of Education with baseline data on its students’ current academic achievement levels, disaggregated by socioeconomic background. The federal government would then send the state one check, provided the state agrees to produce the results it promises in the contract. If the state achieves these results, the federal government would offer a bonus. If the state fails, this flexibility with federal funds would be withdrawn.

Reform-minded superintendents of education, like Seattle’s Bill Olshefski and Chicago’s Paul Vallas, already have endorsed the Straight A’s Act. And Governors like Michigan’s John Engler, Florida’s Jeb Bush, and Virginia’s James Gilmore, whose states already lead the nation in imposing tough standards and accountability measures, also endorse Straight A’s. If Congress is serious about boosting the return on federal dollars invested in education, it should make sure the Straight A’s Act receives its full attention this fall. Otherwise, parents, teachers, principals, and yes, even American students, may want to send their elected officials back to school—but far away from Washington!

Ms. Rees is a senior education policy analyst at The Heritage Foundation and is the co-author of School Choice: What’s Happening in the States.

America at Risk: The Citizen’s Guide to Missile Defense

by James H. Anderson

Wouldn’t it be better to save lives than to avenge them?
—President Ronald Reagan, March 23, 1983

IN 1991, DURING THE PERSIAN GULF WAR, the United States rushed Patriot missile batteries to Israel to help to protect Tel Aviv from missile attack. In April 1994, we sent Patriot missiles to South Korea to reassure that country during a period of high tension. In January 1999, we dispatched Patriots to Turkey when Iraq threatened missile attack. Congress also has allocated funds for upgrading defensive systems capable of protecting our troops and our allies against short-range ballistic missiles.

These actions were justified, but they raise a critical question: Is it fair to protect U.S. service personnel overseas and citizens of other countries from missile attack but leave the American people without any protection at home? The answer is “no.” Leaving Americans vulnerable to ballistic missiles armed with nuclear, chemical, or biological weapons is immoral. As a matter of principle, American citizens should be afforded the same level of protection the government affords our troops and allies overseas.

National security matters little to those who believe America is not worth protecting. The logical extension of this view is not merely opposition to missile defense, but an argument for total disarmament. After all, if America is not worth defending against missile attack, why bother to defend it against any other threat? But leaving America defenseless against foreign threats is not the answer. It is instead a shameful form of moral surrender.

The United States has adopted a nuclear posture that rests on two moral contradictions: First, the government’s duty to “provide for the common defense” conflicts with its unwillingness, at least thus far, to provide the American people with meaningful protection from missile attack. This failure undermines the fundamental compact between the citizen and the state, whereby the former gives up some rights and privileges in exchange for security.

The present policy of vulnerability contains a second moral contradiction: Although our government professes to respect human life, it relies on a retaliatory strategy that threatens millions of innocent lives. Imagine if North Korea fired a missile at Los Angeles. If this missile were tipped with a nuclear bomb, deadly biological agent, or chemical weapon, it could inflict hundreds of thousands, perhaps even millions of casualties. Considering the scale of destruction, the President would have to choose retaliation, which would be likely to result in the deaths of hundreds of thousands (or more) of North Korean civilians—or American capitulation. Neither outcome would be strategically or morally desirable. The ability to intercept incoming missiles would present a morally sound alternative between these two extremes.

Both contradictions are indefensible, considering the availability of technologies that we could deploy to protect our country. As President Reagan asked in his 1983 speech establishing the SDI, “Wouldn’t it be better to save lives than to avenge them?” If the moral contradictions in U.S. policy are left unresolved, we risk paying for them with our lives, treasure, and sacred honor.

Attacking enemy missiles in their silos is an alternative to building a defensive shield or relying on retaliatory threats. Yet preemption is not part of our political tradition—and for good reason. Aggressor states like Imperial Japan and Nazi Germany have used this rationale to pursue their dreams of territorial conquest. It would cost us dearly—in moral, political, and strategic terms—if we adopted this posture.

Clearly, a defensive system designed to intercept hostile missiles would be preferable to striking first. It would end our vulnerability without threatening anyone else. If the Department of Defense emphasized preemptive options, other states probably would be encouraged to develop similar weapons and adopt hair-trigger postures. The result—an increased risk of war—would be predictable and unwelcome. Yet, because we lack any protection against hostile missiles, the pressure to adopt such extreme measures like preemption will increase.

President Reagan’s moral rational articulated in 1983 for developing defenses remains true today. National missile defense is about saving lives and protecting our country. This is the reason a defensive system capable of protecting all Americans is morally preferable to deterrence based on the threat of retaliation or any preemptive option.

Building a national missile defense also would help to preserve our status as a superpower. America has been a positive force for freedom and democratic principles since gaining its independence in 1776. Yet our ability to promote freedom abroad will suffer if we remain defenseless against missile attack. Bereft of any protection, we will leave ourselves open to political coercion, perhaps even nuclear blackmail….

More powerful states have recognized that our vulnerability to missile attack at home will restrict our ability to protect vital security interests abroad. In 1996, a senior Chinese official asserted that his government did not worry about America’s defending Taiwan because “American leaders care more about Los Angeles than they do about Taiwan.”

During the Cold War, we had little choice but to rely on our stockpile of nuclear weapons and the threat of retaliation to dissuade Soviet aggression. At that time, the technologies available to intercept hostile missiles were primitive. Today, however, dramatic progress in technology gives our leaders more choices; we no longer must remain resigned to relying on retaliatory threats to dissuade aggression. Successful missile intercept tests already have shown that we have the potential to develop an effective national missile defense against ballistic missiles launched by rogue states. We have ships that could be equipped with missile interceptors and deployed around the globe. We have satellite technology that would allow us to deploy space-based sensors and interceptors. The refusal of some elected leaders to take missile defense seriously and fund the development and deployment of a missile defense system is itself a moral failing.

Our elected leaders must get beyond the fatalism of vulnerability. They must act to end the morally bankrupt policy of leaving American citizens naked to missile attack. As former Secretary of State Henry Kissinger asserts, “it is reckless to stake the survival of a society on its vulnerability or on genocidal retaliation—even against an accidental launch. National and theater missile defense must become a higher national priority.”

The threat of a missile attack on an American city is not a Hollywood fantasy or a fictional plot in a Tom Clancy novel. In fact, the threat of an accidental launch from Russia or China—or an intentional launch by an anti-American leader—of a ballistic missile carrying nuclear, biological, or chemical weapons is a harsh reality we no longer can wish away.

The truth is that America cannot defend itself today from even one such missile. And all Americans are held hostage by this vulnerability.

Mr. Anderson is a defense policy analyst at The Heritage Foundation. This article is excerpted from his book America at Risk: The Citizen’s Guide to Missile Defense.

Limiting Leviathan

by Donald P. Racheter and Richard E. Wagner

IN THE FAUSTIAN LEGENDS, Faust trades his soul to the devil for knowledge and power. As Vincent Ostrom (1984) notes, government involves a form of Faustian bargain. People grant governments the right to use an instrument of evil, coercive power, in exchange for the improved public order that such power can promote if used wisely. The problem, of course, is that governmental power can be used for bad as well as for good purposes.

Most bargains involve tradeoffs, and the Faustian bargain is no exception. Governments with weak policing powers may give us little reason to be concerned that they will invade our liberties, but they may also fail to provide the degree of security we would like. But as we strengthen the ability of government to provide that security, we also provide it with stronger tools with which to infringe our liberties.

Constitutional governance has always been concerned centrally with the terms of this Faustian bargain. The federalists argued that the central government under the Articles of Confederation was too weak to provide internal order and security against invasion. They also argued that the strengthened government provided by the proposed constitution would be able to provide that order and security, while at the same time managing pretty much to keep under control the dark side of the Faustian bargain. To the contrary, the anti-federalists argued that order and security could be provided just as well with the modest revisions to the Articles of Confederation, and that moreover, the centralization of government authority promoted by the proposed Constitution would be damaging to personal liberties.

Internal order and security against invasion were secured over the following two centuries, though individual liberties were also subject increasingly to abridgement, particularly during the past century. In any case, and looking to the future, the principles of constitutional governance claim that the terms of the Faustian bargain can be influenced by the particular ways in which the offices and positions of governmental authority are constituted.

The United States was founded upon the premise that government is not the source of individuals’ rights. Rather, those rights exist prior to the creation of a government, and government is created to protect and preserve those rights. Government is subject to limits that reside in the prior rights of individuals, and is not itself the arbiter of those limits or rights.

Given an adherence to majority rule as a governing principle, efforts to control the dark side of the Faustian bargain focus on ways of constraining the exercise of democratic power through one form of constitutional construction or another. Indeed, it is difficult to make sense of many constitutional provisions without a recognition that that provision was articulated to forestall some dark manifestation of the Faustian bargain.

The very creation of a Bill of Rights implies the presumption that without such articulated limits on government, the rights in question would be violated by government. The First Amendment guarantee embodies the presumption that otherwise Congress would be likely to abridge freedom of the press, religion, and speech. The Fourth Amendment entails the presumption that otherwise unreasonable searches and seizures would result. The presence of the final clause of the Fifth Amendment would make no sense, were it not for a presumption that the dark side of the Faustian bargain would lead governments to take private property without paying just compensation.

The Faustian dilemma, however, is not overcome once and for all in one mighty act of constitutional draftsmanship. Constitutional erosion takes place, much of it accompanied by imaginative acts of interpretation whereby meanings are transformed into their opposite. Thus, the general welfare clause becomes transformed from a limit on the ability of Congress to appropriate, because appropriations must be limited to objects of benefit to everyone, to a license for Congress to appropriate as it pleases, perhaps as illustrated by the 1954 Supreme Court ruling in Berman v. Parker, “When the legislature has spoken, the public interest has been declared in terms well-nigh conclusive.” New ways of evading constitutional limitations on government lead in turn to renewed interest in constitutional limitations, including new forms of limitations.

A variety of new forms of limitation are examined in the essays in this book and various aspects of that Faustian bargain in an American setting are explored.

Mr. Racheter is the Executive Director of the Public Interest Institute in Iowa and Professor of Political Science at Central College. Mr. Wagner is the Holbert L. Harris Professor of Economics at George Mason University. This article is excerpted from Limiting Leviathan: Faustian Bargains and Constitutional Governance, which they co-edited.

The IRS vs. the People: Why Lawmakers Must Be Bold

by Daniel J. Mitchell

FIXING THE TAX CODE will not be easy. The mess we have today is a testament to the influence of special-interest politics, and a fundamental tax reform will have to overcome powerful groups that want to preserve the status quo. Some battles are worth fighting, however, even when the odds are steep.

Our tax code is unfair. It is riddled with social engineering. The system is corrupt, and it undermines opportunity for those most in need. The American people understand that the tax code is irretrievably broken, and they will be receptive to bold and visionary leadership.

The time is right for the flat tax.

A question often asked, however, is whether implementing a flat tax requires too much change at one time. Yes, it does create the ideal system, skeptics admit, but why not try to appease the special interests by fixing the tax code’s myriad problems in a step-by-step fashion? Reduce tax rates one year, repeal the death tax the following year, end double taxation of dividends the year after that, and keep the process going until everything wrong with the current system is fixed and a flat tax is achieved.

This incremental strategy is appealing, but it may not be realistic. For one thing, the one-step-at-a-time approach is what produced the current tax code. Yes, positive changes are implemented every so often, but it is just as likely that politicians in any given year will move us even further in the wrong direction. Even when lawmakers move in the right direction, they may do so in a bizarre way.

Consider the 1997 tax cut. This legislation had many positive features, including the fact that it was the first tax reduction in 16 years. Yet, because Congress and the White House engaged in so much horse-trading, they wound up making everything more complex. The bill created more than 250 new sections in the tax code and amended more than 800 others.

For this reason, lawmakers should reject the piecemeal approach and adopt the flat tax. It is true that some special- interest groups will oppose a flat tax. It is also true that some politicians will instinctively resist reform because it will take away so much of their power and make it harder for them to raise campaign contributions. But the flat tax also offers certain political advantages:

  • Coalition support. The flat tax solves all of the tax code’s problems at once. People who are angry about the capital gains tax can join forces with others who are upset about the code’s complexity. Taxpayers fed up with high rates can find common ground with business owners frustrated with depreciation and the alternative minimum tax. Farmers angry about the death tax can work with savers upset about double taxation. A serious campaign to implement the flat tax could count on a wide-ranging base of support. In other words, when it comes to winning, the whole is greater than the sum of its parts.
  • Political popularity. In the real world, polls matter. The flat tax is not a guaranteed winner, but it consistently generates support from 50 percent to 65 percent of voters. This popularity is driven largely by the public’s desire to have a simple and fair tax system that gets the IRS out of their lives. Ironically, many of the component parts of the flat tax, such as capital gains tax repeal and the abolition of loopholes, are not very popular, especially if considered as free-standing pieces of legislation. Once again, the whole is greater than the sum of its parts.
  • Freedom and civil liberties. Supporters of the flat tax can argue that sweeping reform means substantially expanding civil liberties and creating a tax code based on widely shared moral values. This means that a flat tax will attract voters who may not care about the overall tax burden and may not understand how the current system undermines prosperity. They may want all taxpayers to be treated equally, or they may want to defang the IRS, or they may want simplicity and transparency. Whatever their goal, these citizens will add their voices to those who support tax reform for more traditional (and often self-interested) reasons.

Trying to fix this monstrosity one piece at a time is probably an impossible task. For every step forward, there will be two steps backward. The only hope for victory is to repeal the entire code and start over. Have lawmakers sit down with a blank piece of paper and draw up a tax code that fulfills the promise of equality before the law. Let them imagine the kind of world they want for their children and grandchildren.

Appealing to the best in everyone is the right way to achieve true tax reform. A flat tax is possible. All it takes is a commitment to do the right thing.

Mr. Mitchell is the McKenna Senior Fellow in Economic Policy at The Heritage Foundation. This piece is excerpted from “The IRS vs. The People: Time for Real Tax Reform.”

The Minnesota Policy Blueprint: A Case Study in State Policy Advocacy

by Kent Kaiser

IN THE SPRING OF 1997, the Minneapolis-based Center of the American Experiment began planning a comprehensive review of Minnesota’s executive branch of government. Over the next 18 months, and at a cost of about $320,000, the plan became a blueprint for restructuring state government. The Minnesota Policy Blueprint now stands not only as a guide for the state’s policymakers, but also, we hope, as a model for other states to follow.

The goals of the publication were concise: subject the executive branch to conservative and free-market tests “ask what should government do, not do, or do better?” and put forth recommendations for policy changes. This project was never about efficiency of government but about its fundamental purpose. We found it easiest to identify areas of government to privatize, make more competitive, or eliminate altogether when we concentrated on the underlying philosophy. Because we began with crisp guiding principles, specific policy examples flowed easily. These principles included:

  • Government’s reach must be limited, and individual responsibility must be enhanced.
  • Identifiable institutions and individuals should be held accountable for what government does.
  • Economic liberty and growth are best served by low-tax, low-regulation policies.
  • State policies and programs should be based on time-tested family and social values.
  • Competition (which is not always the same as “privatization”) should almost always be sought in the delivery of public services.

We brought together 19 task forces composed of six to ten volunteer participants. Each included lawmakers, business leaders, and policy experts. We generally considered cabinet-level departments and broad policy areas in separate task forces. Each task force’s deliberations generated a chapter of the Blueprint.

We chose task force chairmen for their leadership ability and their commitment to our organization’s principles. We believe that the composition of the task forces was the greatest determinant of their success. We found it most productive to assemble task force participants of a singular view for the ideologically-based task forces. For example, in the case of our task force on natural resources, we recruited only hunting and fishing enthusiasts.

This was less important process-oriented task forces. For example our task force on the Office of the Governor was effective with a broad range of political views because its recommendations focused more on process.

We found that it added credibility to the project to include high profile participants and a few individuals of diverse ideological bent when they agreed with our underlying philosophy on a relevant task force topic.

In addition, we found it beneficial to recruit task force participants with current or immediate past experience in the task force subject matter. Including current policymakers as participants has proven especially fruitful; they have been instrumental in subsequently converting the study’s recommendations into pending legislation.

We recommend that task force deliberations take place in three to five sessions of four to five hours each, with participants receiving background information beforehand. It is helpful if the first session includes introductions, a project overview, formulation of guiding principles, and determination of witnesses to call for testimony (to appear live at subsequent meetings or to provide written testimony).

During the course of our deliberations, we heard from dozens of witnesses—often ones whose ideas varied radically from our own—to learn about specific details unknown to task force participants, to understand competing ideas, and to forestall any charge of not being fair to the opposition. Our task forces found it valuable to hear testimony early in the middle sessions, reserving time at the end of those sessions for discussion and formulation of tentative recommendations. We suggest dedicating the last task force meeting to final formulation of recommendations and review of a rough draft chapter.

The project director, research director, and editorial director attended nearly every task force session to provide background information, direction, and continuity between task forces. After each task force finished its deliberations, we exchanged chapter drafts by fax until the task force participants were satisfied with the document before sending it to the publisher. By design, the ideological composition of our task forces led to few conflicting recommendations, and we were able to eliminate any inconsistencies internally that did arise as the chapters developed.

Fundraising for this project took place at the same time as the work of the task forces. In retrospect, we believe it would be more manageable to complete the fund raising before beginning task force deliberations and to have only three or four task forces active at once, perhaps meeting once a week for a month and completing deliberations before launching the next group of three or four task forces.

The Minnesota Policy Blueprint contains almost 250 recommendations, some of which lend themselves readily to implementation as specific policies. At last count, 30 Blueprint recommendations had been presented in 55 separate bills in the Minnesota legislature, and many have realistic chances of being enacted.

In addition, our new governor, Jesse Ventura, has adopted several Blueprint recommendations as policy goals for his administration. We believe that the impact of the Blueprint on the policy debates at the Minnesota State Capitol demonstrates that the political and bureaucratic establishment is willing to embrace conservative and free-market ideas when they are well-argued and well-timed.

Mr. Kaiser served as editorial director for the Minnesota Policy Blueprint, a project of the Center of the American Experiment.

Al Gore’s Livable Communities: A Program in Search of a Problem

by Ronald D. Utt

AMONG THE MANY POLL-DRIVEN PROPOSALS in President Clinton’s FY 2000 budget is his new Livable Communities initiative to provide the suburbs with more money for mass transit and loans to buy land for parks and greenbelts. While seeming to be little more than a generous handout to suburbanites, Clinton’s newest exercise in trickle-up economics also includes an unprecedented effort to inject the federal government into local decisions on development, land use, and transportation by funding and promoting “smart growth” strategies that regulate what people can build and where they can build it.

The Department of Housing and Urban Development (HUD) will be in charge of cultivating and funding these smart-growth strategies among metropolitan jurisdictions. According to the White House, these strategies will include, among other actions, “compact development incentives” (row houses and apartment buildings) and “ways to manage the economy and workforce to reinforce the region’s overall development strategy.”

HUD, the reader may recall, is the federal agency recently described by its own Secretary, Andrew Cuomo, as a “poster child for inept government…plagued for years by scandal and mismanagement.” Having spent half a century wreaking havoc on America’s central cities through its ill-conceived urban renewal schemes, the Clinton-Gore team has directed HUD to “manage the economy and workforce” of America’s thriving suburbs.

The prospect of imposing such bumbling ineptitude on America’s most successful communities actually may be the least onerous aspect of the initiative when compared to what the Clinton-Gore effort might well inflict on communities through the Environmental Protection Agency’s bureaucratic shock troops. EPA Region 1 Administrator John DeVillars wasted no time in letting America know what he had in store for the New England region he will control under the Livable Communities program. On the day the President’s budget was released, DeVillars announced in Boston that EPA will use its statutory authority aggressively to oppose and reshape development and infrastructure projects that contribute to sprawl.

Although enhanced bureaucratic guidance and more money for transit, land, and planning are the key elements of the President’s plan, the initiative also funds the restoration of historic rail stations, hiking paths, and biking paths, as well as safety education, scenic beautification, and school design. In a creative effort to broaden the political constituency for the program, the smart-growth initiative even includes money to fund pre-sale background checks on prospective handgun purchasers!

Just what pressing national purpose this new suburban initiative is directed to is not obvious, although a cursory reading of the abundant anti-suburb/anti-sprawl literature suggests that resentment and disdain for lifestyles dissimilar to those of the Washington elite are powerful motivating factors. Such disdain may explain Administrator DeVillars’ enthusiasm about prohibiting certain consensual commercial acts that unenlightened suburbanites and central-city exiles might otherwise consummate in legitimate efforts at self-improvement. Long-time anti-sprawl advocate and “New Urbanist” James Howard Kunstler best captured the essence of the elite’s angry disdain toward suburbs when he observed:

When we drive around and look at all of this cartoon architecture and other junk we’ve smeared all over the landscape, we register it as ugliness. This ugliness is the surface expression of deeper problems—problems that relate to the issue of our national character. The highway strip is not just a sequence of eyesores. The pattern it represents is also economically catastrophic, an environmental calamity, socially devastating, and spiritually degrading.

Ouch! Fortunately, for the many Americans who still believe that where they live is their business, not HUD’s, EPA’s, or the Vice President’s, the federal case against the suburbs rests on nothing more than angry emotions, because the facts won’t support it. Today’s roads are not more congested; they are less so than in the past, and costly mass transit systems are still the slowest way to get to work compared to commuting by car. In

Portland, Oregon—the New Urbanists’ Nirvana, a forthcoming Heritage Foundation study reveals that Portland’s traffic congestion is nearly as bad as New York’s and projected to be worse than Los Angeles’ within the next decade and a half. Indeed, congestion is worse and the air dirtier in the densely packed cities and older, close-in suburbs than in the more distant ‘burbs.

As for using up the land, less than 5 percent of America’s land is developed for commercial or residential use, and new development consumes only 0.0006 percent of the continental U.S. each year. For reasons that should be obvious from this rate of land use, expanding urban areas do not jeopardize farm production. Since 1950, gains in farm productivity led to a 15 percent reduction in U.S. agriculture acreage, while production has risen by more than 105 percent. At current rates of urban expansion, it would take more than 250 years to urbanize the amount of agriculture land taken out of production between 1960 and 1990.

Indeed, as a result of a centuries-long trend of withdrawing marginal farm land from production and the growing concentration of the U.S. population in large metropolitan areas encompassing older central cities surrounded by “sprawling” suburbs, the extent of reforestation along the eastern seaboard—where America’s population is at its most dense and most of the land is privately owned—is estimated to be the greatest since the American Revolution. And species once thought to have been driven to extinction in the East—including the mountain lion—are returning to this newly emergent wilderness.

Despite this impressive record of improvement, critics of individual choice and private property abound, as they always have; but now they have a friend in the White House who is prepared to put the resources and power of the federal government behind their agenda. And quite probably for the first time ever, these issues will likely come before the Congress. Fortunately for freedom-loving Americans, the impressive body of analytical work on growth controls and sprawl produced by many of the conservative and market-oriented national and regional think tanks will play an important role in keeping the federal government out of an issue more properly the responsibility of state and local governments.

Mr. Utt is a Senior Research Fellow at The Heritage Foundation.