May 11, 2017


The Ideas Industry by Daniel W. Drezner (part 2)

How are think tanks responding to a changing environment?

Part 1 of this article set out definitions of three important terms and then reviewed developments in the policy community and the American population at large that have jolted long-standing roles in policy development among foundations, academics, think tanks, foundations and well-to-do individuals (plutocrats) in the way new ideas are advanced. Part 2 looks more carefully at how think tanks have been affected and responded to the new environment.

Traditional Think tanks

The move toward partisanship, and implicitly away from the highest research standards, has been fostered by two related factors.

  1. Some organizations simply made the calculation that they would have greater influence if they adopted such positions. The Heritage Foundation, for example, made this calculation and the information available indicates that its influence has increased (and its reputation for high quality analysis plummeted).
  1. The 2008 economic downturn caught think tanks off guard. They faced severe declines in funding as traditional funders’ endowments sank in value and, with them, grants awarded. This caused them to be more open to taking funds from sources they would have skirted in the past, in some cases they even suppressed information on the new sources. The Brookings Institution is an example used in the book, as are Council on Foreign Relations and Center for Strategic International Studies. Funds from large donations shot up. Foreign governments also became substantial donors for some. Several think tanks have been badly embarrassed when acceptance of funding that suggested possible conflicts of interest associated with specific grants.

Additionally, a significant share of newer (defined as a period beginning somewhere in the 1970s) think tanks started life with a particular political orientation. The Cato Institute, Heritage Foundation and the Center for American Progress are listed. The newcomer think tanks wanted ideological consistency.

My view is that the politicization of a significant share of think tanks, possibly increasing their influence with one political faction or another, is a threat to think tanks’ traditional position of the honest broker and expert advisor in the policy development process. The key attribute of independence is under severe pressure.  If the perception of politicization grows, think tanks will be less valued and less frequently included in such discussions.

Interestingly, there is no mention of Transparify, a quite new foundation-supported NGO dedicated to pressuring think tanks to be open about their funding both how much is received from each supporter but also the sources for each project undertaken to expose possible conflicts. It has had clear early success in getting think tanks to be more open but much remains to be done.  Full transparency may be the minimum condition for think tanks to retain their privileged position.

Private sector think tanks

Traditional think tanks are competing with a slew of comparatively new “consulting firm think tanks,” among which the McKinsey Global Institute is the flagship. But many others have been created; major investment banks are common sponsors. + This industry is booming.+ 

The motivation for firms to create think tanks seems to be that they want to be perceived as a thought leader and to showcase thought leaders on their staffs. The more impressive the thought leader’s ideas, the more attractive the firm is to employ for strategic studies of various sorts, including related business applications. This drives them to try generate catchy broad ideas that can have both business and public policy applications, e.g., creative disruption.

Compared with think tanks, they gain substantial advantage from plutocratic audiences by demonstrating that major firms pay them a lot of money for their services (they meet the market test): engage them and you will see value added.+ Also, since their expanded public services role is relatively new, they are not tarnished by the poor reputations of the longer established public intellectuals and think tanks for making so little progress on the nation’s major problems over the decades.

McKinsey Center for Government does a large business with government agencies. Its website indicates that these are productivity and efficiency targeted. More efficient on-line interactions with citizens, etc. Some statements even speak of “transformational changes.” They do not appear to be offering the kind of public policy design guidance that is the bread-and-butter of think tanks.

The essential goal of its public persona is marketing via image making, i.e., thought leadership. It may be that some plutocrats fund these firms to further develop basic concepts. Daniel Drezner says that these firms are competing directly with think tanks for funds. I am not so sure about this. Most think tanks are not in the thought leadership business; so they do not have products to market that would interest the same plutocrats. On the other hand, donors who have been providing budget support to think tanks may find providing general support for the further development of a “big idea” an attractive alternative because of it being more concrete. In short, it appears that the for-profits and think tanks may be largely offering differentiated products. Hence, sponsors move to the for-profits to acquire something else.

It is unclear from the write up if these new private think tanks (leave aside the traditional government contractors such as Deloitte, KPMG…) are doing the same kind of detailed program design, implementation analysis, and evaluations routinely being done by think tanks. It is also unclear the extent to which they are making inroads in the government agency policy research market.

Political risk analysis firms seem to be rather separate from both for-profit and traditional think tanks. Their creation and growth has been driven by the surge in cross-border trading. Political risks come in many forms ranging from economic or political instability to trade-affecting sanctions being imposed by major countries or political agencies, e.g., the sanctions imposed on Iran for its development of nuclear capability.

That said, many of these firms engage in thought-leadership activities akin to management consultants and financial service firms. Here they may be competing with think tanks for funds.

In sum

The Ideas Industry is a fascinating, lively, and informative read. It is certainly thought-provoking. Developments in the U.S. marketplace for ideas along the lines discussed in the book may be underway in other countries as well, perhaps in somewhat different forms and possibly for different reasons. If so, the book should be of international interest. It is a “must read” for U.S. think tankers in any case.

About the author:

Raymond Struyk:  Senior manager and policy analyst in the fields of social assistance, housing policy and mortgage finance and has extensive policy formulation and program evaluation experience.

Read more from: Raymond Struyk