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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. Building a Free Enterprise Movement by AEI President Arthur Brooks Issue No. 2, May 2014 Enterprise Report Restoring Liberty, Opportunity, and Enterprise in America

AEI Enterprise Report, May 2014

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Page 1: AEI Enterprise Report, May 2014

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 systemdelivers 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 theearned success and true happiness that can follow, to all Americans.

And who better to discuss the achievement of happiness, free enterprise, andthe moral link between them than the Dalai Lama, who visited AEI for a two-daysummit in February?

His Holiness reminded us that personal moral transformation is the essentialfoundation of a flourishing life. “Happiness,” as the Dalai Lama put it, “comes fromwithin.” We get that transformation by wholeheartedly engaging in four things—faith, family, community, and work.

Building a Free Enterprise Movementby AEI President Arthur Brooks

Issue No. 2, May 2014

Enterprise ReportRestoring Liberty, Opportunity, and Enterprise in America

Page 2: AEI Enterprise Report, May 2014

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 aconversation about how, through free enterprise, policymakers and private charity can combineforces to fight poverty around the world.

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 theworld’s poorest.

But private philanthropy alone cannot lift up the millions who suffer. Fifteen percent ofAmericans 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 willstrengthen and preserve our safety net.

The third pillar of human flourishing is opportunity. AEI’s economists are studying the barriers to education, employment, and credit for all Americans, particularly for the poorestamong us. Robert Doar, the former human resources commissioner of New York City, has joinedAEI as our new Morgridge Fellow in Poverty Studies. Kevin Corinth, an economist finishing hisdissertation 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 everyAmerican, we have launched the Campaign for FreeEnterprise and American Progress. AEI’s donors arejustly proud of the Institute’s 75-year legacy and areshowing tremendous support as we expand AEI’s communications and research to rise to the challengesof the next 75 years.

A critical part of meeting those challenges will be developing the next generation of free enterpriseleaders. You can read in the following pages about all that AEI is doing with college students on 400-pluscampuses and with scores of young professionals whose careers are shaped early on by AEI.

Thank you for your commitment to our fight.

Arthur BrooksPresident, AEI

In MemoriamMurray Weidenbaum, 1927–2014

At the heart of AEI’s long legacy havealways been our scholars. One of the giants in AEI’s history, MurrayWeidenbaum, passed away on March 20. He was one of AEI’s most respected and tireless defenders

of free enterprise and was a towering figure in thederegulation debates of the 1980s. (“Don’t just standthere, undo something!” he used to admonish us.) He was an economist in five different presidentialadministrations—most notably in Ronald Reagan’s asthe first chairman of his Council of Economic Advisers.He served over the years as an AEI scholar, a memberof our Council of Academic Advisers, and a coeditor ofour influential magazine Regulation.Photo courtesy of Washington University in St. Louis

Page 3: AEI Enterprise Report, May 2014

AEI is turning a new page in its 75-yearhistory. We have launched a $100 mil-lion Campaign for Free Enterprise andAmerican Progress, knowing that now is the time to redouble our fight for freedom, prosperity, and flourishing in America.

This campaign will allow AEI to move into a permanent home—which we are proud to name after the vice chairman of AEI’s board,Daniel A. D’Aniello—after more than40 years leasing space in Washing-ton. The location of our future head-quarters could not be more fitting: the building is a National HistoricLandmark, and was once home to US secretary of the treasury Andrew Mellon.

But this campaign is about muchmore than bricks and mortar. Our new

headquarters will provide a cutting-edgecommunications and media facility, amodern events space, and classrooms to train the next generation of free enter-prise leaders.

We are creating a number ofresearch chairs and programs and funding new outreach efforts that willtake advantage of the capacities in our new building.

AEI has made tremendous strides in recent years thanks to our communityof scholars and investors. We are sett-ing the bar even higher for the yearsahead—together we will write the next century of the free enterprise story.

We are enormously grateful for the steadfast support of our donors. This campaign, and more importantly,AEI, would not exist without the trust that

they place in us each day as we fight for our shared values.

For more information on AEI’s Campaignfor Free Enterprise and AmericanProgress, please contact Jason Bertsch,vice president of development,([email protected]; 202.862.5873) or visit campaign.aei.org.

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AEI’s $100 Million Capital CampaignNew Building Will Extend Reach and Impact

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

AEI wishes to thank the followingdonors 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

JENNIFER AND MARC LIPSCHULTZ

ROBERT H. MALOTT

DANIEL AND KATHLEEN MEZZALINGUA

JOE RICKETTS

GEORGE R. ROBERTS

CHARLES RYAN

STATE FARM

BARBARA AND BILL TAYLOR

E. L. WIEGAND FOUNDATION

Page 4: AEI Enterprise Report, May 2014

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AEI’s Program on Human FlourishingWhy Free Enterprise Gives the Most People the GreatestOpportunity to Better Their Lives

His Holiness the Dalai Lama at AEI

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 arepursuing 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.

A partnership between AEI and the Mind & Life Institute (an organization thatbegan as an intellectual experiment between the Dalai Lama, entrepreneurs, andneuroscientists) brought His Holiness to AEI headquarters for a summit on freeenterprise and human flourishing on February 19–20. The event drew internation-al attention, with Radio Free Asia providing simultaneous translation in Tibetanand Mandarin and headline coverage in Vanity Fair, the New York Times, theWashington Post, the Wall Street Journal, the Huffington Post, Yahoo! News, andnumerous other outlets.

“Strictly speaking, I am leftist. Butrightists are also human beings.AEI’s main purpose is to build a

happy society, so therefore Iaccepted their invitation. In thepast, I thought capitalists only

take money—then exploitation.Now, I have developed more

respect for capitalism.”

“We are selfish. It’s important forour survival. But because thingsare 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

His Holiness shares lunch with AEI vice chairman Daniel D’Aniello and AEI board chairman Tully Friedman.

Jonathan Haidt (NYU business ethicist), Daniel Loeb(founder, Third Point LLC), and Glenn Hubbard (notpictured, dean of Columbia Business School) join thepanel discussion of the morality of free enterprise.

Page 5: AEI Enterprise Report, May 2014

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New Morgridge Fellow in Poverty Studies leadsAEI’s Economic Opportunity Research

As New York City’s human resources commissioner underMayor Michael Bloomberg, Robert Doar oversaw the largest social services agency in the country and helpedmore than 500,000 New Yorkers transition to work andbegin 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 StreetJournal op-ed he wrote recently explained how charities and shelters that focuson transformation, relief, and opportunity for the homeless are more successfulthan those that provide only material relief and ignore the other two pillars ofhuman flourishing.

Joining Robert in expanding AEI’s work on poverty researchis Kevin Corinth, a new AEI fellow who finishes his PhD at the University of Chicago this summer. He uses surveydata to compare the effectiveness of homeless shelters andother sources of basic material relief for the poor. At AEI, he will help policymakers ask what the most vulnerable

Americans really need and how current government policies could do more toactually improve their lives.

AEI Scholars’ Latest Efforts: Strengthening Opportunityfor Vulnerable Americans

Aparna Mathur, AEI resident scholar, has studied wages and income taxation for more than a decade. In recent testimony before the US Congress Joint Economic Commit-tee, she explained why she has turned her attention to anopportunity agenda for the very poorest Americans: “Whatis often lost in this back and forth [over income inequality] is

the focus on the poor, because a change in income distribution says little abouthow people are faring in absolute terms at the bottom.”

Charles Murray is working on a new book, By the People,on the health of community ties in the United States. WhileMurray concedes that the American landscape may nolonger resemble the system our founders envisioned, he isoptimistic about trends in community life over the last 30years that point to a reincarnation of some of America’s

most dynamic qualities—ones that lay dormant during the New Deal era. Look for By the People early next year, and Murray’s latest, The Curmudgeon’sGuide to Getting Ahead, in bookstores now.

Bill Gates Comes to AEI

“When people say we shouldraise the minimum wage—I knowsome economists disagree—but I worry about what that does to job creation—intentionallydampening demand in the part of the labor spectrum that I’m most worried about.”

—Bill Gates

Bill Gates joined Arthur Brooks for aconversation titled “From Poverty toProsperity” at AEI headquarters onMarch 13. Their conversation touchedon a range of topics, including howthe Bill & Melinda Gates Foundation isbringing material relief to Africa’s poorby leading disease prevention andpublic health campaigns and workingto open up free markets for farmers on that continent. Gates then talkedabout the foundation’s emphasis ondomestic education reform, and itsefforts to unlock greater opportunity for thousands of young Americans.Much greater opportunity for workingAmericans, Gates noted, is also withinreach, as long as we enact the righteconomic policies. After hearingGates’s thoughts on domestic and international economics, the audiencemight have been forgiven for mistakinghim for an AEI scholar.

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Ambitious, intellectually curious collegestudents are often disillusioned by thepolitical scene they find when they get to campus. They can join the entrenchedleft-leaning intellectual and social main-stream or the isolated conservativeminority, but rarely do the two sidesengage each other.

AEI now gives students a thirdoption: join a community of scholars,policy leaders, and entrepreneurs whosepositive message—that free enterpriseunlocks the most opportunity for allAmericans, especially the poor—isreshaping the right and attracting some very nontraditional allies.

AEI Executive Councils—groups offour to five handpicked student leaderswith the greatest potential for impact—launched on 25 select campuses lastfall. Executive councils direct AEI pro-grams on their campuses and gather in Washington, DC, for leadership conferences throughout the year.

These teams of student governmentpresidents, campus newspaper editors,and Ivy League quarterbacks arecharged with bringing student leaders of every stripe into the debate. Execu-tive councils develop a wide network

of influential students who see AEI as the home of reasoned discourse on campus.

At Boston College, AEI’s ExecutiveCouncil hosts Coffee & Conversationeach month for a rotating cast of stand-out students and professors. The councilincludes BC’s student government presi-dent and other campus leaders capableof drawing these peers into serious public policy discussions.

The five members of the Universityof Texas Executive Council each meet forlunch with 10 other campus leadersthroughout the year, building a strategicset of campus allies. One council mem-ber has interned in the office ofRepublican governor Rick Perry and

another in the Obama WhiteHouse, so their network spansthe political spectrum. The students have brought five AEI scholars to UT since the fall, hosting events with campusgroups from the right and leftand with the University’sClements Center for History,Strategy, and Statecraft.

The University of SouthernCalifornia Executive Council introducedAEI’s policy work to a completely newaudience by cohosting a recent event onthe US response to Putin with the RussianCulture Club. In a high-profile campusappearance, AEI director of RussianStudies Leon Aron talked via Skype to a packed lecture hall about the stakesinvolved in the Sochi Winter Olympics.AEI’s Campus Programs team laterorganized a virtual town hall on the Ukrainian crisis in response to student demand at a number of schoolsacross the country, and many executivecouncils have taken the opportunity toconnect with Russian and Slavic studentclubs that are especially interested in US foreign policy.

Already this spring, AEI haslaunched 10 new executive councils,and we are on target to be on 50 campuses by the end of the schoolyear. Slowly but surely, these studentleaders are raising the tone of politicalconversation on campus and engagingtheir peers in a battle of ideas that AEI has equipped them to win.

AEI on Campus Doubling Number ofExecutive Councils

The Dalai Lama with students from AEI’s Executive Councils.

Page 7: AEI Enterprise Report, May 2014

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Growing up, did you want tostudy the Middle East?

I’ve been fascinated with the regionsince high school and even tried tolearn Arabic as an independent study, but was foiled. I went to collegeknowing that I wanted to end up working on the region.

When I came to AEI as an intern,the Critical Threats Project (CTP) wasjust beginning. I had never studied ter-rorism and knew very little about someof the most volatile countries, but Ilearned on the job and enjoyed theanalytical work. Part of what we do isput together bits and pieces of a puzzlegleaned from open sources and then tryto describe what it’s showing.

AEI didn’t have a campus programwhen you were in college. Whatare some of the opportunities now offered that you would havebenefited from?

I’ve enjoyed working with AEI onCampus and recently returned to myalma mater, Yale, to talk to studentsthere. AEI attracts very bright young

minds, and one of the most rewardingexperiences I’ve had has been workingwith my interns and developing theminto junior analysts. When I was a stu-dent, I wish I had had the perspectiveof someone 5 or 10 years older whocould provide advice on how to breakinto the DC job market.

You went from AEI intern to senioranalyst with a rising profile in thedefense and intelligence community.How has the environment at AEIguided your development?

I have benefited from great advice andfantastic mentors at AEI, starting with mynow-former colleague who offered mean internship and including FrederickKagan, director of CTP; Danielle Pletka,vice president of Foreign and DefensePolicy Studies; and Veronique Rodman,director of public affairs.

What advice would you give a college student who is thinkingabout a career as a scholar?

Spend some time in the professionalworld before pursuing an advanced

Katherine ZimmermanMaking Her Mark on the Policy Community

degree, so that you have an understand-ing of how you will use it.

What’s the biggest misconceptionpolicymakers and the public haveabout al Qaeda? What have youlearned from your research thatsurprised you?

I have to explain the definition of alQaeda all the time. It’s a game ofsemantics, but it’s an important one. The administration uses “al Qaeda” to name the group now led by alZawahiri in Pakistan, and very rarelydo officials talk about the broader “al Qaeda” network. So while we have dedicated enormous attention to al Qaeda in Pakistan, we are onlyfighting a fraction of the network. In fact, al Qaeda’s primary threat toAmericans appears to come from its group in Yemen, which has targetedour homeland at least three times in thepast five years.

Where’s al Qaeda headed in thenext 5 years? 10?

I will not predict the future of al Qaeda,but over the past few years, conditionshave tilted considerably in its favor.New governments swept in by the Arab Spring have their hands full, and fighting al Qaeda’s growth maynot be their first priority.

To read Katherine’s work, visit her scholar page at www.aei.org/scholar/katherine-zimmerman and visitwww.criticalthreats.org.

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 comingto AEI, she has testified before Congress on al Qaeda’s global expansion, written forthe Washington Post and Wall Street Journal op-ed pages (editors praised her piece as“a service to Journal readers and to Americans generally”), appeared on nationalnews programs, and corresponded with top generals about the al Qaeda threat.

Page 8: AEI Enterprise Report, May 2014

The American Enterprise Institute is a community of scholars and supporterscommitted to expanding liberty, increasing individual opportunity, andstrengthening free enterprise. AEI’s work is made possible only by the financialbacking of those who share our values and support our aims.

To learn more about AEI’s scholars and their work, visit www.aei.org | www.american.com | www.aei-ideas.org

To find out how you can invest in our scholars’ work, visit www.aei.org/support

1150 Seventeenth Street, NW Washington DC 20036

202.862.5800 | www.aei.org

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The United States,prompted by interna-tional backlash overrevelations of NationalSecurity Agency spy-ing, recently

announced that it will give up the last ofits roles administering the Internet. Thenews prompted a flurry of cybersecurityquestions: who will safeguard users in

The Baupost Group’s Seth Klarman Elected to AEI Board of Trusteeshelped him earn his own success,” said president Arthur Brooks. “We aregrateful for his service since March2013 as a co-chair of AEI’s NationalCouncil, and are honored to have himalongside us in the fight to expand freedom, opportunity, and enterprise inAmerica and around the world.”

The author of modern-day valueinvesting classic Margin of Safety(1991), Mr. Klarman was chosen aslead editor for the sixth edition ofGraham and Dodd’s Security Analysis,

the seminal value investing textbook towhich Warren Buffett and others havecredited their success. Mr. Klarman has also been featured in a variety of investment industry publications.

In addition to his leadership at AEI, Mr. Klarman serves as cochairman of the board of trustees of Facing History and Ourselves and serves on several other nonprofitboards. He and his wife, Beth, livein Boston.

AEI is pleased toannounce that Seth Klarman, presi-dent and CEO of The Baupost Group,has joined the Insti-

tute’s Board of Trustees. Mr. Klarmanhas had primary responsibility for managing the investments of Baupostsince the firm’s founding in 1982.

“Seth brings to AEI his tremendousexperience, leadership, and passionfor free enterprise—the system that has

the absence of US Internet governance?Will the Internet remain “borderless,” orwill governments begin to censor andcontrol it within their realms? And howcan businesses, whose cybersecurityinterests often diverge from govern-ment’s, contribute effectively to US cyber-security and national security policy?

New AEI Center for Internet,Communications, and Technology Policy

visiting fellow Shane Tews brings experi-ence from the White House, Capitol Hill,and executive roles at a web hostingand security giant and a boutique com-munications firm to her role at AEI. AEI will produce regular reports on the issues and plans to bring business leaders and policymakers together forworking groups on cybersecurity andInternet governance.

Cybersecurity Expert Shane Tews Joins AEI