Announcer: From the Nation's Capital, the American Enterprise Institute for Public Policy
Research presents "Public Policy Forums."
A series of programs featuring the nation's top authorities presenting their differing
views on the vital issues which confront us.
Today's topic: "Future Directions of Public Policy."
Peter Hackes: One commentator on the social scene has declared, "We managed to muddle our way
through the 1970s in spite of ourselves."
Another has taken the view that, "On balance, the '70s gave us 10 years of social progress."
Progress, he says, "that ought to become a logical basis for giant strides in the '80s."
What are the lessons we should have learned in the '70s?
Will we build on them having learned something from our mistakes?
Or do we enter the new decade destined to repeat some of the same blunders?
In what new directions will the world's leaders take us?
How will U.S. public policy makers deal, for example, with inflation?
Will it be with us for another whole decade?
What lies ahead in health, welfare, housing, the family, education, labor and criminal
justice?
Will some of our creaky old institutions such as Social Security, for example, be revitalized?
Or will they merely crumble to be replaced with something quite different?
What will the role be of the United States as the '80s move along?
Will we, can we regain some of the world leadership of which this nation was once so proud?
Or should we even try?
An old-time philosopher once said, with some considerable validity, "It's extremely difficult
to make predictions, especially about the future."
But that's just what our panel of experts will be doing.
Welcome to another Public Policy Forum presented by AEI, the American Enterprise Institute,
a non-profit, non-partisan research and education organization.
Today's roundtable discussion will consider the topic, "Future Directions For Public Policy."
Appearing on our panel today are Peter Berger, Professor of Sociology at Boston College.
He is co-director of the AEI Mediating Structures in Public Policy Project.
Professor Berger also serves as a member of the Council on Foreign Relations and as an
Associate Editor of "Worldview," a monthly journal of religion and international affairs.
Irving Kristol is a senior fellow at the American Enterprise Institute.
He is also Professor of Social Thought at the New York University Graduate School of
Business.
Mr. Kristol is co-editor of the journal, "The Public Interest," he's a member of the board
of contributors of "The Wall Street Journal," and author of the book, "Two Cheers For Capitalism."
He is also sometimes referred to as "The Father Of Neo-Conservatism."
Paul MacAvoy is Professor of Economics at Yale University.
He was a member of the Council of Economic Advisors during 1975 and 1976.
Professor MacAvoy is chairman of The Technical Advisory Committee of the AEI Center for the
Study of Government Regulation, and is an AEI adjunct scholar.
Michael Novak is a resident scholar in Religion and Public Policy at AEI.
Previously, he was Ledden-Watson Distinguished Professor of Religious Studies at Syracuse
University.
He is the author of a syndicated newspaper column called "Illusions and Reality," and
is author of a number of noted books of social commentary.
John Charles Daly will be moderator for this panel discussion.
Mr. Daly, is a former head of "The Voice of America."
He has served as a news correspondent and analyst for CBS News and ABC News, and as
vice president of the ABC Network.
Now, here is Mr. Daly.
John: This Public Policy Forum, part of a series presented by the American Enterprise
Institute, is concerned with the opportunities and the problems of the new decade, the 1980s.
Our subject: "Future Directions For Public Policy."
It is our nature and our tradition to look upon the rising sun, a new day, a new year,
and particularly, a new decade, for we now speak in decades, the '40s, the '50s, the
'60s the '70s, to look upon the decade as an opportunity to pursue with new energy our
vision of a good and just society.
This Public Policy Forum culminates a two-day period of conferences during which the American
Enterprise Institute for Public Policy Research convened its scholars together with involved
experts of the public policy community to assess the public policy decisions of the
1970s and to reflect on the public policies our people and nation wish to, or should,
pursue in the 1980s.
The scholars with us for this discussion, all affiliated with the AEI, have actively
participated in the two-day conference.
To get perspective to so broad a subject, we would tend to focus on the economy, domestic
policy, the state of America's institutions, and foreign affairs.
So Professor Kristol is a member of the board of contributors of "The Wall Street Journal,"
and author of the recent book "Two Cheers For Capitalism."
Will you take a look at the economy?
Can the policies of the past meet the challenge of the 1980s?
Prof. Kristol: If you mean the policies of the recent past, the obvious answer is no.
It was George Will who called the 1970s "a decade of second thoughts," And if you stop
the 1970s with the end of Watergate, '74, I think that's a fair description and I expect
the 1980s to continue that process of second thinking, in which the ideas and enthusiasms
and illusions, I would say, of the 1960s are rectified, as the Chinese would say.
John: Professor MacAvoy is a Professor of Economics at Yale University.
How say you on public policy and the economy?
Prof. MacAvoy: John, I would like to install as my first set of remarks everything Irving
Kristol, just said, and I will try to attain that level of brilliance and fail in the next
few minutes.
In a room full of economists, perhaps 30 in number, we had 300 answers to your questions.
The sum total of the answers was fairly universal agreement that public policy was affecting
the economy far more than the economy was changing or improving public policy.
By that, we meant that public policy with respect to expenditures, production of the
federal government and with respect to monetary issues was creating inflation in the economy
to a very significant extent.
Indeed, there may be causes to generate new federal policy with respect to monetary and
fiscal affairs, but it was ultimately the increase in the money supply and in federal
expenditures which created the economy-wide inflation.
Public policy across a wide variety of programs also has created a real slowdown in productivity
and in the growth of the economy.
These may be regulatory policies requiring investments that are not productive of new
output.
They may be tax policies, they may be expenditure policies, which replace investment with consumption.
But the sum total of a wide variety of particular policies for specific sectors of the economy
is that these policies have slowed down the growth and development of the United States
economy.
One would expect that these adverse effects, more inflation, less growth, would lead to
some change in public policy.
But it's at that point that we leave the 1970s and enter into the 1980s because we did not
see any improvement in public policy as a result of the bad behavior of the economy
yet.
John: Professor Berger, let's turn to the general area of domestic policy and our institutions.
Can we be both more responsive to human needs and more particularly human desires and, at
the same time, meet increasingly urgent demands, for more efficiency and more effectiveness
from our policies in the 1980s?
Prof. Berger: I think that what has happened in domestic policies and as a curious parallel,
I think, in foreign policy is that public policy, particularly, as fashioned in Washington
represents values and viewpoints on the world which are at considerable distance from those
of the majority of the American people.
And I think that one of the foremost imperatives of public policy in the 1980s is for government,
for public policy to show more respect for the values of the American people and for
the institutions that represent these values.
And I think this cuts across, really, all the issues you mentioned that we discuss here.
Most of the American people believe in enterprise, government carries on policies which are detrimental
to enterprise.
Most of the American people believe in institutions through which they themselves express their
values and identity, such as the church, the family, the neighborhood, many government
polices are detrimental to that.
And most Americans are very patriotic, and believe in a strong international posture
of the United States, and the foreign policy establishment of this country has a lot of
people in it who feel very apologetic about America and would like to see a very soft-footed
stance in the world.
So I think this cuts across, really, all the issues we've been talking about.
John: All right, Professor Novak, as author of the syndicated column "Illusions and Realities,"
what are the realities of the 1980s in the foreign affairs field?
Prof. Novak: The realities are, I'm afraid, that we are facing the most dangerous era
in our history.
And the advantage of the 1970s have been that we've had an opportunity to see through at
least some of our illusions about the world.
We began the decade with a treatise aimed at our elite predicting the greening of America.
We ended the decade with a profound fear on the part of many people in the world as well
as here that we were seeing the yellowing of America.
That America would be unable and unwilling to fulfill its worldwide responsibilities.
One of the illusions that has been penetrated is that whereas we thought we were engaged
in detente with the Soviet Union, we have come to discover that the Soviet Union has
been spending on its military budget far in excess of our spending, that that spending
has had offensive weaponry in mind and, in fact, that those great expenditures grow every
year more obsolescent, that is the opportune time for their uses in the near future, that
the Soviet leadership will be facing a basic change, probably to a younger and more aggressive
leadership.
That the Soviet Union will be in more dire need of oil than we are beginning in the middle
'80s.
And that the Soviet Union is already practicing a very activist international policy.
And then we have the illusion of the third world, that the third world was interdependent
with us.
And we said that in a friendly, fraternal tone of voice.
And then Iran showed that that could be a very unfriendly, and hostile, and rude interdependence.
We thought the third world was poor, but a good part of it is very rich, we thought of
the third world as one and we've discovered there are many third worlds.
So we enter the '80s, I think, with a greater realism, fortunately, because all the realism
we can draw upon is going to be needed for a very dangerous time.
John: All right, Professor Kristol, and this really is directed to each of you in the four
areas on which we focus, the economy, domestic policy, America's institutions and foreign
affairs.
What are the most significant lessons of the 1970s and what is the most pressing public
policy problem for the new decade?
Prof. Kristol: Let me answer another question which you haven't asked yet.
John: That's good.
Prof. Kristol: As I look back on the discussions we've been having these past days, I think
it's fair to say that the majority of the scholars, economists, political scientists,
sociologists, theologians were quite pessimistic about the world we were going to live in,
in the course of the 1980s.
It is going to be very hard world.
Energy is going to be a big problem.
The international order seems to be generally collapsing, destabilization, as one calls
it now, no longer has to be caused by anyone, it seems to be self-propelled in nation after
nation.
In addition, we face serious economic problems at home as a result of our past mistakes,
we faced a galloping inflation, we face...we have productivity that is far too low, we
face increasing competition from other nations in all sorts of economic areas.
All of these things, I think, are, at least from our present vantage point, undeniable.
Where these scholars divided was in their estimate as to how the American people would
react to these facts, and how the American government would react.
I was among the more optimist, among the more optimistic.
I think the American people and the American government will react sensibly.
And I think that the old adage about the uses of adversity might be proved once again.
I think we have gone through a decade of utopian enthusiasms, that was the 1960s and the early
1970s.
We believed we were living in something called "an age of affluence," if not "an age of Aquarius."
That is, the only problem left was the distribution of wealth, not the creation of wealth.
And the only problem in foreign affairs was goodwill rather than wicked will.
And we have learned that this is not the way the world is, not the way the world works.
And I think the American people have learned, and I'm not sure that all the politicians
have yet learned it, but many show signs of being on a learning curve.
John: Well, let's stay on this issue.
Do you feel that, for instance, the crisis of the hostages in Iran in the closing hours
of the '70s inspired a renewal of conviction, values, and direction of the American people?
Mr. MacAvoy?
Prof. MacAvoy: It seems that we have had [crosstalk 00:16:31]
Man: He's in jail, how would he know?
Prof. MacAvoy: That's a very good question, it makes it easier to answer.
John: You sound like a Harvard [crosstalk 00:16:40].
Prof. MacAvoy: The rallying around of the body politic, the citizens of the country,
of this country to a strained, if not crisis, international situation is very impressive,
It shows resiliency that I had not seen in some years.
And, indeed, I'm encouraged somewhat along the lines that Irving Kristol is encouraged
with respect to our ability to respond.
But that's only one instance, John.
We are still missing from the experts a means by which we can see our way clear to either
coincidental, or simultaneous, energy, economy, and national security crises.
And until we do find a way of bringing these crises together in our thought patterns, I
am not likely to be as optimistic as Irving, concerning the results.
That we may have two or three crises, we lose 3 million barrels of oil, we have a political
disruption in the Middle East and the economy is ready for another slowdown, where the combination
can be a multiple effect of the three.
John: We're taking the question by the thrust of the ability of the American people to respond.
What do you say to that, Professor Berger?
Prof. Berger: Well, I'm sorry, but I wanna add another crisis which is the crisis in
values or, if you will, the crisis of the American self-image.
Which cuts right across the crises that MacAvoy has just mentioned.
Let me tell you a brief episode.
Oh, about three years ago, I talked with an Austrian diplomat whom I know who is extremely
well informed.
Austrian diplomats are particular well informed because they always talk to Romanians, and
the Romanians are totally informed, I have discovered that.
John: By the Hungarians [inaudible 00:18:51].
Prof. Berger: No, not by the Hungarians.
No, the Hungarians ask the Romanians.
But in any case, I was talking with this friend of mine about what everyone in Central Europe
worries about which is the future of Yugoslavia after Tito goes.
And that's a big worry, what will happen in Yugoslavia with all kinds of apocalyptic possibilities.
And my friend who is very, very pro-western said, "Well, Yugoslavia borders on two NATO
countries, Italy and Greece, and the United States, if worst comes to worst, will just
have to send in troops into Croatia from Italy and troops into Southern Yugoslavia from Greece."
And turned to me expecting me to agree, and I said, I should say this was two or three
years ago.
I said, "Well, are you sure that American troops will fight to save whatever regime
in Yugoslavia?"
And he stopped and the question, obviously, had not occurred to him.
Now, I am an amateur with regard to economic, diplomatic, and military policies that should
or should not be pursued.
But I am quite certain of the relevance to all of these of the American value crisis.
I don't think there is any easy crisis in values.
Let me say again, this amounts to a crisis of consciousness, a crisis of how we as a
people view ourselves.
I wish I had an easy recipe in this area, I think the events in and around Iran are
too recent, it is too early to say what will be the outcome of this and it would be nice
if one could be optimistic.
But I think one thing that is relevant to this image, self image, self-consciousness
are domestic policies in all aspects of the welfare state, particularly those that affect
people's values and meanings.
In terms of, particularly, the foreign posture of the United States, I think to put it very
simply, we are a society of which the American people can be proud, not uncritically, but
basically proud.
Does our image in the world reflect this fact, does public policy reflect this fact?
Now as far as the welfare state is concerned, I think we have in the United States a very
distinctively American possibility of creating models of a humane welfare state, which is
far superior to anything in Western Europe, for example, Sweden, I think, is usually taken
as a perfect paradigm of the welfare state.
And I'm not professionally anti-Swedish, but I think what we can create...
I mean, sometimes I am privately anti-Swedish, but not professionally.
I think what we can create in America, and to some extent, have already created, is distinctively
superior.
Not only in terms of its efficiency, but in terms of the humaneness of our institutions.
I think much more can be done along these lines.
Now I think I must add in all honesty that no public policy that I can imagine can overcome
the fundamental crisis put on the table along with the other crises that are already on
it.
Because at its roots, this is a spiritual crisis, and the human spirit is not a very
easy target for public policy.
But at least one can ask that government does not interfere with those impulses in the society
and those institutions in the society that have a chance of dealing with a crisis of
values.
John: Professor Novak.
Prof. Novak: The problem that Peter is addressing arises, I think, because in the 1960s and
the 1970s that we expanded enormously the elites of the United States.
The number of people with at least four years college, the number of people with an income,
now, the top 10% is somewhere around the $27,000 a year per household range and with high status
as managers and professionals.
A full 10% of our population falls in that category now.
This compares, for example, to 1939 when we had 900,000 students in colleges and universities
approximately, now 13 million.
That expanded elite also began to divide in the 1970s.
That is to say, there was the old elite whose interests lay in the private sector and its
energy and expansion.
And now we have a new road to wealth and power, which is through identification of one's own
interests with those of the state.
And perhaps half of our elite now has interests that lie in a statist direction.
And the third factor, I think, that is important is that our top 10% has become increasingly
separated from the other 90% of the people.
There is not an easy connection between the values, the energies, the aspirations of ordinary
people in their many diverse localities across this country.
And the statement of public policy that comes through our public institutions, that comes
through the media, in particular, why is that?
It's partly because the reporters now and, in general, those who, the analysts who give
us our picture of ourselves are now themselves from the top 10% by education, by income,
and by status.
And they tend to give a picture back of this country that reflects better them than the
people, that we have got to find a way, I think, on all the questions that we're talking
about to make a more vivid connection between ordinary people everywhere and the definition
of our public policy.
John: Well, do you consider that the old accepted rule of "Thumb of my youth," which, of course,
was not universal, but shirtsleeves to shirtsleeves in three generations has passed from the American
scene, that the elite become elite and remain elite?
Prof. Novak: Well, no, not that.
I mean, there is some hope for thinking that all those kids who were out demonstrating
against nuclear energy in their Gucci boots and so forth are not, meanwhile, working hard
at their studies and creating room at the top for somebody else.
I mean, who pays their airplane ticket to get them to the demonstrations?
As they lose the ability to pay it for themselves, there's going to be a circulation.
John: Their parents pay, I regret to say.
Prof. Novak: Their parents pay, is right, but there will be room at the top for, still,
others.
But meanwhile, or the point I only want to make is that we have a recently ascendant
elite whose favorite images of the counterculture were to spell America with a "K." And to regard
as the greatest enemy of peace and justice in the world the policies of the United States.
I heard a young man say just yesterday, "Why do we spend so much energy defending the most
reactionary regimes of the world?"
And he meant the, for example, the Shah of Iran.
But one begins to compare, can compare to whom?
Compared to Khomeini?
Compared to the rulers of Iraq or Syria in the immediate vicinity?
Or to any other rulers?
And is the regime which followed the Shah less reactionary?
And you go around the world in that way.
And these questions, I think, have been too absent for a time and many American people,
good people have been intimidated by the constant accusation.
Prof. Kristol: You know, Mike, I think everything you say is true, but I think that's the 1970s.
I'm certain, but I can't prove it obviously, that the 1980s are going to be very different.
I think one of the things we have learned, and that came as a rather shocking surprise
to most of us as it certainly did to me, is that this democracy and, indeed, all modern
industrial democracies, is more threatened by affluence than it is by recession or adversity.
We do not cope well with affluence.
We tend to immediately fly off into the wild blue yonder and to make the most grotesquely
utopian assumptions about the world and its possibilities.
Now I think what has happened in the course of the 1970s that the American people and
a good part of the elites you referred to have become more conservative or, to use a
term I am rather fond of, neo-conservative, which I am supposed to be.
The people who coined the term did not particularly mean it to be flattering.
But I think it's a pretty good term and I define a neo-conservative as a liberal who
has been mugged by reality.
I think this is what happened in the course of the 1970s, reality mugged us all.
Reality imposed itself upon us, and, you know, it imposed itself upon the White House last
of all.
But then the White House always is the last to know.
But the American people have responded.
And I got my first intimation of this at the time of the bicentennial celebration, when
you saw these young people, young girls, carrying their babies and papoose packs, wearing blue
jeans, singing "The Stars and Stripes Forever," I didn't even know they knew the words, I
didn't know they even knew the song existed.
But there they were singing it, and I got a sense then that the tide had begun to turn.
And I think as a result of the events in the Middle East, we are witnessing in this country
the rise of a new nationalism.
I think there'll be a much stronger sense of communal solidarity.
There will be many problems, there will be all the crises that Paul MacAvoy referred
to, and every one of them...
It's going to be a hard decade.
But what gives me hope is the fact the American people seem to be a lot more prepared to cope
with this decade than they were with the 1960s, which, at least in the earlier part, was not
a hard decade at all.
Prof. Berger: Now, Irving, I feel we shouldn't make too many predictions that we might regret
in all these public...
Prof. Kristol: Oh, people forget, it's all right.
Prof. Berger: I don't know whether the tide is turning or not.
I hope you are right.
But I would like, as of now, I would like to say something a little different to Mike
than you did.
I think the people who like to spell America with a "K," that is not the dominant mood
anymore, certainly not in the areas of public policy, they are not people in the State Department
HEW, very few of them.
And I think what you find is something that, at first, looks more harmless, but perhaps
is more insiduous [SP] and it just occurs to me that we need a new term and that's "neo-counterculture,"
which is a much softer version of it.
Prof. Novak: That's Romania.
Prof. Berger: They're not...
Prof. Kristol: All intellectual terms are Romanian.
John: Neo-counterculture.
Prof. Berger: I think what one finds is something and you find in all the areas we're talking
about, certainly in foreign affairs, it's not that America is fascist and Maoist China
is wonderful.
It's something more nuanced, but also very dangerous.
It's always giving the benefit of the doubt to what seems to be a revolutionary movement,
okay?
It's always assuming, at least there's a possibility, that the friends of the United States are
the worst.
It's terribly important, a fundamental intellectual failure to understand the difference between
an authoritarian and a totalitarian society.
Now, these are softer themes than the late '60s and the early '70s, but I think they're
very insiduous.
Prof. Novak: But the point I wanted to make...
Prof. Kristol: In Romania, we call it insidious, right.
Prof. Novak: The point I wanted to make is that both you and Irving argue that the iron
is hot.
And that there is a change at work with which I'm in total agreement.
But I don't think that it has been shaped yet, I don't think that those channels have
been created.
All this good feeling, all this good turning toward greater reality might come to naught.
We don't, for example, I think, at the moment have a political expression of it.
We have neither a party nor a set of candidates who represent the sort of view that we are
here talking about.
Prof. Kristol: Well, I disagree.
I think all the candidates are representing it in one way or another.
Even Mr. Brown, Governor Brown, in certain respects, the constitutional amendment to
limit government spending does reflect that changing mood.
I think it's finding political expression the way these things find political expression
in this country by sort of filtering up and coloring everyone's rhetoric and coloring
everyone's policies.
I think even on economic policy, which is in a way the hardest policy because there,
we get into group and class conflicts, there is a new appreciation of the need for economic
growth.
And far less emphasis on the importance of economic redistribution.
I think that is as much to be found in the Democratic Party now as in the Republican
Party.
Prof. Novak: But it's yet to be achieved.
I mean, the changes in policy which would make investment conditions more favorable,
which would take the government out of the universities to a greater degree and so forth,
those things are yet to be achieved.
There is a sea change in opinion, but there is not yet the imagination of the laws or
the organization of the institutions which could really effectively turn the tide, and
that makes always possible, I think, a restoration of that earlier mood.
Prof. Kristol: I think the phrase that may be throwing us off a bit is turning the tide.
Look, we're not going to go back to the early 1950s to the Eisenhower era.
Whenever it goes back, the counterculture will, in a sense, to some degree, remain.
It will become stylized, it will become commercialized, as it already has, it will become co-opted,
Hollywood will take it over.
And it'll become a part of popular culture and, one hopes, will be tamed and made to
accommodate traditional American values.
The accommodation may not be all that easy.
But in a free society, these things can and do happen and the potential, the power of
a free society to take a hostile idea and castrate it while accepting it should never
be underestimated.
And some of the radicals incidentally understand this very well, indeed.
And I think that's what's happening.
I mean, there are many, going to be aspects of American life in the 1980s that those of
us of a certain age and a certain background are not going to like.
But then there were certain things in the 1950s I didn't much like either.
Prof. Novak: Take one theme, though, that came up in our meetings again and again, namely,
the theme of mediating institutions, or mediating structures.
That is those parts of life which are intermediate between the individual on one hand and the
state on the other.
The institutions like the family, the neighborhood, the church, the union, the corporation, and
so forth that Peter already mentioned.
While there's beginning to be a body of thought about how important these organs are any healthy
society, there really is not yet much imagination about how to avoid harming these basic institutions,
minimally.
Or on the other hand, about how to provide a way for strengthening them, for encouraging
them, which doesn't either corrupt them or make them even more dependent on the state
or some other institution.
Well, you know, I think one thing...
Excuse me.
John: Professor Berger, you're chairman, to remind them again, you are chairman of the
project examining mediating structures.
So give us your view as to...
Prof. Berger: But I'd rather talk about something else at the moment because otherwise, I'll
get involved in the scholastic... [crosstalk 00:34:28] I'll get involved in the scholastic
discussion as to what are mediating structures and what are not.
I wanted to say something else if I may, I don't want to avoid the subject.
John: Yeah, please do.
Prof. Berger: It seems to me that the conversation right now, between particularly Mike and Irving
Kristol, is the continuing potency of the countercultural themes.
And I think one thing one might hope for, and there are certain economic forces perhaps
that lead to this, is a certain privatization of these themes.
In other words, what you are referring to, Irving, in terms of what we may not like very
much are certain private mores, which...
Who likes what one's neighbors do anyway?
I mean...
So they may have some, perhaps, sexual taste that I don't appreciate or what I find much
worse, because I can hear it, musical taste and things of that sort.
But as long as this stays out of public policy, I think we can live with this.
And that is perhaps a realistic goal.
Prof. MacAvoy: [crosstalk 00:35:31]
John: Yeah, please do.
Prof. MacAvoy: ...add just an injection of fresh politics at this stage, too, many of
the wishes or goals or aspirations of our friend, Kristol, can be achieved with changes
of operations of existing organizations, mediating structures, even federal and state agencies,
or boards or bureaus, even elected presidents.
We can turn around the important economy-wide policies of inflation and economic growth
without a significant change in institutions.
If we have a presidency, which is an organization now, with the will to set out a five-year
balanced federal budget and the will to use the influence of the White House on monetary
policy, to restrain the growth of money supplies that is obtained through Federal Reserve Board
policies, we need not change institutions.
However, if we want to improve the growth performance of our economy, the productivity
growth, if we want to create significant new jobs and opportunities for entrepreneurs,
for people with new ideas, we're going to have to change regulations, we're going to
have to reduce the licensing authority of the state board, we're going to have to do
things with housing regulations, with regulations on the production of new goods and services
throughout the economy that require changing institutions.
That whole vast body of agencies that lie between an elected president and the people,
mediating structures created by governments, to do their work at the local level, will
have to be in good part put back to where they were in the 1950s if we're going to have
the changes he wants in the 1970s.
And he has told me 30 times that regulatory reform proceeds at an inch a year.
In over a decade, you may get as much as three yards.
So I doubt whether he can do what he wants to do within the existing institutions on
part of his programs [crosstalk 00:38:09]...
Prof. Kristol: But in the closing hours of 1970, we had deregulation of the airlines.
Prof. MacAvoy: Yes, but that was...
Prof. Kristol: We had the FTC issue brought up.
So there is a speeding up, it's really quite important.
The deregulation of the airlines was, as with trucking, as with railroads is a complicated
matter you're talking about.
A specific older kind of regulation, not the newer social kind of regulation which has
really imposed the most tremendous course upon the economy as a whole.
As against...
Prof. Novak: Give an examine.
Prof. Kristol: Well, OSHA or Environmental Protection Agency.
Prof. MacAvoy: EPA.
Prof. Kristol: Yes, which has imposed course not on one industry, but on the economy as
a whole.
And you're right, we are going to make very slow progress against those excesses of regulation.
On the other hand, it was Adam Smith who said, "A market economy can withstand a thousand
impertinences of government."
Didn't say a million, but he said a thousand.
I think if you get that inch every now and then, the market economy will figure out a
way to cope with these regulations.
Already, it really is extraordinary, the achievements, and much undervalued and, indeed, quite ignored.
The achievements of the business community in coping with these regulations which, if
one had described them 10 years ago in a class in economics, one would have assumed to simply
drive them all out of business completely.
But they are very ingenious people, and very hardworking people and they have managed to
not live with them comfortably, they're living with them painfully.
And they are indeed excessive and something has to be done to reduce their costs and something
will be done to reduce their cost.
But a few inches at a time and a few yards at a time and at the end of 1980s, I think
our economy will be in much better shape.
John: Well, I asked what was the most pressing public policy problem of the new decade, and
I guess the answer is there's no most, they're all rather pressing and that there are a great
many of them.
Let's come to grips with specific concepts.
How much is our dependence on foreign energy sources, Professor MacAvoy, going to shape
our future?
Prof. MacAvoy: It's going to be a very important part of our future, John.
This is the classic public policy problem of the decade because it offers the full range
of opportunities to do very well and very poorly.
If we start with what will happen in the market economy, the world oil market economy of Irving
Kristol's description, I believe that analysts have to come down to a position where both
because of engineering and technical conditions in the production of oil, and because of political
conditions, we will have each year 1% or 2% less oil than we had the year before.
All it takes is a political disruption in one Middle Eastern country.
A surprise find that the decline curve, that the exploitation of oil has taken us further
and has water in the field.
Any of these conditions will give you a couple percentage points reduction in world supply.
The world's demand grows at 4% or 5% a year because of population growth, because people
obtain higher levels of income as Dr. Novak mentioned.
They have higher aspirations, they will consume more in the developing countries.
So that each year that we have a couple percentage points less, we'll have five percentage points
more demand.
In order to clear the market of the excess demand now 5, 6, 7 percentage points, prices
on average are going to have to go up 20% to 30% a year, that's every year in a normal
year.
There'll be abnormal years.
Well, against that, that says that over the next decade, we ought to get a 200% to 300%
increase in the price of world oil.
That is our challenge for these vibrant citizens that Irving and the rest of us have described.
And we can do one of two things, we can attempt to maximize our domestic production to add
to those supplies and we can attempt to conserve the maximum amount possible so as to reduce
that press of demand.
John: How do you factor in synthetics, oil from coal, oil from shale?
Prof. MacAvoy: That is a way of adding to the supplies of domestic oil with a substitute
that you won't be able to tell the difference between with respect to oil.
It will burn in your in your...I presume you now have a two-cylinder, a 12-horsepower,
a former lawnmower that you drive to the office.
John: With a hole in the floor so I can also use my feet.
Prof. MacAvoy: Yes, you're conservative with respect to energy, which I applaud.
And under those conditions, the additional supply of synthetics will play an important
role towards the end of the decade.
Well, that's policy A, that is our challenge and that's the positive policy.
In order to do that, we must eliminate the regulations of prices because that's the most
effective force for conservation, it makes people think about what they conserve, what
they consume, it makes people work against very important limits on their budgets to
carry out conservation.
And it adds the maximum amount available to domestic supplies of both the synthetics and
the orthodox fuels.
That policy opportunity of eliminating regulations in that area has its alternative of continuing
the present Department of Energy controls.
The Department of Energy controls over the last five years have added a couple million
barrels a day to demand and reduced supply by a million barrels a day.
So a continuation of those controls can only add to the press of world demands and reduce
the world supplies even more than my baseline prediction.
Whether we choose policy A or policy B is a matter that legally comes up in the next
year or two.
There will be a tremendous furor on Congress, they'll spend a year on it.
In the process of spending a year on it, they will not do damage elsewhere in the economy,
so that's good.
But in the process, they may very well decide on A or B, and frankly, I don't have the ability
to predict as to whether they take the positive or the negative road.
That's the challenge of the decade as far as American policy concerns the economy.
John: All right, let's turn to an issue we said we would look at which is foreign affairs.
How do you see the role of the United States on the world stage in the '80s?
Do we have the national will to lead commensurate with our wealth and our inherent power?
Who wants to start with that?
How about you, Professor Novak?
Prof. Novak: That's one of the issues that's still in doubt.
I think we were very lucky that the challenge, the first really vigorous challenge to us
came from Iran, rather than, let us say, in Yugoslavia with the Soviet Union or in a rebellion
in Poland.
I'm just back from 10 days in Poland and talk of an imminent rebellion there is very powerful.
We're lucky that we were tested in Iran first and we're lucky that the people coalesced
behind it, we're lucky that the president found Iran as a pretext for saying he wanted
a 5% real increase in the military budget for every year for the next, I think he said,
four years.
And I don't think apart from Iran, that would have happened and the people would be so unanimously
behind it.
And I think the other politicians will come in behind it.
All that means that we again have a chance to author our course at least by a little.
But one has to be a bit skeptical yet whether we will, there are important forces who will
try to undermine that and take us back into the mood that we have been in for the last
10 years and whether we can actually execute it is to be decided.
John: Anybody else want to talk to that point, if not, Professor Berger, with your permission,
let us briefly, to be sure, go back to mediating structures.
Which, as I understand from reading your works on it and your chairmanship of the project,
consists of that vast conjuries of important elements of our lives, our church, our family,
etc.
Do you see them having a more effective place in the '80s than you have indicated at least
in what you've said they had in the '70s?
Or do you see less government domination of the mediating structures?
Prof. Berger: Well, let me emphasize again how I see this connected with the general
theme of this discussion.
In my response to your first question, I said I would like to see public policy more respectful
of the values of the American people and the institutions that embody these values.
Now take the church as an example, organized religion.
Now minimally, it seems to me, and it's a very minimal expectation, public policy should
not prevent these institutions from continuing doing certain things which they are doing,
for example, education.
Now, we have in the courts now for several years a number of cases in the federal courts
and in the state courts.
Where government, state education departments, in what seems to me a demented way, have been
trying to impose their dominance over certain religious schools.
Most of these cases as far as I know at the moment are in the South and most of the schools
are Evangelical Protestant schools.
And it's very important to point out that as far as I am aware, in none of the important
cases is there any issue of race, in other words, everyone stipulates that these are
not that these little schools that came up to avoid desegregation.
They are schools operated by evangelical Protestants who want to teach their children in a setting
which expresses their religious values.
That's not some little sect, I mean, it's not like the Amish case up there in Iowa a
few years ago.
These are millions of Americans.
The estimate is not accurate, but perhaps between 30 million and 40 million of the American
people belong to this community of value.
I don't, I have no stake in this personally.
I have a stake, however, in government not running roughshod over the values of millions
of fellow Americans.
Now, what's, I think, terribly important, quite apart from what one thinks about religion
per se, and I think I said before I think the crisis is ultimately religious, spiritual,
the values for most human beings, in the end, are religious values, but even if one does
not share this opinion and is a sort of tolerant agnostic, one would have to, which is very
few Americans are not at least tolerant agnostics.
I mean, there's a infinitesimally small group of militant atheists and anti-church people
who have an absolutely disproportionate effect on the courts, which is very interesting in
itself.
But that's another story.
So even from the point of view of the tolerant agnostic, I think it's very important to point
out that these schools on the whole do a very good educational job.
What is the state trying?
Teaching, writing, reading and arithmetic, never mind their evangelical theology.
Now, what is the state trying to do?
To force these schools to become like the public schools which, in most of the country,
are an unspeakable mess.
Now, as public policy, I think this is, I would use the phrase again, demented.
And this dementia has a lot to do, I think, with the crisis of values that I have been
talking about.
Prof. MacAvoy: An economist's concern or forecast, mediating structures, in the work of Peter
Berger and others, are these organizations that lie between the individual and government.
And they attempt to ameliorate the harshness and impersonality of the delivery of government
services.
They do this well in a variety of circumstances from his case studies.
On the other hand, you can become concerned that in the 1980s, the mediating structures
as they succeed become, themselves, government agencies.
And because they are successful products of the local community, become a powerful political
force for the perpetuation of that government program.
Now, John, just three minutes ago, I was trying to balance the federal budget and I hope that
the growth of these burgeoning ameliorative organizations doesn't give us a $60 billion
deficit again.
So I've got a few worries back in [crosstalk 00:51:41].
Prof. Berger: [inaudible 00:51:41] I would like to say, Paul, that while this is a legitimate
worry, and you and I have discussed this, I think in the case I mentioned.
this doesn't enter into it at all...
Prof. MacAvoy: Didn't say it did, we're in the 1980s.
We're in the '80s, Peter, we're not back in the medieval '70's.
John: Yes, sir?
Robert: My name is Robert Pranger and I direct foreign policy studies at the American Enterprise
Institute, or AEI as it says behind this panel.
Now my question to the panel basically is, what from your standpoint is the role which
ideas and intellectuals ought to play in the 1980s in the realm of public policy?
Prof. Berger: Yeah, I would make a distinction between the class of intellectuals and the
class of experts.
Obviously, in the conduct of economic policy, you would like some economists around to give
you whatever guidance and counsel they can.
I would not particularly want an economist to be in charge of economic policy, but I
do think that it's useful to have economists around so that politicians can talk with them
and get all of their varying opinions.
I think similarly on foreign policy, it's very useful, obviously, to have experts of
a particular part of the world on international economics or, these days, on armaments when
you go into disarmament negotiations.
So that there is and I think must be a role, consultative role for the expert in domestic
policy and in foreign policy.
But, you know, it's interesting, they don't really function there as intellectuals in
any traditional sense of that term.
They function as experts.
But I, on the whole, don't like the idea of these people conducting policy.
I think they must be kept in a subordinate position because they do tend to think in
very abstract ways about the real world.
And they do tend to have very rationalistic conceptions of political, social and economic
reality, they do tend to have too much confidence in their own analyses and not enough good,
solid gut instinct as to what is the right way to go.
So there's a role for these people, but not, I would think, a top role.
Prof. MacAvoy: Taking the economic policy role seriously over the last 10 years, I would
surmise that our governments have been disappointed that the counsel and advice that is come from
the universities, the White House, and the congressional staff has been, unfortunately,
not canceling.
That there have been dominant themes, they have mostly been in error, they've led to
worsening the situation and the consumers of that sort of advice, I believe, have learned
widely and well to be very cautious.
It's almost in the tradition of a true story that's told about President Ford and Alan
Greenspan, his economic adviser, at a lunch early in President's Ford's administration.
He looked up and asked, "Where is Alan Greenspan?"
And his aides said, "I do not know.
Shall I find him and bring him here?"
And Mr. Ford, said, "No, no.
Just tell me where he is, don't bring him here."
John: I appeared with Professor Kristol a little over two years ago on another forum.
And I can't resist sharing with you what he had to say on that occasion because it's so
germane to what we're talking about.
That time, he said, "The point is the economy of our country is in the hands of professionals
who do not know what to do, but nevertheless have the only professional authority to do
anything."
Then he added, "I think it was George Bernard Shaw who said that it was only after 1905
that doctors started to do more good than harm to their patients."
So then I think there's a mix of that in what you have all had to say.
Prof. Kristol: Actually, intellectuals and public policy are at their best when they
show why and how public policies don't work.
They really are at their best when they're critics.
They're not all that good at coming up with positive policies.
Their record there is, to put it very gently, is very spotty.
John: This concludes another Public Policy Forum presented by the American Enterprise
Institute for Public Policy Research.
On behalf of AEI, our hearty thanks to the distinguished and expert panelists, professors
Peter Berger, Irving Kristol, Paul MacAvoy, and Michael Novak.
And our thanks also to our guests and experts in the audience for their participation.
Peter: This Public Policy Forum on "Future Directions for Public Policy" has brought
us the views of four experts in the field.
It was presented by AEI, the American Enterprise Institute.
It is the aim of AEI to clarify issues of the day by presenting many viewpoints in the
hope that by so doing, those who wish to learn about the decision-making process will benefit
from such a free exchange of informed and enlightened opinion.
I'm Peter Hackes in Washington.
Announcer: This Public Policy Forum series is created and supplied to this station as
a public service by the American Enterprise Institute, Washington, DC.
[00:57:57]
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Announcer: For a transcript of this program, send $3.75 to the American Enterprise Institute,
1150 17th Street NW, Washington, DC, 20036.
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