The populist rap on U.S. trade policy is that it's stacked against Main Street but works wonders for corporate elites. And, indeed, the numbers show that while Joe Six Pack has gotten creamed by globalization over recent decades, the top 1 percent have enjoyed record income gains.
Populists argue further that America's enthusiastic embrace of an open global economy, even as the domestic casualties have mounted, is yet one more example of how U.S. policy debates have been hijacked by an affluent minority whose economic interests are quite different than those of ordinary Americans.
In fact, global economic policy may be the single best example of upper class preferences trumping the views held by most U.S. citizens. Polls have long shown that many Americans see free trade as a one-way street, costing jobs and hurting U.S. living standards. But the public's revolt against globalization has done little to stop the free-trade push of the past two decades. The United States has entered into a dozen new free trade agreements since the uproar over NAFTA in 1994, and more pacts are in the works.
While it's no secret that pro-business groups like the U.S. Chamber of Commerce play a big role in shaping policy inside the Beltway, the role of think tanks in advancing corporate interests remains less understood—in part, because there hasn't been much transparency around corporate donations to such nonprofits (donations which are tax deductible, in contrast to lobbying expenses).
Lately, though, think tanks have been doing a better job of revealing their donors. And the Peterson Institute for International Economics is one place that now posts a (long) list of its funders online. Over two dozen major U.S. corporations are on the list, including many with an urgent self-interest in U.S. global economic policy. To name just a few: Aetna, Coca Cola, Dow Chemical, ExxonMobil, GE, Goldman Sachs, IBM, JP Morgan Chase, Shell, and United Technologies.
Corporations don't just fund the institute; corporate executives also largely control the place. Of the forty members of PIIE's board of directors, about half are active business leaders and many of the others are retired CEOs. The board is chaired by the former private equity star Peter Peterson, whose giant $50 million gift to the institute explains its name.
According to the institute's very helpful communications team, about 40 percent of its funding comes from corporations, another 25 percent comes from the endowment (created with Peterson's gift), and the rest comes from foundations and wealthy individual donors.
In case you're not familiar with the institute, I think it's fair to say that it's the top think tank in Washington that works on international economics, helping shaping U.S. policy on trade, debt and development, international finance and globalization in general. The institute claims credit for helping usher in NAFTA and other free trade agreements, as well as normalizing trade ties with China in 2000, which substantially opened U.S. markets to Chinese imports. Currently, it's neck deep in the fight for the Trans-Pacific Partnership, another trade pact which has drawn fire from populists.
The Peterson Institute bills itself as "completely nonpartisan" —you know, just a practical group of policy wonks looking for the best solutions to complicated issues. And while nearly everyone dismisses claims of impartiality by outfits like the Heritage Foundation or the Center for American Progress, the Peterson Institute tends to be regarded in a less ideological light.
Additionally, the institute derives great influence from the fact that it's a major player on a set of complicated global economic issues that tend to get short shrift from other policy shops and often go uncovered by the media.
In short, because the Peterson Institute is a big fish in a small pond, who it speaks for matters. And one has to wonder: Just how much intellectual integrity can the institute have, considering its dependence on donors with a strong financial stake in the issues that it works on?
To put the question more starkly: If a think tank is heavily funded by corporations, and its board is filled with corporate executives, how can anyone see it as anything other than a "pro-corporate think tank"—a place that speaks for specific private interests as opposed to being an impartial authority on policy?
There are two basic defenses against the charge that a think tank is merely carrying water for its donors.
The first is the "alignment of interest" defense. Which basically says, hey, we believed in these policies long before any of our donors came along, and we'd be fighting for the same ideas even if we didn't get their backing. Our donors share our worldview, and that's why they give us money.
This argument is particularly resonant in the case of the Peterson Institute, since elite policy experts have been embracing an open global economy for generations. More specifically, C. Fred Bergsten, the institute's founder, believed in this ideal well before he started the institute in 1981 following a stint as assistant secretary for international affairs of the U.S. Treasury during the Carter Administration.
A second defense is the "firewall" claim. Which says, sure, our donors may desire specific outcomes in the policy areas we research, but we reveal our donors to the public and also create safeguards so that funder preferences don't influence our work.
The Peterson Institute does a better job than many places of revealing their funders and watching out for conflicts of interest by their researchers. These policies are spelled out here, and among other things, the institute says, "Funders are never given the right to final review of a publication prior to its release."
In the end, though, neither the alignment nor the firewall defenses are very compelling.
While the Peterson Institute may be perfectly aligned with its donors on the broad importance of building a more open global economy, it's easy to imagine its scholars being drawn at times to policy positions that aren't to the liking of funders like ExxonMobil or Goldman Sachs.
And the danger here is not that some board member or funder will give the word to a squash a specific policy brief. Rather, it's that such a brief will never be written to begin with, thanks to self-censorship. Policy groups are loathe ever to bite the hands that feed them, no matter what they may say about the intellectual independence of their scholars. As for those scholars, they're well aware of who's paying their salaries.
Peterson Institute staff have surely taken positions at odds with its funders here and there, but any significant and ongoing divergences are unlikely to occur, given the set-up here. As well, the staff must ultimately stay in sync with the board, which broadly sets the institute's priorities.
The bottom line is not that the Peterson Institute is a corporate shill that blindly follows the orders of its CEO masters. Rather, it's that it is inescapably more attuned to the interests of large corporations than of ordinary Americans, and it's structurally constrained from ever challenging those interests in a major way. It's just nonsense to imagine that this place can be an objective arbiter of U.S. global economic policy.
So, yes, the Peterson Institute is, indeed, a "pro-corporate think tank." And if the media did a proper job, it would identify the institute as such when citing its experts and research, just as it identifies the ideological orientation of places like Heritage or CAP. The public needs to know these things.
Meanwhile, it's worth pondering this as yet another example of corporate philanthropy used for the advancement of corporate interests—and at taxpayer expense.