Stephen Boucher is programme director at the European Climate Foundation, author of "Think Tanks: Cerveaux de la Guerre des Idées", and a founding member of the Council on Economic Policies.
"When the Greenlining Institute met in 2004 with Alan Greenspan to alert him about the impending subprime-mortgage crisis and urging him to press lenders for a voluntary code of conduct, the then-Federal Reserve chairman wasn't interested.
His response to this small think tank specialising in studying ethnic diversity issues was, in essence, “this is good for growth”. A few other think tanks were as insightful about the root causes of the economic, financial and social crisis that was to unfold and similarly dismissed, notably the Center for Responsible Lending, the Center for Economic and Policy Research and the International Institute of Management.
What’s the point of canaries if miners won’t pay attention to them? Are policymakers today listening to think tanks’ warnings and ideas for solving the crisis?
Private policy research institutes are now well-established features of Western democracy. By some accounts, there are approximately 2,000 in the United States and about 1,800 in the European Union. The UK and Germany lead, but countries such as France, Spain and Italy are catching up, as recently evidenced by think tanks’ role in the French presidential election, with groups such as Fondation Terra Nova contributing to François Hollande’s manifesto and, arguably, victory.
Times of disruption have always provided fertile ground for think tanks’ expansion and integration into policymaking. They appeared on the back of World War 1 to draw upon the insights provided by new social science techniques and foster international peace. They grew in number after World War 2 and diversified and multiplied after the energy crises of the early '70s. They thrived on the demise of the East-West divide.
We are today living the fifth major wave of think-tank development, with both mainstream institutes frantically publishing policy briefs about Europe’s economic woes and a smattering of new think tanks challenging more established institutes and ways of thinking. Yet their role in solving the crisis remains limited.
Borderline thinking
Nicolas Véron, senior fellow at Bruegel, one of the EU’s premier economic think tanks, defines the current challenge succinctly: “producing new thinking with old thinkers.” Think tanks have to identify the very narrow space for innovation, with governments handling urgency and not wanting revolutions, yet in need of innovative solutions. Finding this small opening for acceptable reform in today’s atmosphere of near panic is an art, which a few of the larger institutes have mastered.
The fiscal and monetary crisis has given prominence to the proposals of the Centre for European Policy Studies for a European stability fund, as well as Bruegel’s analysis of eurobonds, for instance.
A few others are trying to push the envelope for a more radical rebooting of policymakers’ software. The UK’s conservative Institute for Economic Affairs in fact hopes that the current turmoil can foster a fundamental rethink of the way government is run, with ideas it knows are not palatable in the short term. In a different vein, new groups are emerging to challenge neo-liberal thinking – such as the Institute for New Economic Thinking (INET) and the New Economics Foundation – or to reconcile long-term economic and sustainability issues – such as the Post-Carbon Institute, Re-Define, Economie & Générations, the Capital Institute, and the Council on Economic Policies.
How much are policy makers listening though? According to Bruegel’s Véron, “The crisis has been an opportunity for think tanks, because there is a need for explanation and everyone is disappointed by his or her own ability to analyse developments.” However, according to Pierre Dechamps of the European Commission’s Bureau of European Policy Advisors (BEPA), policymakers “direct most of their energy towards urgent financial and economic matters.” As a result, BEPA currently focuses on the “urgencies of the moment, of the day, of the hour, of the minute,” thus shifting BEPA’s role from “mid- and long-term advice to short-term practical support.”
While many of the recent remedies to the crisis have found their origin in private policy research institutes, there is clearly very little appetite for deeper reforms that the less mainstream institutes are calling for.
Unfortunately, the current context, while drawing think tanks more into the limelight, is not yet translating into a significant increase in funding, despite a few notable exceptions, such as George Soros’ decision to support INET. European think tanks are still woefully under resourced relative to their US counterparts.
New thinking does require new thinkers. Policymakers should pay more attention to private institutes that challenge the orthodoxy. Donors should generously support policy innovation. And think tanks should continue improving their ability to publicise their research.
Europe’s time to reboot has come, and it urgently needs innovative software developers."
