Simply Reckless

Let’s take a look at the American Enterprise Institute. Let’s see what SourceWatch has to say.

Controversies and Claims

Minimum Wage Hikes “Simply Reckless”

AEI scholars caution against legislation raising the minimum wage “for the sake of low-wage workers,” claiming that mandating a higher wage increases the cost of employment and will therefore leave fewer jobs. In one article, AEI resident scholar Michael R. Strain called Seattle’s initiative to increase the city’s wage requirements “simply reckless.”[16]

Dodd-Frank Wall Street Reform “Disastrously Wrong Response”

AEI has spoken out against the financial system regulations created under the Dodd-Frank Act. In an article, AEI scholar Peter J. Wallison claimed that the 2008 financial crisis, which led to the legislation, “was not caused by insufficient regulation, let alone by an inherently unstable financial system. It was caused by government housing policies…” Wallison wrote, “The Dodd-Frank Act was a disastrously wrong response,” claiming it created uncertainty and removed the incentive for financial institutions to take risk.[17]

No surprises there, only the familiar disgust.

Casting Doubt on Global Warming

In February 2007, The Guardian (UK) reported that AEI was offering scientists and economists $10,000 each, “to undermine a major climate change report” from the United NationsIntergovernmental Panel on Climate Change (IPCC). AEI asked for “articles that emphasise the shortcomings” of the IPCC report, which “is widely regarded as the most comprehensive review yet of climate change science.” AEI visiting scholar Kenneth Green made the $10,000 offer “to scientists in Britain, the US and elsewhere,” in a letter describing the IPCC as “resistant to reasonable criticism and dissent.”[19]

The Guardian reported further that AEI “has received more than $1.6m from ExxonMobil, and more than 20 of its staff have worked as consultants to the Bush administration. Lee Raymond, a former head of ExxonMobil, is the vice-chairman of AEI’s board of trustees,” added The Guardian.[19]

Since the time of that report, AEI has continued to receive money from Exxon Mobil — a total of at least $1,520,000.[20]

That’s pretty shameless. It’s almost as if AEI is not a think tank at all, but just a paid servant of the oil industry – only for some reason it’s seen as a think tank, so its output is treated not as PR fluff but as think-tankery.

AEI and the head of its energy studies department, Benjamin Zycher, have faced criticism for distorting scientific findings on global warming from Jeffrey Sachs, a leading environmental studies scholar, Columbia University professor, economist, and UN advisor. Zycher had once criticized Sachs for misconstruing the IPCC conclusions on global warming; however, Sachs responded, “It is Zycher who distorts, misrepresents, or simply ignores the IPCC conclusions.”[21]

Sachs went on to write:

“It is time for Zycher and, indeed, the American Enterprise Institute, to come clean. The AEI, despite its roster of distinguished academics, has failed to be constructive in the climate debate.

A roster of distinguished academics who have been bought by ExxonMobil.

Defending Big Tobacco

In 1980, AEI for the sum of $25,000 produced a study in support of the tobacco industry titled, Cost-Benefit Analysis of Regulation: Consumer Products. The study was designed to counteract “social cost” arguments against smoking by broadening the social cost issue to include other consumer products such as alcohol and saccharin. The social cost arguments against smoking hold that smoking burdens society with additional costs from on-the-job absenteeism, medical costs, cleaning costs and fires.[24] The report was part of the global tobacco industry’s 1980s Social Costs/Social Values Project, carried out to refute emerging social cost arguments against smoking.

NGO Watch

In June 2003, AEI and another right-wing group, the Federalist Society for Law and Public Policy Studies, launched a new to expose the funding, operations and agendas of international NGOs, and particularly their alleged efforts to constrain U.S. freedom of action in international affairs and influence the behavior of corporations abroad.[25] AEI claimed that “The extraordinary growth of advocacy NGOs in liberal democracies has the potential to undermine the sovereignty of constitutional democracies, as well as the effectiveness of credible NGOs.”[26]Ralph Nader responded, “What they are condemning, with vague, ironic regulatory nostrums proposed against dissenting citizen groups, is democracy itself.” [27]

Altogether not a very admirable organization.


  1. mildlymagnificent says

    In February 2007, The Guardian (UK) reported that AEI was offering scientists and economists $10,000 each …

    There was a $30000 prize available for disproving global warming until a few days ago. That one’s closed now but $100000 prize will be offered in a few months time under slightly different conditions. If you know any global warming deniers, it might be worth getting them to have a look at Charles Keating’s blog and review the challenges and responses so far. (I don’t recommend it to anyone else unless they’re sure they won’t grind their teeth to powder when doing so.)

  2. Crimson Clupeidae says

    Meanwhile, in the real world, places that raised minimum wage experienced significant economic growth.

    Libertarians are just as delusional as the religionists they often decry.

  3. lpetrich says

    As to the AEI and the FSLPPS demonizing NGO’s, consider that the AEI and the FSLPPS are both NGO’s. So are they denying their legitimacy? Or the legitimacy of all NGO’s that they consider competition?

  4. lorn says

    This is a gross simplification but it has, IMHO, some useful concepts: Differentiate between wealth and prosperity. Wealth is simply the amount of money in the system. The measure of prosperity is more closely related to the velocity of money.

    Imagine an isolated community with 1000 people where one has $1000,000 and 999 have nothing. Now imagine the same community where everyone has $1000. The total wealth is the same. Of course most people will recognize that while both cases are equal in wealth they are not equal in prosperity. In the first case there will be little activity because the vast majority have nothing to buy goods with. If there are any purchases the one with the money will have a whole lot of pricing power. In the later case there is, at least, significant potential for a vibrant economy.

    Now imagine the same community where all 1000 people each have $1000 and each is arranged in a circle of 1000 people where each person buys $1000 worth of goods, and sells $1000 of goods each day. At the end of each day they still have $1000 because one person’s sale is the next person’s purchase. You have a virtuous cycle and a vibrant economy.

    Of course real world economies don’t work is such a simple manner but the principles really do work.

  5. Ben Finney says

    AEI scholars caution against legislation raising the minimum wage “for the sake of low-wage workers,” claiming that mandating a higher wage increases the cost of employment and will therefore leave fewer jobs.

    Utterly delusional, like most free-market rhetoric. It ignores that the “market” is composed of people, most of whom are workers. An increase in minimum wage is an increase in the market’s capacity to spend.

    The corporate capitalist already has plenty of incentive to pay workers less. Yet they simultaneously demand consumers spend more — without apparently connecting the fact that most consumers are the same workers.

    So there needs to be a countervailing force to compel the corporate capitalist to sustain the market we all depend on. That countervailing force is regulation requiring minimum wages to remain high.

    The sooner we can toss out the free-market pseudo-scientists, the better.

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