AEI Guards Free Enterprise

  • Public-Policy Reform
  • 1954

Founded in 1938 by a group of businessmen aiming to strengthen “free, competitive enterprise,” the American Enterprise Association had been only mildly effective when William Baroody arrived in 1954, quitting a comfortable job at the U.S. Chamber of Commerce to do so. Within a generation, he transformed the think tank—renamed the American Enterprise Institute—into one of the great conservative forces in Washington, rallying corporate and philanthropic dollars to make it happen.

Libertarian economist Milton Friedman became an AEI academic adviser, and conservative intellectuals like Irving Kristol, Arthur Burns, Antonin Scalia, Herb Stein, and Michael Novak began long associations with the think tank. At a dinner honoring Baroody’s twentieth anniversary at AEI, President Richard Nixon sent a message that praised him for breaking liberalism’s “virtual monopoly in the field of ideas.” By the time of Ronald Reagan’s election, AEI had a budget of $8 million and a stable of innovative thinkers. It helped fill the new administration with personnel like Jeane Kirkpatrick, an AEI foreign-policy expert who became Reagan’s ambassador to the United Nations.

AEI’s finances sagged in the 1980s, but new president Christopher DeMuth revived donations and lifted the organization to another peak during his 22 years at the helm. He built around scholars and fellows like James Q. Wilson, Charles Murray, Lynne Cheney, Glenn Hubbard, Leon Kass, Robert Bork, Michael Barone, John Bolton, Newt Gingrich, Christina Sommers, and Arthur Brooks. He attracted a large paid circulation for the institute’s monthly current-affairs magazine The American Enterprise. AEI researchers led policy in many areas: a group convened by Michael Novak set groundwork for the 1994 welfare reform; Frederick Kagan helped the Bush Administration develop the successful troop surge in Iraq; Peter Wallison gave advance warnings of the looming mortgage crisis, and the government role in causing it.

Economist Arthur Brooks became AEI’s president in 2009. He greatly expanded the institute’s communications capacities, continued to add scholars, became a nationally popular speaker, book writer, and commentator himself at newspapers like the New York Times and Wall Street Journal, and demonstrated a flair for fundraising. Gifts of $100 million allowed the group to renovate an historic building on Washington’s “Think Tank Row” into its new headquarters. In 2014, AEI raised $41 million, 41 percent of that donated by individuals, 34 percent coming from foundations, and 19 percent contributed by corporations.