Restoring Confidence in Public Leadership
Dean Douglas Elmendorf
February 20, 2019
Hello everyone. It is a great pleasure to be here in Madison and an honor to be speaking at the La Follette School of Public Affairs. Thank you, Lindsay, for that kind introduction, and thanks to you and Tim Smeeding for inviting me to speak here.
I have spent most of my career working on economic policy for the U.S. government. I watched, up close, as good public leaders, good policy analysts, and good policy ideas helped to make people’s lives better. I also watched, unfortunately, as bad public leaders, bad policy analysts, and bad policy ideas had the opposite effect. This means that the work of the Kennedy School and the La Follette School and other schools like ours is incredibly important. If we truly are, in the words of your Vision Statement, “improving the design, implementation, and evaluation of public policy and the practice of governance worldwide,” we are accomplishing a lot. I believe that we are advancing those goals and accomplishing a lot, but I also know that we have a lot more to do.
Across this country and around the world, many people have lost confidence in their public leaders because they do not think that our current economic, social, and political systems are serving them well. The rising tide of globalism in economic affairs has left many people behind, and economic policy has done too little to help them. Social changes have been too slow in some important respects to achieve the fairer society we seek, and yet too fast in some respects for other people to feel that they still matter. Established political leaders seem to many people to be part of an out-of-touch and self-serving elite. In turn, more leaders are capitalizing on divisions between people and cultivating those divisions in order to advance their own interests rather than the common interest.
Therefore, we face a fundamental and pressing challenge: How can we improve people’s well-being and restore their confidence in their public leaders? That is a hard question, but an answerable one. Although much that is happening in the world today should concern us deeply, I am profoundly optimistic about the ability of people of good will to make a better world. So, I will describe in more detail why I think people have lost confidence in our economic, social, and political systems, and then I will come back to the question of what can be done to respond to their concerns. Throughout the talk, I will focus on the United States, but you will recognize that many of the problems and solutions that I discuss have analogues in other countries.
Let me discuss three factors that have been central to many people’s frustrations with our current situation.
First, living standards for lower- and middle-income Americans have improved only slightly, on average, during the past few decades. While it is challenging to measure household incomes well, the data show clearly that market incomes of people across most of the income distribution have increased fairly little during the past few decades, while market incomes of people at the top of the distribution have risen considerably. In particular, Americans who have less education or are living in certain parts of our country have had much less economic opportunity and much less improvement in their standard of living than Americans who have more education or are living in other parts of the country. Our tax and transfer system has muted this divergence in market incomes a little but not much: According to the latest estimates by the Congressional Budget Office, the top 20 percent of the distribution receives 55 percent of pre-tax, pre-transfer income and 48 percent of after-tax, after-transfer income.
Adding to concerns about what has happened in the past, some people are worried, appropriately, that economic forces will make these problems worse over time. Over the coming decades, expanding use of self-driving vehicles, the diffusion of artificial intelligence, and other technological changes will probably eliminate a significant number of jobs that currently tend to be held by people without college degrees. Whether other forces will create more jobs for people without college degrees, and what those jobs will be like, are important questions.
A shortage of economic opportunity for many Americans has had a range of economic and social consequences. For example, the labor force participation rate for men without college degrees has fallen sharply relative to the participation rate for men with college degrees. In addition, Americans of my age in the top part of the income distribution are expected to live significantly longer than their parents, on average, while Americans of my age in the bottom third of the income distribution are expected to live no longer than their parents, on average. Moreover, some communities have been devastated by a loss of jobs stemming from technological change and growing imports, and the loss of those previously vibrant communities has a profound social cost as well as an economic cost. As well, the growing divergence of income and wealth has consequences for our political system, which I will return to shortly.
A second factor that has weakened confidence in the American system for some people is social change. Women, people of color, LGBTQ individuals, and others who have been discriminated against and marginalized historically in the United States are now in somewhat stronger positions, on average, in our society. These changes are very far from complete, but they are real. Some people in other demographic groups resent their loss of relative status, while others do not object to the changes themselves but do object to what they view as an inappropriate focus in this country on demographic identity. Another significant social change is that the share of our population born outside the country is now at its highest level in a century. The greater diversity of language, food, and customs that has resulted is exciting for many Americans, but it is disorienting and disconcerting to other Americans who fear the loss of the culture and lifestyle with which they are familiar. Also, the economic and social changes I have described interact with each other in people’s minds: There is evidence that white voters in 2016 tended to view economic concerns through a racial lens, in which they reacted partly to how they were doing relative to how they thought members of minority groups were doing.
A third source of Americans’ frustration that I want to highlight is the ineffectiveness of our political system in responding to people’s needs. Many people are right to think that they are not being well-represented by elected officials. Some people are disenfranchised by law, such as felons in some states. Other people are disenfranchised by policies and practices that are supposedly intended to prevent voter fraud, despite a lack of evidence that fraud is a significant problem. And other people who do vote receive less weight in the political process than some of their fellow citizens because of gerrymandering of Congressional districts—or because of the design of the U.S. Senate. Indeed, writing recently in the New York Times, David Leonhardt drew attention to the combined effects of having no Senators from Washington, D.C. or Puerto Rico, and having two Senators from each state, with the states with smaller populations tending to have larger shares of whites relative to people of color. Leonhardt estimated that, relative to the average white person, the average black person has only about three-quarters as much Senate representation and the average LatinX person has only about half as much Senate representation.
Still other people who vote receive less weight in the political process because they and the organizations they control do not have much money with which to influence elected officials. Researchers Martin Gilens and Benjamin Page have concluded that “when the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Of course, concerns about inequities in our political system based on economic power are not new. In a speech in 1897, Robert La Follette questioned the role of corporations in the American political system. He said, “The basic principle of this government is the will of the people. … Have we such a government today? Or is this country fast coming to be dominated by forces that threaten the true principle of representative government? … [W]e owe it to the living as well as the dead to make honest answers to these questions.” We owe those answers still today.
In addition to these problems of representation, our political system has become less effective at responding to people’s needs because some of our public leaders are attacking the customs and institutions that our system depends on. Our political system is designed to distribute power, so its effective operation depends on the customs of civil discourse and compromise between those who share power. Our political system also depends on some key institutions such as the rule of law, checks and balances in government, a free and vigorous press, and government workers who implement policy decisions. Yet, more of our leaders are choosing to attack those customs and institutions for their short-term political gain: They are demonizing their opponents in order to stoke fear and anger, and they are challenging the rule of law, undermining our checks and balances, attacking the press, and undercutting government workers. Moreover, other leaders who are not making such attacks themselves are enabling other leaders to act in those ways.
In sum, economic, social, and political factors have all contributed to many Americans’ loss of confidence in our system and in our public leaders. Manifestations of their skepticism and anger abound. To pick just one recent example, consider the grassroots discontent that led Amazon to cancel its plans to build a significant facility in New York City. Although most New Yorkers apparently supported Amazon’s plans, a vocal minority seems to have doubted that the new facility would improve their economic fortunes, been skeptical that any economic gains would compensate for the social dislocations that would occur, and distrusted their elected officials to act effectively on their behalf. And, as I noted earlier, similar concerns can be seen in other countries as well. One might describe the support for Brexit in the United Kingdom very much the way I just described the opposition to Amazon’s New York plans.
So, how do we tackle these difficult problems, improve people’s well-being, and restore confidence in public leadership? I will offer three broad recommendations regarding economics and politics. I should admit upfront, though, that I do not have much useful to say about social factors. The changes that are letting women and black Americans and others who have been marginalized play somewhat larger and more appropriate roles should not and will not be reversed. Unfortunately, some people will continue to oppose those changes or object to what they view as a misplaced focus on demographic identity. The historically large share of our population born outside this country may lead us to become a less open country. The last time that immigrants were such a large share of the U.S. population, the country imposed tight restrictions on immigration that were not eased again for 40 years. As a citizen, as a student of economic growth, and as a leader of an educational institution where people from outside the United States are incredibly important, I find this prospect very troubling.
So, let me turn to my three broad recommendations about economic and political factors.
First, we need to focus our economic policy on improving standards of living for lower- and middle-income Americans rather than boosting total income or GDP. These goals are sometimes aligned, but not always. When there are tradeoffs between them, we should reject policies that would boost total income but hurt living standards for the less-well-off, and we should support policies that would diminish total income but boost living standards for the less-well-off. One shorthand description of this approach is to focus on raising median income rather than mean income.
This focus would lead us to increase education and training for people who do not have good access to education and training today; that action would help empower those people to be effective in well-paying jobs. A focus on helping the less-well-off would also lead us to improve jobs that are often held by people with less education and training so that those jobs become more rewarding and offer greater avenues for advancement; concrete steps in this direction would include expanded career ladders and access to portable health insurance and retirement savings. A focus on helping the less-well-off would lead us to expand public programs that provide income support for lower- and middle-income people. Our safety net programs can surely be improved, but a growing body of evidence suggests that our current programs not only help recipients today but also help the children who are recipients to have better labor-market outcomes later in their lives. A focus on helping the less-well-off would lead us to use monetary and fiscal policy vigorously to offset any future weakness in demand for goods and services, so that the economy remains close to full employment. A focus on helping the less-well-off would lead us to increase public investment in infrastructure; public infrastructure can be especially important for the well-being of lower- and middle-income people because they are less able to use private substitutes for public services. And a focus on helping the less-well-off would lead us to implement regulatory policies that protect people from unfair business practices in which businesses use their market power, greater information, or stronger legal or technical skills to disadvantage their customers.
Unfortunately, we have not pursued these policies in recent years and have indeed been going in the wrong direction in important ways. We had misguided objections to the use of monetary and fiscal policy to lessen the severity of the Great Recession. We expanded public subsidies for health insurance so that tens of millions of Americans gained insurance, but now have spent nine years debating whether to undo that advance. We have reduced federal investment in infrastructure to roughly the lowest percentage of GDP in my lifetime. We have cut taxes and focused the cuts primarily on higher-income people. We are now rolling back protections against unfair business practices. And we have hardly even had a national conversation about the changing nature of education and employment, much less mounted a determined effort to empower lower- and middle-income Americans to do better. We will need to change our ways to move the country in the right direction.
My second recommendation for restoring confidence in public leadership is to make our political system more responsive to more people’s views—to make it more democratic with a small “d.” We can achieve this goal partly by increasing substantially the number of Americans who vote. Most developed countries have notably higher voter turnout than we do, so raising our turnout is not an insuperable challenge. One step is to expand the voting franchise, as Florida recently did by allowing felons to vote. Another step is to make voting easier. We should reduce obstacles that supposedly reduce fraud—which is not a significant problem—and actually reduce turnout—which is a problem. That means adding polling places in neighborhoods that have few, encouraging mail-in and early voting, and making Election Day a national holiday or moving it to a weekend. We should reduce gerrymandering by establishing nonpartisan commissions to draw jurisdiction lines.
In addition, we should work to limit the influence of money on politics. That means, in part, considering alternative ways to finance campaigns, although I do not know enough about the specific legal issues to recommend any particular approach myself. It also means, in part, reducing conflicts of interest by public officials, by making potential conflicts visible through robust disclosure rules and by strongly enforcing rules designed to prevent conflicts. And limiting the influence of money on politics also means, in part, ensuring that elected officials have access to unbiased information and analysis of policy options so that they are not dependent on the views of interested parties. Some of you will recognize in that last recommendation a plug for the Congressional Budget Office, of which I was the director for six years, and for similar organizations covering other aspects of federal policy and all aspects of state and local governance.
My third recommendation for restoring confidence in public leadership is to make our leaders more principled and effective than some of them are today. How can we achieve that? One route, of course, is through the teaching of the La Follette School, the Kennedy School, and other schools that are working to improve governance. At the Kennedy School, we say that our students learn to apply practical skills and hone values needed to solve public problems. They learn these things through courses that teach about substantive policy issues and teach about ethics, communications, negotiations, and other aspects of public leadership. Through this sort of teaching, the Kennedy School, the La Follette School, and other schools are making a difference in the caliber of public leadership. This work is one of the ways in which we are meeting our responsibilities to society. In his inaugural remarks last fall, Harvard’s new president Larry Bacow said, “Whether our colleges and universities are public or private, we all rely upon the generosity of the American people, who contribute both to research and financial aid. We are excellent because of them, and must endeavor to deserve their support. So, it is up to us to remember, always, our collective obligation to the public good.” By the way, Larry Bacow holds both an MPP and a PhD from the Kennedy School, so naturally he has a strong commitment to advancing the public good.
But the training provided by schools of public policy is not enough. We also need to change the incentives and constraints that our public leaders face. The changes in our political system that I discussed a few moments ago would help. Help would also come from changing our own behavior as followers: If we want our leaders to be principled and effective, we should stop following their lead when they do not meet that standard.
What do I mean by that? I mean that we each need to establish principles or values that we believe are important for advancing the public interest, and then we need to stand up for those values even when doing so conflicts with particular leaders or policies that we favor for other reasons. As I have explained in other speeches, I believe that public leaders: should be committed to truth and knowledge; should respect the worth of each person regardless of their gender, race, religion, sexual orientation, national origin, and disability status; and should engage in civil discourse and be open to different views. And I believe that those values are more important to our society in the long run than any specific policies are. Therefore, I think that I have an obligation to stand up against public leaders who violate my values—even when doing so interferes with other objectives I would like to achieve. I think all of us have an obligation as citizens to stand up against public leaders who violate our core values, even when doing so hinders our other objectives. And I think all of our public leaders have an obligation to stand up against other leaders who violate core values, even when doing so conflicts with their other goals.
Those precepts may seem straightforward, but I do not mean to make decisions about when and how to stand up for core values sound easy. No organization or society can function effectively unless people generally follow their leaders. Yet, no leader is perfect, so the act of following unavoidably involves compromising. When I became deputy assistant secretary of the Treasury near the end of the Clinton administration, a more-senior appointee said to me: “Doug, sometimes your view of the right policy will differ from the president’s view, and in those cases, we will do what the president wants.” That was an obvious point on some level, but also an important reminder that every presidential administration—and every political group of any sort—embodies a tremendous range of views about what should and should not be done. We had a panel discussion at the Kennedy School last fall with a number of faculty members who had faced the choice of whether to stay in a government role they held or leave that role when the leaders of the government took actions with which they strongly disagreed. These faculty members had agonized about the good they could do by staying versus the good they could do by leaving, and in their different circumstances, had made different decisions.
So, when public leaders do not act in accord with our core principles, deciding whether to support and enable their actions in order to accomplish other goals, or to oppose and resist their actions despite those other goals, can be challenging. But we should all recognize the danger of averting our eyes when principles are violated. Martin Luther King, Jr., once said, “In the end, we will remember not the words of our enemies, but the silence of our friends.” And John F. Kennedy once said (slightly misquoting the 18th century statesman Edmund Burke), “The only thing necessary for the triumph of evil is for good men to do nothing”; today, of course, we would add “and good women.”
Let me conclude. Many Americans—and many people in other countries as well—have lost confidence in their public leaders because they see those leaders guiding economic, social, and political systems that are not serving the broad public interest. Some of this frustration and anger is misplaced, in my view, but, as I have explained, there are many legitimate grievances as well. We can change this situation. We can improve people’s well-being and restore their confidence in their leaders by adopting economic policies that help more people, by making our political system more responsive and fair, and by holding ourselves and our public leaders to high standards. This agenda of change is long but very doable. I am deeply optimistic about the future—and especially so when I am talking with people like you who are engaged with public policy. Your talent and energy and commitment to the common good are inspiring. Thank you for that, and thank you for inviting me to be here today.