American innovation and entrepreneurship have improved living standards for hundreds of millions of people. Our society continues to be one of the healthiest and most prosperous on the planet, and Americans continue to enjoy an unprecedented degree of personal freedom. Unfortunately, bad policies have stifled improvement in many areas, including healthcare, education, criminal justice, and our responses to the housing and homelessness crises in major cities. In extreme cases, ill-conceived laws have ruined the lives of individuals and communities.
That’s why we are designing bipartisan policy frameworks that harness market forces to fight special interest capture of public institutions, align incentives for government agencies and their contractors, and expand opportunities for all Americans. Our mission at the Cicero Institute is to establish policy frameworks which allow ambitious, competent leaders to design entrepreneurial solutions to the toughest social problems.
The most productive social forms recruit the situational perspectives of as many people as possible rather than employ the limited vantage point of a centralized command. Systems-level thinkers appreciate that basic principles of bottom-up organization apply at the scale of a household, a corporation, government, and the American economy as a whole. We call these principles of specificity, adaptability, and choice.
1) Specificity - Successful systems rely on concrete insight rather than generalized wisdom - what Hayek called “local knowledge” and others have termed “the tacit dimension.” It’s impossible to capture statistical nuances from a high altitude. Only a system which surfaces microscopic details can account for the precise needs of a people. Even the most talented, intelligent leaders possess only a fractional, fragmented view of reality. Market frameworks succeed because they are intellectually humble, and acknowledge that valuable information comes from the ground up rather than from sweeping generalizations.
2) Adaptability - The American economy, which triangulates the needs and aspirations of hundreds of millions of people, is nearly as complex as life itself. Economic and political systems should borrow insights from evolutionary processes and use iterative trial-and-error to continuously adapt to contingencies. Rather than relying on a priori management principles or dated techniques, successful institutions adjust to the shifting needs of a consumer base, target population, or constituency.
3) Choice - Systems should cultivate expansive decision spaces for as many agents as possible, preserving their flexibility to experiment with new approaches rather than limiting creative (productive) deviance. The mom-and-pop café is a generally a superior institution to the formulaic call center because it maximizes the owners’ discretion and is fully customizable. Public and private services providers which maximize choices for those they serve are best able to meet their needs.
The best technique we have devised for encouraging specificity, adaptability, and choice at scale is market competition. Open, competitive markets stitch local knowledge and preferences into organizations - non-profit and for-profit corporations - that unleash the forces of change and growth to solve material challenges, empower individuals, and save society billions of dollars. Market competition naturally rewards creativity, innovation, and entrepreneurial genius, no matter how unexpected their origin. It ensures that the best ideas go viral, that the worst ideas vanish into obscurity, and that business leaders are held accountable for the decisions they make.
Good government leaders focus on designing successful programs and replicating them. Great government leaders design systems in which entrepreneurs compete to provide social goods and are held accountable to general metrics which can’t be gamed. The job of government is to give America’s best and brightest market incentives to deploy their efforts towards oft-neglected social missions. Enlightened policy reforms can help fight cost disease in sclerotic areas of government, expand opportunities for people to lead rich, purposeful lives, and ensure that no Americans are left behind.
The United States has the highest incarceration rate of any developed country. American prisons house 2.3 million inmates, or nearly a quarter of the world’s prison population, and another 4.5 million people are on probation or parole. Shockingly, 7 in 10 re-offend once released from prison. Any adequate solution to America’s criminal justice catastrophe must focus on rehabilitating formerly incarcerated individuals and helping them return to peaceful lives.
We’re excited by policies which reward probation and parole departments for reducing return-to-incarceration rates, and are currently pursuing reforms in multiple states. Performance improvement funding in California probation averted roughly 100,000 people from returning to prison over the last decade and saved the state well over a billion dollars. It’s time to implement similar reforms in probation and parole departments across the country. Competitive, metrics-driven innovation will inspire real leadership, weed out bad ideas, and spread practices that ultimately strengthen our most vulnerable communities.
America’s educational system must prepare Americans to grow into responsible adult citizens ready to face the challenges of an increasingly complex, dynamic, entrepreneurial world. Our economy faces short-term technological unemployment and a skills gap in the American labor force. There are millions of unfilled jobs in the US labor market, and new jobs are emerging in sectors such as the science, technology, healthcare, and service industries.
We believe that the federal government should experiment with giving loans to colleges and universities contingent on whether these centers of higher education actually help their students attain not merely “marketable skills” but real jobs in the American economy. In 2017, the federal government disbursed more than $29 billion in Pell grant loans alone. Let’s redeploy this funding so that schools are rewarded, and pay off Federal loans, on the basis of their graduates’ salaries and other metrics tied to short and medium-term career success. Properly incentivized, colleges and universities will innovate and prepare students to meet the evolving needs of industry.
Healthcare is no exception; the American regulatory regime is generally broken. Because the regulatory state cannot adapt – only grow – we have seen an uncontrollable metastasis of millions of restrictive and ineffective regulations, which cost the economy an estimated 1.9 trillion dollars a year. The average state code contains over 9 million words, and the Federal Register contains 175,000 pages of regulation.
Administrators create rules with limited input from those impacted by their rules and make their metrics for success deliberately opaque to those being regulated so that regulators can push political agendas without fear of recrimination. Meanwhile, special interests – especially large corporations, industry lobbying groups, and other powerful incumbents – are often able to their regulatory overseers at the expense of small businesses. Regulatory costs are 20% higher on average for small businesses compared with all firms.
Regulatory solutions must begin with transparency and cost-benefit enabled by advances in information technology. Good regulation is important; all of us want to keep hucksters, polluters, and cartels in line. But we need an adaptive regulatory system that quickly and easily scraps bad ideas and encourages innovation, particularly from entrepreneurs and small companies.
Policymakers need better data and tools to evaluate the effectiveness of different rules at achieving their intended goals. Whether it be ensuring safe cosmetology practices or facilitating an ADA compliant workplace, policymakers should focus on managing and measuring the impacts of rules. Above all, the process of creating and reviewing new rules should be far more transparent and accessible to citizens and entrepreneurs across every industry.
America faces a mounting transportation crisis, and the primary culprit is road congestion. Americans spend 7 billion hours a year sitting in traffic, crippling both our individual health and national economic productivity. Commuting costs keep many Americans locked out from urban hubs, which are centers of innovation and economic opportunity. Infrastructure financing has dried up. The Highway Trust Fund is insolvent, and American roads are falling apart, with an $836 billion backlog of capital needs.
Our country must massively expand construction of new lane-miles and alternative infrastructure such as high-speed railways, tunnels for Boring Company pods and other vehicles, and electric VTOL infrastructure. Cariably priced toll lanes, are one exciting prospect for financing this infrastructure overhaul in a Pareto optimal way. Better infrastructure and high-speed transportation will alleviate the urban housing deficit and free up billions of hours of time. Saving everyone time with faster commutes – rich or poor – is good for the economy, and the American thing to do.
The lack of affordable housing in America’s high-growth cities is crippling growth and destroying equality of opportunity in American society. A restimated that lowering regulatory constraints in the most productive American cities would increase U.S. GDP by 9.5%, generating over $32 trillion over the course of the next decade. Another study estimates that lowering those restrictions would also reduce national homelessness by hundreds of thousands, and the Bay Area's homeless population by half. The culprit for America’s undersupply of housing is “Not In My Back Yard” or “NIMBY” syndrome, as manifested in restrictive land use regulations. We support efforts to roll back those regulatory restrictions, but we also support efforts to change the financial incentives for neighborhoods and municipalities, so that local neighbors see housing as a benefit and not a burden. When combined with new proposals for vast tunnel networks, powerful 5G networks, and streamlined regulations on infrastructure, housing reform will help make our cities the beacons of opportunity they were always meant to be.
Over half a million Americans are homeless at any time, and over 200,000 are entirely without shelter. The problem is worse in California, which contains over a fifth of the nation's homeless population, and a larger proportion of the unsheltered. Our state's sky-high housing prices and dysfunctional social service system have exacerbated an issue that has become the single most important to California's voters. Homelessness is unquestionably a state-wide, as well as a national, crisis. We believe that we need to help those most vulnerable among us, even while we ensure that homelessness doesn't impact public order and the safety of our streets. Homelessness is a complicated, multi-dimensional issue impacted by all of the Cicero Institute’s other areas of focus, including housing, health care, and criminal justice. Studies demonstrate that combining evidence-based health services with mandated treatment, as well as increased housing, can solve most of our homelessness problem. We therefore advocate for deregulated housing markets, mass-produced shelter, incentive-driven and competitively-provided health care and mental health services, and new Safe Streets courts to direct the homeless to the services they need. By improving the value of homeless services, and mandating their use, we can protect our most vulnerable and maintain the livability of our cities.
Our belief in market competition reflects our view that there are no final solutions to deep social problems. We are suspicious of ideological reductionism and utopianism in all its forms. Politics is the art of managing the tradeoffs between fundamentally conflicting values, and it is a great virtue of our form of government that dissenting voices are not subject to illiberal persecution. As Isaiah Berlin observed,
The richest development of human potentialities can occur only in societies in which there is a wide spectrum of opinions – the freedom for what J. S. Mill called ‘experiments in living’ – in which there is liberty of thought and of expression, [and] views and opinions clash with each other…Subjection to a single ideology, no matter how reasonable and imaginative, robs men of freedom and vitality.¹
Some degree of political polarity is the default condition of any free society. But we favor market-driven innovation precisely because it is often capable of circumnavigating battles over incommensurate ideals. While certain issues, such as housing or regulatory reform, involve real trade-offs between entrenched, corrupt special interests and the public good, the great promise of competitive markets is that they inspire entrepreneurial spirits to invent technological and structural solutions that leave everyone better off. By channeling our finest minds towards seemingly intractable social problems, we can expand the realm of political possibility and improve the lives of all Americans.
 Berlin, Isaiah. “The Crooked Timber of Humanity: Chapters in the History of Ideas.” Princeton University Press, 1959.