John Hood

John Hood is the executive director of The John Locke Foundation, a free-market think-tank that focuses on North Carolina issues. In its eleven-year existence, Hood and the JLF have had a major impact on public debate in North Carolina, in part because their positions are based not just on ideology, but on solid quantitative analysis – and a communications infrastructure that is relentless in providing "op-ed" pieces and media-friendly events to the state’s newspapers. Charlotte World publisher Warren Smith sat down with Hood in his office in Raleigh as the 2001 General Assembly was preparing to go into session.

Warren Smith: Why is there a need for an organization like the John Locke Foundation in North Carolina?

John Hood: The John Locke Foundation was created by a group of North Carolina business and political leaders who thought the state needed an independent, free-market oriented policy institute to study state and local issues, and to publish, write, and speak. To broadcast, to hold events, and to otherwise spread the free-market, limited government message and to provide information to decision-makers.

We do work that is of a philosophical – what some might call an ideological – nature. We talk about what should government do. What are the rights and responsibilities of citizens? But we also try to get more practical. What kind of pavement should we put on the highways to last the longest? We try to mix the theoretical with the intensely practical into a potpourri that is of interest to people around the state.

WS: On the national level, the Cato Institute and one or two others do this sort of thing. Why focus just on North Carolina?

JH: The reason we focus just on North Carolina is precisely because these national organizations exist. They have existed for a while and they do, on balance, very good work. There isn’t very much we can bring to the table with regard to national affairs, the culture wars, Israeli policy. These are areas in which we have no expertise. No value to add.

The thing that the national think tanks don’t do is application, and discussion in a specific context, such as here in North Carolina. There are many people who will read something in a Heritage Foundation publication will lose interest because they don’t see its relevance. But if they hear similar arguments from North Carolinians related to North Carolina issues, it makes a difference. It makes a difference in whether or not they’ll even read it, and it makes a difference in the likelihood of persuasion. Nobody likes to be lectured to by someone distant and far-off. Of course, no one likes to be lectured to at all! Our goal is to engage North Carolinians in discussion about issues of North Carolina.

A lot of the issues that conservatives care about are local issues. The federal government may have usurped them, or intervened in some way. But education, transportation, health care – these are really state and local issues, and they need to be discussed in that context.

WS: One issue you have written about, and an issue that is relevant to every metropolitan area in North Carolina, is the issue of "smart growth." Generally, you guys are opposed to "smart growth."

JH: Well, no, we’re not against it. I am for smart growth, but what is being called "smart growth" is not very smart.

Let me say first that we should not accept the linguistic barriers that are presented to us. For example, we advocate choice and competition in education. Some argue that means we are against public education. Absolutely not. We are absolutely, strongly in favor of educating the public. But we will not accept the definition that public education consists solely of government-controlled schools run by districts. There are many other ways to set up public education.

Similarly, "smart growth" should mean that individual homeowners, developers, travelers, consumers make decisions facing full and accurate information about the costs of those decisions. In other words, government should not be in the business of subsidizing any kind of local development. If you are a developer building a housing development in the suburbs of Charlotte, and you want to hook into a city water system, or you want street access, there should be a mechanism for computing the reasonable marginal cost of becoming a part of the municipal system. And those costs should be charged to the developer. The developer will then, presumably, be able to pass the cost on to the consumer, and that’s fine.

That, for me, is smart growth. Growth pays for itself. To the extent that we have had policies that subsidize sprawling development, or dense development, that’s bad. To me, smart growth means getting the government out of tipping the scales, of deciding who is going to live where, for how long, and why, and instead having a market-based system – even for services – that charges an accurate price to people that neither penalizes nor subsidizes local growth.

WS: In Charlotte, and in the Triad and the Triangle, the issue of smart growth seems to pivot around roads. In Charlotte, in particular, it has become a "roads vs. rails" argument. Based on what you just said, that’s a false distinction.

JH: It is. The smart growth debate is far larger than just transportation. Even the proponents of rail agree that rail will fail if we don’t change housing patterns. So it is not just a debate of whether to put rail down or to build more roads. You have to change where people live.

So in Charlotte, the efforts have moved in a direction to change where people live, to move them into denser environments around where rail stops are likely to be. So it has become an issue of controlling where people live.

WS: And you think that’s wrong.

JH: It should be out of the question. Now, as I said earlier, you should charge people accurately for the services they consume, and let them decide.

For example, if you have a congested road, that means there are a lot of people who want to use that road. Number one, that means you may need more roads. Now to those people who say you can’t build your way out of traffic congestion, that if you build more roads people will fill them up – to those people my answer is: "Good! If you built a road and no one drove on it, that’s when you’re in trouble. You would have built something no one wanted!"

Of course, in some places you can’t build roads. On I-77 in Charlotte, for example, the solution may be to add lanes on a toll or HOV [high occupancy vehicle] basis or a HOT, which is high-occupancy tolling, basis. You might have an electronic toll collecting device and, as you’re driving along in heavy traffic, if you want to take that extra, less-congested lane, you can, but your credit card will incur a small charge. That puts in place a pricing mechanism that solves the problem. That’s smart growth.

What’s really dumb growth is what is being proposed in Charlotte, which proposes a 19th century technology, which is trains, and you try to make people live in 19th century living arrangements. This is the 21st century. We should be trying to create public policy that is consistent with what people want in the 21st century, and charges them for what they want. If it is more expensive to deliver water and sewer services to sprawling developments, make them cost more. But don’t impose regulations arbitrarily.

WS: I know that this is a bit speculative, but is it possible that this debate is actually something of a structural shift in our culture. That the era of the big city is over. That proponents of "smart growth" or "new urbanism" – while representing themselves as enlightened and progressive -- are in fact nostalgic, romanticizing 19th century lifestyles, while the free-market folk are the ones who are in fact providing a new way?

JH: Well, the era of people living and working downtown has been over for a long time. Sure, in some communities people live downtown and work downtown. In places like Raleigh, people neither live nor work downtown. But the old-style city is dead. There is some level of interest in it. But it is a select audience. Young, childless couples, and singles. Retirees. The very affluent. It is not generally families with children, who clearly are demonstrating a preference for suburban life. That is not going to change.

WS: It was interesting that during the recent Christmas break, traffic improved considerably. In fact, if you weren’t around a mall, it wasn’t bad at all. That caused me to wonder if the fact that we are busing hundreds of thousands of kids all over North Carolina during rush hour – sometimes for dubious reasons -- wasn’t contributing unduly to our traffic problems, and if there wasn’t some sort of a link between school policy and growth policy.

JH: There are two interesting questions here. The practical issue that you’re getting at is that schools are intimately linked to parental preferences. People try to choose schools, even in a forced busing environment, by moving into certain neighborhoods. It impacts housing markets greatly. And it impacts transportation. There are costs to everyone when you have the amount of busing that is currently going on in Charlotte.

The broader issue is one of philosophy. The bottom line is that "smart growth" is about telling people how to live, where to live, and how to travel. Busing and other school policies in effect try to tell people how to live, where to live, and how to travel. Environmental policies that often go with "smart growth" are all about telling people how to live, where to live, and how to travel.

All of these add up to a monumental assault on personal property rights. They amount to coercion. That is a fundamentally un-American approach. This is opposed to ideas that we hold dear. That people should be sovereign. Individuals should be ends, not means to an end. Busing treats children as a means to an end. There is something fundamentally immoral about forced busing for that reason.

Now busing is another one of those debates where I think conservatives falter by accepting the terminology presented to them. For example, in Charlotte the argument is presented to me as "busing vs. neighborhood schools." That is not the right distinction. It is not the location that is important, but about who decides? Who has the power? I am in favor of voluntary busing for educational excellence. Parents might prefer a school closer to where they work, rather than closer to their home. So, for me, neighborhood schools are not the goal. It is certainly not the goal to have forced busing for racial integration or some other social engineering purpose.

The goal should be for parents to choose where their children should attend school, and for public policy to support those choices. That includes the kind of open enrollment system that was being proposed in Charlotte until the school board there lost its head again. It includes charter schools and other kinds of independent public schools that do not have to answer to a district. It includes a more active private school market. For poor children there should be some sort of publicly funded scholarship program.

WS: You’ve written a book, The Heroic Enterprise, which extols the virtues of capitalism. You have a new book, Investor Politics, that is of a piece with the first in that it extols the virtues of a shareholder nation as a way of recovering the historical link between democracy and capitalism that is what really makes the American Experiment unique.

JH: Democracy is not worth having if it is merely the substitution of a mob picking your pocket for the king who used to pick your pocket. I don’t see any moral advantage to mob rule. Indeed, the king might be worse at picking your pockets and that might be better.

This book is based on my rediscovery of something that I think Thomas Jefferson was trying to get at. I always thought Jefferson was a brilliant political theorist, but poorly understood economics. Because, if you remember, one of the elements of the debate between Jeffersonians and the Federalists was whether we should have a commercial society or an agrarian society. Hamilton and Jay and, originally, Madison argued that a commercial society was more likely to be productive and successful, that it would knit the country together, that it looked forward and not to the past. Jefferson was arguing that there was something inherently valuable about the yeoman farmer. There was something dangerous about the growth of cities.

I guess I always thought that he was something of a crank. Economically, it was silly. You couldn’t have had the kind of growth and prosperity that we have had in the United States without urbanization. But what Jefferson was getting at was something different, I think, and it is something that we are now rediscovering. That is that the survival and health of self-government is related to property ownership. It is related to whether we as a people are investors or consumers. Are you an ant or a grasshopper? Jefferson was arguing for a nation of ants. People who worked hard. Saved for the winter. Took responsibility for their actions.

What we are now is increasingly a nation of grasshoppers. We live off of others. We do not take our responsibilities as citizens seriously. We do not think about the long run, but only about the short run. This is not just an argument about welfare, or entitlements, or about shareholders in the stock market. It is about the culture and about morality. Morality is about considering the long run. It is about understanding that an action may feel good, but it has long-term consequences.

Moral behavior is about obedience to a divine command, but it is also about avoiding behavior that causes harm. Drunkenness causes harm. Adultery causes harm. Abusing drugs causes harm.

The mentality that is at the core of our problems regarding entitlements and other economic policies is actually the same mentality that is at the core of our moral problems as a nation. That is the problem of self-gratification, instead of delaying gratification into the future. Capitalism and personal morality are both based on the idea of a sacrifice today because there is some greater gain available in the future.

So part of the genesis of my recent book is answering the question: How do we achieve the benefits of an agrarian society in a 21st century information age? I think the answer is to encourage people to own the means of production. In some ways, Karl Marx had it right. The ultimate solution to class struggle is to spread prosperity to everybody. The workers should own the means of production. The goofy way to do that is by revolution. The good way to do that is for workers to keep their jobs, and to work at jobs that match skills and training. The communist way – of rotating the head of the factory among the workers – is a pretty bad idea. The person who runs the factory should be someone who is good at running a factory. But the benefits could be spread by letting all the workers have an opportunity to own a share in the factory.

To me, investor politics involves finding ways to transform government programs – social security, Medicare, unemployment insurance – into savings programs, so that you save your own money for the future, rather than get someone else’s money.

WS: It seems as though a common thread in both books is the idea that dependency vs. independence.

JH: I am not advocating a return to the farm, but I would say that historically speaking, when we left our farms we stopped being our own boss. Even small-time farmers were their own bosses. You were the head of your own company. You were making investments in hopes of a long-term return.
The word "capital", for example, comes from the same word from which we get "cattle." The idea is that if you take care of your cattle, your cattle grow. Capital stock, livestock, grows. Of course, if you eat your cattle today, it doesn’t grow. So delaying gratification becomes an important way to create wealth.

Farmers, small businessmen, craftsmen – they understood these values. Of course, today some of these enterprises are no longer economically viable. And that’s fine. That makes perfect sense. But in the process of moving to cities we became apartment renters and not homeowners. We began to purchase water rather than dig a well. All of this makes sense and is not in and of itself wrong, but it does tend to create a relationship of dependency that led to political behavior that became more and more dependent. We began to say, if someone is going to provide my water and take away my sewage, why shouldn’t someone take care of my kids? Why shouldn’t someone else take care of my grandparents? Why shouldn’t someone else take care of me?

That’s the danger.

WS: Much of what you would say, some would argue, was common sense a few generations ago, but it is no longer so common, in part because the higher education system in this country has become ideological and abstract in its methods and content. Is that why The John Locke Foundation – through the Pope Center -- focuses so much attention on the higher education system in North Carolina?

JH: There are three reasons. One, it is about 12% of our general fund budget. Probably higher now.

Secondly, no one was paying attention to higher education in North Carolina.

Thirdly, higher education has become the linch-pin of liberal attempts to transform culture. This is where all the activists, all the lawyers, get trained. They go to our colleges and come out knowing less than when they went in about many important things. They have learned a preposterous concoction of Keynesian economics and Marxism. They have learned that the Western intellectual tradition is racist, sexist, and homophobic. They’ve learned a lot of stuff that isn’t true.

We either need to take the bull by the horns and straighten this stuff out, or we need to create alternatives to it. We want to reform the current institutions, but we also want to know how to create new kinds of institutions that can impart knowledge and skills and wisdom outside of the current college and university structure.

Let’s face it. A lot of these institutions are lost causes. They’ve been taken over by 60s radicals who hide behind tenure and misbegotten notions of academic freedom. The only way to win against them is to starve them out. But public institutions can be reformed because ultimately they are under the authority of the legislature, and they are not under the authority of any particular group of intellectuals.

Because of what is going on with the Internet, there will increasingly be ways for people to learn to make a living, and to be educated more broadly, without going to college. I know that this is not conventional wisdom, but it is absolutely true. The problem is not to low a college-going rate, but too high a college-going rate. All you have to know is that half the students in the University of North Carolina system do not graduate in six years – not four years or five years, but six years. About 40% will never get any kind of degree. Taxpayers pay the majority of the costs for these students to be there, and it is unclear to me why they are there at all. I think that entire enterprise needs to be rethought.

This is probably the most controversial argument that we make. Because this is outside of the conventional wisdom. Conventional wisdom is that society benefits when there are higher and higher rates of the population who get college degrees. But I question that proposition, in part because the value of a college degree is increasingly questionable. And in part because what you learn at many colleges you have to spend the next 15 years of your live un-learning or making huge life mistakes because you tried to live your life as a citizen, as a taxpayer, and as a parent according to what you learned in college.

That’s the real cost to individuals and culture. The cost of not unlearning what you’ve learned.

WS: Finally, John, after 11 years, how goes the battle?

JH: I’m hopeful. We’ve had tax cuts. We are now measuring more and more of our public institutions’ effectiveness. That doesn’t mean they’re getting better, but at least now we know how bad they are, and that’s a start.

But on the negative side, we’ve created more entitlement programs in North Carolina. Smart Start. A new child health insurance program that takes us in the wrong direction by making more middle-class people dependent on government rather than helping the poor. Our highway system has deteriorated to a woeful state. So there are accomplishments we can claim, but we will never run out of bad government programs to fight.