Into a Vacuum Goes the Manhattan Institute

horowitzgiuliani Into a Vacuum Goes the Manhattan InstituteOn a recent weekday afternoon, a handful of policy wonks sat in a corner office adorned with maps and books in the Vanderbilt Street headquarters of the Manhattan Institute discussing a political opportunity presented by the current financial crisis.

“We feel that the moment is here,” said Steve Malanga, an economic policy expert at the Institute.

After losing the presidency and both houses of Congress for the first time in 15 years, Republicans are scrambling to find something different. Different is the Manhattan Institute’s specialty.

Socially eclectic, fiscally conservative and proudly contrarian, the institute is home to people like Myron Magnet, who wears mutton chops and capes and carries gold-knobbed canes, and fellow sartorial pioneer Tom Wolfe, who, while not a member, considers himself the institute’s biggest fan and unofficial biographer.

The Manhattan Institute is most well known for its work on the “broken windows” theory of policing—which argues for the strict enforcement of laws involving small crimes to prevent more serious ones down the road—welfare-to-work and charter schools. Recent headlines in the institute’s City Journal include Mr. Malanga’s “We Don’t Need Another War on Poverty”—“Nothing could be more misguided than to renew this ‘tin-cup urbanism,’ as some have called it”; Curing Diversity,” about how biochemical regulation threatens natural inequality; and “Storm-Proofing the Economy: We Can’t Prevent Wall Street Turmoil, but We Can Make It Less Destructive.”

For a time, it looked like the institute’s star disciple, Rudy Giuliani—who, during his Broken Windows mayoralty, proudly expressed a desire to blow up the city’s Board of Education—would bring their ideas to unprecedented national prominence. But he flamed out in the Republican primaries. Now the lack of a coherent Republican economic philosophy in a time when free markets are under siege offers this group of distinctly urban conservatives another shot at having a national impact. 

In what was perhaps an early indication of its place in the post-meltdown world, on Nov. 13, President George Bush chose to make a major financial address defending capitalism and his bailout of financial institutions at an institute-sponsored event at Federal Hall National Memorial.

“I thank the Manhattan Institute for all you have done,” said Mr. Bush, before adding, “We are faced with the prospect of a global meltdown. And so we’ve responded with bold measures. I’m a market-oriented guy, but not when I’m faced with the prospect of a global meltdown.”

The fellows at the Manhattan Institute say that they are in no rush to claim an intellectual leadership role on one side of the coming civil war over the identity of the Republican Party. They portray themselves as unassuming wonks and point out that they work with anyone interested in tackling tough problems, including Democrats, like Newark mayor Cory Booker, who supports vouchers and charter schools.

But in the corner office of Brian Anderson—decorated with posters of the institute’s City Journal magazine, which he edits; an antique map of Europe showing how the continent’s political borders changed between the two World Wars; and books including Niall Ferguson’s Empire, about the rise and fall of the British Empire—the fellows did articulate what might be considered a sort of manifesto for the role of conservative thinkers in promoting free-market ideas in the 21st century.

Mr. Anderson sat grimly behind his desk in a pin-striped blazer, clicking a computer mouse. New economic ideas, he said, are “important to any vital conservative political movement.”

His colleague, Nicole Gelinas, sat in a straight-backed chair against the wall with perfect posture, wearing a blouse and gray skirt, and explained in complete professorial paragraphs why the failure of financial institutions required a bailout and innovative regulation that would allow banks to fail in the future without endangering the entire economy.

“It’s hard to say with a straight face that this was not a failure of free markets. But this is true,” Ms. Gelinas said with a straight face.

“Something that allows for failure but doesn’t create systematic failure,” chimed in Mr. Malanga, a gregarious and cheerful former editor of Crain’s New York Business, who sat on a leather couch. He was wearing four shades of green. (Socks, pants, shirt and tie, but brown shoes.) 

Expressing the general consensus of the room, he said that the Republican Party needed to focus more on the economy, which he said John McCain did a bad job of during the campaign. Strong religious beliefs were important, he said, but voters showed themselves to care more about the economy and non-ideological policies geared toward improving society. He said that’s what the institute did best.

“Moderate independents and moderate conservatives,” said Mr. Malanga, “I think there is a home for them here because they agree with most of our ideas.”

“Economically,” Ms. Gelinas added later in the conversation, “the room for ideas is wide open to help Republicans stay relevant.”

The fellows all said they prefer to keep their heads down in their drab, green-cabinet-lined headquarters near the Yale Club, but that they would be ready to speak up when the time came.

But in the wake of the Election Day drubbing, the academically inclined, fiscally conservative, culturally agnostic wing of the party quickly began declaring itself loudly.