Advice for the Next President

My advice to the next president of the United States is this: although we’ve had some failures in state building, and although it's very popular for politicians today to say “America should not engage in state building,” in fact the US’ national-security interests really depend on this nation developing an effective capacity for postconflict political follow-through for future military interventions.

Don’t run away from state building. Recognize that the failures of the past mean that we need to invest more in it. The cost will be significantly less than the cost of any number of new weapon systems that military contractors are currently talking about, and its impact on our ability to deter international terrorism will be far greater.

Terrorism is first and foremost a political tactic. The basic goal of terrorist violence is to provoke a violent response. Because terrorists hide within larger populations of people, governments that respond to terrorist acts often do so to the detriment of large subsets of those populations. The effect is to cause people in those populations to start viewing the governments in question as their enemies. It enables the terrorists to say, “Well, we’re the ones who have been fighting this dangerous enemy all along.”

Our response, they hope, will create political opportunities for them. Almost all of the discussion we hear this election year about how to respond to international terrorism in the Middle East and elsewhere in the world is, “When they attack, we’re going to just bomb them. Don’t try to do state building; don’t occupy anything. Just go in with destruction.”

What can we do that terrorists would truly hate? The answer is to build up political alternatives to them.

Destruction creates chaos. It creates hardship for the populations around where the terrorists are operating. And that is exactly what terrorists want. When we face, as we do today, enemies such as ISIS, who actually think that any American military operation would simply create new political opportunities for them, that means our military threats have failed to act as deterrents.

So what can we do that terrorists would truly hate? The answer is to build up political alternatives to them. And the way to do that is to develop a balanced sharing of power between national, provincial, and municipal governments.

If you look through the history of what happened in Iraq and Afghanistan after our military interventions there, you’ll find that where we had frustration and failures, it was almost always because we didn’t insist on a proper balance between local and national politics in the formation of the government. This is not some theoretical abstraction. This is exactly the kind of political principal that meant the most to America in its own state-building process.

It has been said by many that Americans have overestimated the degree to which people around the world desire or are ready for democracy. I think democracy is a pretty good sell. I think people all around the world, if they don’t have a democratic government, appreciate the idea that the national leadership ought to be accountable to a broad popular approval, and don't want leaders who can’t win popular approval in something such as an election.

Far from overestimating the appeal of democracy, I think we underestimate the extent to which other countries are exactly like the US in having local politics that mean as much to them as national politics. When our diplomats and generals go in and focus only on building a strong national government for a country in transition, we are implicitly threatening local political leadership in some or many parts of that country. In each case this has created problems.

For example: ISIS in 2014 conquered the Sunni third of Iraq very quickly because of an alienation of the Sunni population. That area had legitimately elected provincial governments in the three Sunni-majority provinces. If the US had made a commitment to long-term financial and technical support for those legitimately elected provincial governments in the Sunni provinces, local Sunni leaders wouldn’t have needed to turn to ISIS to protect their political authority.

The US should have understood, because this is part of our own history, that people everywhere need to have some faith that popular local leaders have some real ability to serve their communities.

When I argue that the US needs to invest in a credible capacity for state building, it is not with any anticipation that we will ever use it. One can advocate for military systems without ever wanting to use them—in fact, one should. The imperative is deterrence. If terrorists recognize that attacking the US will result in the creation of a viable democratic government in the state or region in which they operate, they will have to change their political strategy. If that happens, then our state-building capacity will never need to be used, but we will nonetheless have deterred dangerous adversaries.

However, there’s a crisis brewing. The quality metrics that are being calculated are inaccurate. And as a consequence, some good hospitals are being penalized, and some bad hospitals are being rewarded. Patients are also being directed, in some cases, to providers that are not giving the best care.

Why are the metrics inaccurate? There are two primary reasons. One has to do with data integrity, and especially with internal controls. We lack national standards for how hospitals should control, internally, the collection and maintenance of data. For example, on the death of a patient, some hospitals make sure that conditions such as obesity and diabetes are properly coded, while others don’t. Those that do have seen increases in their mortality quality metric without having necessarily made an actual quality improvement. Differences in internal controls can make hospitals look better or worse than they really are.

There are also data-integrity problems with how quality metrics are externally reported. Some of my collaborators at Rush University Medical Center just published an article demonstrating that the patient-safety indices calculated by U.S. News & World Report have, in the past, suffered from a data-integrity issue.¹U.S. News & World Report has actually changed its methodology for how it calculates these scores, and in 2016 there have been some reversals, with formerly high-ranking hospitals now near the bottom along some metrics. And of course, clinically, nothing has changed.

The second major problem with quality metrics involves methodology. A couple of years ago the Institute of Medicine published a report saying that hospitals should begin to collect data on social and behavioral determinants of health. It’s been well understood that these determinants actually have significant impact on readmission rates, mortality, and other things. But they aren’t being accurately captured right now, and so it is believed that safety-net hospitals in particular are being unfairly penalized.

Similarly, ProPublica has begun ranking surgeons across the nation, and the methodology they’re using for risk adjustment, while sophisticated, was not properly vetted in the medical community before their rankings were released.² Nonetheless, their ranking affects where the public gets its care.

As a result of all this, my second piece of advice to the president is that the government should set up for health care something similar to the Financial Accounting Standards Board.³ We need a nonprofit, independent authority to serve two basic roles. One is setting standards for the internal controls of hospitals around data collection and data integrity, as well as standards for external reporting of quality metrics, much as the National Quality Forum does today. Its second role should be as an auditor. It should be able to go into hospitals and verify that the standards established for internal controls are in fact being followed. In addition, any agency, governmental or private, that’s involved in rating hospitals should be subject to audit to make sure it’s following proper methodological standards and being transparent.

What I’m describing is not a small job. But taking these steps would allow us to build on the strides we’ve already made toward better quality and patient protection in heath care, and it would allow hospitals to compete with one another on a level playing field.

¹ Bala Hota, Thomas A. Webb, Brian D. Stein, Richa Gupta, David Ansell, and Omar Lateef, "Consumer Rankings and Health Care: Toward Validation and Transparency," The Joint Commission Journal on Quality and Patient Safety, October 2016.
² Mark W. Friedberg, Peter J. Pronovost, David M. Shahian, Dana Gelb Safran, Karl Y. Bilimoria, Marc N. Elliott, Cheryl L. Damberg, Justin B. Dimick, Alan M. Zaslavsky, "A Methodological Critique of the ProPublica Surgeon Scorecard," RAND Corporation, 2015.
³ This idea builds on views expressed by David M. Shahian, Elizabeth A. Mort, and Peter J. Pronovost in “The Quality Measurement Crisis: An Urgent Need for Methodological Standards and Transparency,” The Joint Commission Journal on Quality and Patient Safety, October 2016.

I’d like to offer two pieces of advice to the next president. One is to find wise trades. The other is to stop what I would call parasitic integration. Let me explain what I mean by those terms, and how they’re related.

Wise trades sound like a broad idea, but I mean something very specific. Columbia’s Joseph Stiglitz referred to near-Pareto improvements, which describe trades that allow just about everybody to be better off (except perhaps for some special interests who contorted the system to begin with). This kind of trade is possible for legislators who want to move policy forward.

To understand wise trades, imagine a situation where Spouse A and Spouse B are going to dinner and a movie. Being perfectly nice people, they compromise on the dinner choice, and then over dinner they compromise over the movie choice. Later on, they find out that there was a trade to be made: Spouse A cared more about dinner choice, and Spouse B cared more about movie choice. If we let each dominate on the issue that he or she cared about, both would have ended up being happier.

We’ve now been through two different presidential administrations where the ability to reach across parties to actually make wise decisions has been very, very limited. But if we go back to the 1990s, we had something called a Habitat Conservation Plan, which provided a means to make trades between land rights and environmental concerns so that land owners could potentially violate the Endangered Species Act while in pursuit of a broader plan that would make the environment and the economy better off. Similarly, in the Environmental Protection Agency we had something called Project Excel, which had the same object with this question in mind: How do you relax some regulations in the pursuit of wiser agreements for the overall society, both on economic and environmental grounds?

We’re not just looking for the center. We’re looking for wise legislators.

It need not just be environmental issues. We were on the verge of a grand deal to solve our debt crisis, but that fell apart due to extremists on both sides of the aisle.

What the next president should do is to figure out how to harness a bipartisan set of wise legislators who could craft a series of wise trades across domains so that we could have wiser policies. Then legislators could resume their partisan differences, but on a more Pareto-improved set of options that they would be looking at.

The idea of wise trades is not compromising, and we’re not just looking for the center. We’re looking for wise legislators who realize that there are trades to be made, legislators who actually want to make the world a better place as opposed to clobbering the other side.

But making the world a better place doesn’t just entail wise trades. My other piece of advice is that there’s a moral imperative to stop parasitic integration. Integration, or value creation, is something we teach in negotiation classes; parasitic integration refers to situations where two parties come up with trades by stealing from people who aren’t at the table.

Growing the debt so that we can spend more without increasing taxes is parasitically integrating across those issues while dumping the debt on future generations. Similarly, overharvesting our forests and overharvesting our seas provides the means for current society to be better off largely because we’re stealing from future generations. I think the next president should abide by the imperative to stop stealing from future generations, and that certainly includes a major focus on reducing climate change, which is an enormous threat to the earth’s future residents.

My advice for the next president of the United States would be to focus on studying and expanding antiviolence programming for young people across the country.

In research I’ve conducted with other investigators, we’ve seen promising results from a particular type of antiviolence programming—for people who have been through these programs, arrests for all crimes drop by about 35 percent, arrests for violent crimes drop by 50 percent, recidivism rates drop, and graduation rates go up. The programs are loosely based on principles of cognitive behavioral therapy, or CBT, which at its core basically says, “Everybody acts automatically from time to time. We all respond to situations quickly or interpret them or make assumptions about them quickly.”

Usually our automaticity is well adapted or well tuned to the environments or situations we’re in. Every once in a while we do things automatically that are not well matched to the situations we’re in. For example, sometimes we might escalate a conflict when in fact it might have made more sense to walk away from it. CBT-based programming spends time teaching people to reflect on the situations they’re in and to think about those situations from various angles so that they come up with appropriate responses.

The challenge of scaling these interventions right now is that we’re not sure the best ways to adapt them to local contexts. What does this kind of program look like in Houston as opposed to Chicago? We’re not 100 percent sure. We don’t know the exact ingredients that are most effective in these different contexts.

Consider, then, a five-year plan wherein the Coordinating Council on Juvenile Justice and Delinquency Prevention would lead a multiagency effort to study and evaluate programs to see which are the most effective. In years one and two they might field and act on proposals from organizations providing CBT-based programming. They can evaluate, say, 40 cities with 40 programs. Through the variation in those programs, you’ll better understand the common components of the programs that work.

In years three through five, you’d scale up that evaluation and demonstration approach to more cities, but also in different contexts. For instance, in-school programming versus after-school programming versus juvenile-justice settings. We estimate that once we better understand the most effective components and contexts, bringing this to every at-risk young person in the country would cost about $2 billion per year—a pretty small fraction of the $200 billion per year that we spend on criminal justice already.

My advice for the next president of the United States is to take a close look at bad policies we have regarding certain subsidies—specifically, subsidies that completely distort the economy and do us harm. We subsidize harmful things, and as a result, many of us are suffering the consequences of things that can easily be fixed.

One of the big distortions in the economy is that we have policies—tax rules, for example—that encourage and subsidize the use of debt in certain situations. For example, housing. We subsidize the purchase of houses, but only if the buyers borrow. If they borrow, they get to deduct the interest on the mortgage. They don’t get a subsidy if they don't borrow. And the more you borrow, the more you’re subsidized.

That subsidy doesn’t make sense. It doesn’t do what we want it to do; but what it does do is make people use a lot of debt when buying houses. That subsidy can inflate housing prices and actually add to inequality and other distortions. If we want to subsidize housing, if we want people to own houses, we have to find a different way to deliver those subsidies to the people who deserve them.

We don’t subsidize pollution. We don’t subsidize smoking. But we have policies that subsidize similarly harmful things.

Similarly, we subsidize, through the tax code and otherwise, corporate debt. In other words, we encourage corporations to finance with debt rather than financing with equity. That is an incredible distortion, and it does nothing for the economy except to encourage corporations to use more debt than is efficient. As a result, we get distortions in investments, we get an incredibly fragile financial system that we have a lot of trouble regulating, and all because of a policy that can be quite easily changed.

We also subsidize, for example, sugar and do almost nothing to subsidize vegetables. The sugar industry loves and promotes their subsidy. But we could subsidize something healthier instead. We don’t subsidize pollution. We don’t subsidize smoking. But we have policies that subsidize similarly harmful things.

Some of these subsidies, such as the corporate debt subsidies, started almost as an accident. They were put in place 100 years ago temporarily, maybe to help indebted railroads. But we seem to be stuck with them. It seems difficult to change a tax code—people tell you it’s a sacred thing, as though it’s from the Bible. Once a subsidy is in place, the people who benefit most from it hate to lose it, and then it becomes a political issue. It becomes lobbying for certain loopholes or preferential treatment.

We have to stop subsidizing harmful addictions, such as addictions to debt or addictions to sugar, and start crafting better policy. Use subsidies instead to address the things that we know are wrong but are difficult to tackle, such as inequality.

My advice to the next president is to look at the evidence from the past and recognize that presidents have a very limited ability to change public opinion.

Most new presidents are coming off of, of course, a successful election campaign. Often there are new communications technologies that have been involved in their winning the election. They’re surrounded by people who are telling them that they are particularly good at connecting with the public and at using these technologies, and so presidents tend to perceive that they will be capable of molding public opinion on the issues that they care a lot about. Yet time and time again, we see presidents getting burned on those issues.

That doesn’t mean that if there’s an issue on which the public is already behind the president and Congress is blocking it, the president can’t use public communications to try to pressure Congress. But if there’s an issue on which the president is trying to actually move public preferences, presidents fail over and over again. They waste a lot of time, and they expend a lot of capital.

The exception is security. On something like a national security matter, the public tends to defer to the president and rally around the flag, so to speak. The president has a big informational advantage in those cases, and the public knows that. The same isn’t true, however, of other policy areas, where access to information is more balanced.

Not that the president should shut down the communications office. You wouldn’t want your opposition to go out and be on the airwaves while you sit back and do nothing. But when presidents find themselves surrounded by people who have every incentive to tell them that they are great at molding public opinion, by policy advisors who are working to get certain policies passed, I would say prioritize those policies on which you already have the public behind you.

In addition, much of the rest of the world is on a so-called territorial tax system, wherein corporations with operations in different countries pay taxes on earnings in those countries, but they can repatriate, or bring back, any of the profits to their home countries without paying additional taxes. The US has a simple worldwide system, so you pay tax locally in whatever country you have revenue in, and then you’ll pay more tax if the funds are repatriated to the US. There’s been one recent proposal to have a significantly lower tax rate, in the 12–14 percent range, on repatriated earnings. That would certainly give more of an incentive to bring that money back.

Another key reform would be to lower tax rates more generally but broaden the tax base by eliminating a lot of loopholes and special deductions, so that you can lower rates without actually reducing revenues. An added benefit of that is by eliminating the distortions that come with loopholes, you’re using the market rather than the tax code to establish incentives for allocating investment, and that will likely lead to more-efficient allocation of funds and a somewhat higher growth rate.

Ireland is an example of how powerful tax reforms can be. It has a low corporate tax rate, about 12.5 percent, which is lower than the rest of the European Union and relatively low in the developed world. The American Chamber of Commerce in Ireland estimates that about 700 US companies have opened up operations in Ireland, and they’ve created about 140,000 jobs there. The business-friendly policy environment has fostered high job growth and an economic boom in Ireland while the rest of Europe stagnates.

Not only is tax reform important; it’s something that’s politically feasible. I don’t think anyone believes that giving strong incentives for US corporations not to invest in the US makes any sense at all, and hence we’ve had House Speaker Paul Ryan (Rep.), Senator Charles Schumer (Dem.), and presidential candidates Hillary Clinton and Donald Trump talk about these kinds of things. It’s one of those rare issues that both sides of the aisle can agree on.

My advice for the next president is threefold. Number one, win big. Presidents that win big are able to do things, and presidents that don’t win big are not able to do anything. Unless you get a big victory, you can forget numbers two and three of my advice.

Number two. At this point in the country, the crisis is over. We have to get out of the crisis mentality. It's important for us to make investments with the long run in mind.

My third piece of advice is: remember that the thing that made us the richest country in the world is our people. We have to invest in the skill base of our own people. That means their training. That means raising educational attainment in the US. Those investments in human capital comprise the most important thing for the country.

In making those investments you’re, in essence, saving and investing for the future. It's a bit of a win-win in that you not only improve the fate of the economy and the fate of the nation, you make individuals themselves much more resilient to recession. If you look at people with a college degree, they don’t just have higher incomes. They don’t just have lower unemployment. Around the world and within the US, they also have proved remarkably better able to weather the downturn and move from industry to industry and into new jobs as the world economy has shifted.