Avik Roy is one of the most interesting policy thinkers on the right. He came to prominence during the Obamacare debate as an expert on health care policy, as a scholar at the Manhattan Institute and a policy adviser to several Presidential campaigns. He went on to found the Foundation for Research on Equal Opportunity (a.k.a. “FREOPP,” pronounced “Free Up”), a center-right think tank.

We started the interview intending to mostly ask Roy about his current work at FREOPP, but we couldn’t resist the temptation to ask him about what it’s like to start your own think tank and how to go about it, and this ended up taking up the majority of our conversation. We expect that many of our readers have at least fantasized about starting their own think tank one day, so we hope this content is interesting or at least a little fun.

The interview was conducted over videoconference, transcribed, and lightly edited for clarity. Here it is:

PolicySphere: So, what made you want to start FREOPP? Why did you decide that the world needed another think tank?

Avik Roy: It’s an important question because the world does have plenty of think tanks. There were several reasons. There were a bunch of things that I’d been working on over the previous 6 to 8 years that converged on the idea of starting a think tank. The first is that prior to starting the think tank, I worked at other think tanks, particularly the Manhattan Institute for Policy Research in New York. And I’d also worked on several presidential campaigns; I was a policy advisor to Mitt Romney in 2012 and had been a policy adviser to Rick Perry and Marco Rubio in the 2016 presidential campaign cycle. So I’d worked on three presidential campaigns–all losing campaigns, it’s worth mentioning. But the thing that I learned is that you think of presidential campaigns as these giant operations with thousands of people. But when it comes to the core group of people who are making the decisions about what the strategy of the campaign is and what the policy agenda of the candidate should be, those decisions are made by a very small group of people, usually under six. 

PolicySphere: Yes. 

Avik Roy: Let’s say you’re running for President of the United States- 

PolicySphere: We haven’t announced yet. Don’t don’t spoil it.

Avik Roy: Let’s say you’re running for President, and your policy advisor is a young 25 year old whippersnapper–it’s usually a young person who runs the policy team for the presidential candidate. And you say to that 25 year old: “You know, I really want to do something about student loans. Student loans are out of control. I don’t like Bernie Sanders’ idea of free college. What is a more pro-free market, classical-liberal way of dealing with the problem of runaway student debt?” Now, if your 25 year old is a super genius, maybe he comes up with a plan on his own, right? But more likely than not, he’s going to look around and see which think tanks that are philosophically aligned with the candidate have done work on this issue. And based on that, he’s going to talk to those scholars and look at their proposals and then maybe build from that. And it turns out that, on a huge range of issues that affect a lot of people in the United States, think tanks weren’t really working on those issues in a free market-oriented way. So if you’re worried about the runaway cost of health care, very few people in the free market side of the think tank world were working on: “What are realistic free market solutions on health care costs?” Same with student loans, same with the high cost of housing.

You could go on and on down the list of issues that were really affecting ordinary Americans in terms of their economic prospects, their economic opportunities. On these issues, the right-of-center, pro-free market movement was not really working on those specific policy challenges. It was much more about very specific things that for whatever reason, people had gotten caught up on, some of which are important, like tax policy. Others may be just ideological rabbit holes that people really got involved in, because that was the political controversy of the day, without necessarily connecting it to what ordinary people were dealing with. So that was one basic issue: if you want to solve the problems that the vast majority of Americans are dealing with, the movement wasn’t really addressing that. So that was problem number one. 

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Problem number two is–take health care. I’ve done a lot of work on health care policy. And one big flaw with conservative or Republican approaches to health care policy had been that they weren’t in any way realistic in terms of being able to attract broad public support. There was this very kind of libertarian mindset of: “Well, the government really shouldn’t be doing anything to help people.” This ignored the fact that the government had already been doing a lot and doing it badly–which is why health care is so expensive!–and that it was actually our responsibility to fix things that the government was doing badly, so that people could afford health care. There was just this complete intellectual gap there. And as a result, when Republicans tried to repeal and replace Obamacare in 2017, they completely failed. They didn’t even get 50 votes. They wouldn’t probably have gotten even 40 votes for their plan, because not even not even all Republicans were in favor of it, let alone trying to get any Democrats. And the fact is, in the American system, you have to get 60 out of 100 Senators to support you. And they only had 52 Republicans at the time. There were 48 Democrats. And so there was no serious strategy on how you get all 52 Republicans, let alone those eight Democrats. So there was a real problem: if you believe in economic freedom as a tool and freedom in general as the right way to organize society, you have to do it in a way that attracts people who are left of center, center and right of center, not merely right of center. Otherwise, you won’t be able to change laws in the ways that we really need in the problems that we really need to address. So that was problem number two. 

Problem number three was that the American conservative movement had become racially tribalist in ways that were unhealthy because as the country gets more racially diverse, we were writing off huge chunks of the population. Young people in general, by being kind of stodgy. But also, our movement was kind of giving up on minorities, saying: we’re just going to assume that if you’re white, you’re pro-freedom. And if you’re non-white, you’re anti-freedom, you’re against the way of running America. And that’s just crazy. Like, that’s not how it works. There are plenty of white voters who love the entitlement state and want to preserve it. And there are plenty of immigrants to America who are entrepreneurial, who come to America precisely because it’s the land of the free and the home of the brave. That’s what they admire about America. And this idea that we’re just going to give up on them or assume that, because they’re immigrants they want handouts, is politically self-destructive because it prevents us from attracting a majority constituency for our ideas. 

So these were all the things I’d been thinking about. That all pointed to the need for a new think tank, because think tanks are a bottleneck in the war of ideas. If you have a think tank that’s doing important work on important economic issues, you can have a disproportionate impact because few other people are working on those issues in exactly the same way. Furthermore, if you actually want to pass laws and get them through the United States Senate, you have to have an approach to policy that is sufficiently nonpartisan or cross-partisan or bipartisan that you can attract 60 votes in the Senate. You don’t have to attract unanimity, but can you get to 60 votes? That was number two. And number three, can we produce a form of classical liberalism or American conservatism that is appealing to the rising generations and the future demographics of the country? And all those things, in our view, spoke to the need for a new organization that was not merely trying to be another partisan think tank, not just another Republican think tank, but a think tank that would genuinely try to appeal to Democrats, genuinely address the policy challenges that ordinary Americans on the bottom half of the economic ladder face. And could we do so in a way that was inclusive, that united a broader cross-section of Americans?

PolicySphere: There’s a question we’ve always wanted to ask and we suspect a lot of our audience is interested in: How does one start a think tank? How does one get from being, you know, Bob Smith, who has worked for a few campaigns and a few think tanks, to a place that has a shingle and an office and a budget that can pay staff?

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Avik Roy: Well just as there’s no one way to start a business, there’s no one way to start a think tank. There are different approaches out there. But generally speaking, if you’re talking about a nonpartisan nonprofit 501(c)3, then you have to raise money from donors. I was more risk oriented, perhaps because I spent a dozen years as a Wall Street investment manager, and so I had a bit of a financial cushion. I also, I think, benefited from the fact that having worked at a different think tank previously, I had some sense of what my prior employer, the Manhattan Institute, had been raising off of my work relative to what they were paying me, and I had a hypothesis that if I could raise a quarter of what the Manhattan Institute had raised off of my work, I could keep the lights on at a new think tank, because I wouldn’t have had all the overhead that they had. So that was my theory. And so I went to a number of the people who I knew supported my work and said, “Hey, I’m leaving the Manhattan Institute, I’m going to start a new think tank.” I walked them through a little bit of what I just told you, and we were very fortunate. We got a certain amount of press coverage when we launched. There was coverage in the Washington Post in the Atlantic and some people called us almost out of the blue who wanted to support what we were doing. And so we were able to launch with some seed capital. We got really lucky in that regard. We raised, I think, something like $400,000 or more. 

PolicySphere: For seed funding for a think tank, that’s really good.

Avik Roy: It was pretty amazing. And that really helped us in a sense that meant that myself and my co-founder could get ourselves health insurance and pay ourselves minimum wage, and pay for a couple other things to just get us off the ground. And then it’s just a lot of hard work. There are some consultants and things like that that you could look to that help new think tanks get off the ground. If you’re free market-oriented, there’s groups like the Atlas Network and the State Policy Network that have advised a lot of people on how to start a think tank. They have some how-to guides that I devoured. But at the end of the day, it comes down to the nuts and bolts of it, and you have to be able to raise money. And there are certain foundations that are oriented towards funding think tanks. Funding think tanks is kind of a specialized thing that not everyone does, because you have to actually believe that they are useful in order to fund them. Not every wealthy person out there believes in funding think tanks.

PolicySphere: That’s an understatement.

Avik Roy: Yeah. So the market is in that sense specialized. But there are some foundations that you can go to, depending on your point of view. And so that’s part of it. But I would say that I think for us, the biggest thing, the thing that really helped us the most was having a great idea. I think people really saw that FREOPP was something new. It wasn’t just “Hey, Avik Roy wants to strike out on his own, so he’s starting a think tank.” It was: “Hey, he’s doing this interesting thing of marrying free market and individual liberty ideas with directly addressing the challenges that Americans on the bottom half of the economic ladder have.” And that was just something that nobody else was doing. That’s not to say individual scholars weren’t working on that, or there weren’t individual policy areas where those issues came more to the fore. But as an institutional mission, there was no think tank doing that. 

Take any of the big name think tanks, American Enterprise Institute or the Cato Institute or the Hoover Institution, take your pick, and you go to their mission statement. They’ll say things like, we are for constitutional government or limited government or freedom. And those are all great principles, of course. But we were saying our mission is to expand economic opportunity to those who least have it, using the tools of individual liberty, free enterprise, technological innovation, pluralism. So those more ideological concepts were secondary to the primary mission, which was to expand economic opportunity. And that was something that was different. That subtle inversion made all the difference. 

And we launched FREOPP in 2016, and, as we all know, that was the year that Trump disrupted the American political system. So there were a lot of people who at the time were feeling like, “Okay, there’s a lot of change going on around here. Who should I be supporting?” And so in that very disruptive year, we were very fortunate. There were a lot of people looking around asking: “Who’s trying to address the things that are leading to the rise of Trump, but in a way that is compatible with my philosophy?” And so if you’re the kind of person who believed that Trump had a point when he said that elites had been leaving ordinary Americans behind, but believed that economic freedom and individual liberty had a role to play in addressing those challenges, you were led to FREOPP.

PolicySphere: In our experience, the hardest form of funding to raise, in both the non-profit and for-profit world, is seed funding for a non-profit. Usually you need to find one anchor donor who is willing to write a six-digit-figure check for a founder or a team of founders and an idea and things get comparatively much easier, but that first dollar is extremely difficult to raise. And if you’re not fortunate to have that connection with an individual who is not only wealthy enough to write six-figure non-profit startup checks, but also maybe a little idiosyncratic and willing to take more risks than the average donor, you’re pretty much DOA. And this is a problem for the policy world in general, because it means t that the barriers to entrepreneurship are much higher than in the for-profit economy.

Avik Roy: We did have two anchor donors who came in early on, even before our launch in one case. But I think part of what made that happen was that I had a pretty high profile in terms of my role in the health care policy debate. I had a point of view, which was somewhat quirky and still is somewhat quirky, which is that I believe in universal coverage, but doing so in a market based way. People knew about my profile, and so I was able to make these connections. So to give an example of somebody who’s different from me, but who I go way back with–Oren Cass. Cass has been at the Manhattan Institute, he was domestic policy director for Romney’s presidential campaign, he wrote a book called The Once and Future Worker, which was a very interesting and creative book. So he built a profile for himself before launching a think tank. If you’re just a person who wants to start a think tank, but you don’t yourself have a profile, you can still succeed, right? But you’re going to have to work much harder to convince people to write you a check.

PolicySphere: That was very enlightening. You’ve had a lot of success, so let’s talk about what FREOPP is doing now.

Avik Roy: We work in 12 policy areas now which is really amazing. Having the mission that we had, we’ve attracted an amazing team of scholars. I think we’ve punched way above our weight in terms of the caliber of scholars we’ve attracted. Which has been awesome. It’s been a real honor to work with some of the people that we’ve gotten to work with at FREOPP. Because of that, people come to us and say, “Hey, I love the mission of FREOPP, I’d love to work with you guys.” And you know, early on it was a real challenge because it’s not like we were rolling in dough. So if someone wanted to come to FREOPP, we couldn’t necessarily pay you. So we had to figure out some creative structures in order to help support the scholars along the way. And we figured out a way to do that. Still, it took us a while to scale because you have to raise the money to support the scholars. But again we got there and that’s been awesome. 

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Now we work in a bunch of different areas, but I’d say about 70% of our work in some way touches on cost of living. And the reason for that is if you take the intersection of how free markets and individual liberty can improve the lives of lower and middle income Americans, a big part of the intersection of those two concepts is cost of living. 

The left likes to talk about income inequality. And when they talk about income inequality, they’re talking about what a businessman would call the top line, the revenue. The salary, not what’s left after you pay your taxes and your rent and your health care bills. That’s your disposable income, right? They don’t talk about that as much. They talk about your gross income before all those taxes and expenses. But if you think about it, what are taxes and expenses? Taxes are something that the government levies on you. And then your expenses are driven in large part by how much regulatory costs have driven up the cost of those goods and services and subsidies. So there are free market solutions to reducing the cost of health care, education, energy, and all these kinds of things. And if you’re able to reduce those costs, you can then increase someone’s disposable income, which is why if you make $50,000 a year and you live in San Francisco versus Dallas you can bet that $50,000 goes a lot farther in Dallas than it does in San Francisco. And that matters. The income of those two people is identical, but their disposable income is very different.

So a lot of our work has to do with that. For example, one area that we’re really active in is higher education reform. That’s super important, not because everyone needs to go to a four year liberal arts college and get a bachelor’s degree. But because the cost of post-secondary education overall is a real barrier to social mobility, whether it’s a four year degree, whether it’s grad school or whether it’s a vocational or trade school or a certificate or credential–all those things are way too expensive in the US, and it’s almost entirely because of the way that government regulates and subsidizes the way you get to obtain those forms of education. So we do a lot of work on that. So we created an ROI tool, which shows what’s the return on investment on literally every degree in the United States, whether it’s an undergraduate degree or a grad degree or vocational, you can look up the exact course of study, the institution, and find out: is the ROI of that degree positive or negative? This is pretty remarkable and merges a couple of different datasets that we have access to in order to create those analyses. But what’s really cool about it is not merely that it’s a tool for parents who have high school-aged kids who are looking to figure out what they do next, it’s also a tool for policymakers, because a big part of why higher education is so expensive is because we basically subsidize it at the institutional level. As a society, we basically say to the student: “Here’s a student loan with a little subsidized interest rate, go to town, borrow $200,000,” and then the student realizes “Oh gosh, I’ve got this master’s in film studies from Columbia, and I’m working at Walmart. I haven’t become Steven Spielberg yet.” And they default on their loan. And who pays for that when they default on the loan? Well, the taxpayer does. Columbia doesn’t pay her, right? Columbia has already gotten paid when the loan was taken out. So they don’t care whether the student succeeds or not. What they care about is: did they get paid? And they got paid. So whoever ends up with the bill doesn’t matter to them. And the end result is, if you think about the Biden student loan bailouts, all that does is further incentivize universities to charge more, because they know that they’re going to get paid no matter what, and the taxpayer will foot the bill, which is an incredibly corrupt, vicious cycle. So by having this ROI data, we can now go to Congress and go to the Education Department and say: “Hey, wait a minute. Why are taxpayers being forced to subsidize this? Why are ordinary working people–two thirds of Americans don’t go to college, by the way–being forced to pay subsidies to grad students who basically don’t pay off their loans because they got overcharged by the university?” And that university didn’t invest in making sure that what that degree cost was commensurate with what the earnings of that graduate would be after graduation. So that’s the policy tool. And having this engine of the ROI analysis allows us to reform the perverse incentives that lead universities to overcharge for low ROI degrees. So that’s one major area we work on. 

We also do work on K-12 education. Our main education scholar, Dan Lips, was the guy who, in 2005, first invented the concept of education savings accounts, which have now taken the nation by storm. There’s about a dozen states that have installed some form of universal education savings accounts, using some of the Covid relief money that they got as start up funds for that, and which is going to revolutionize education in the states that have adopted that policy. So that’s pretty cool. 

We obviously continue to do work in health care policy in terms of of trying to not only ensure that every American can afford health insurance and health care, but to make sure that the system is affordable for the country because it’s health care spending that’s driving the deficit and the debt, and that is one of the biggest crises we have.

We’re doing a ton of work in energy policy, particularly in nuclear energy. For the people who are saying we emit too much CO2 in the United States and so we should consume less energy and live in grass huts, we say, no, you don’t have to live in grass huts. You can build nuclear power plants that generate as much electricity as America can consume. You can’t generate enough energy from wind and solar to supply the US, but you can with nuclear. So we’ve invested a lot in nuclear energy policy as a way of saying, hey, if you really want a low carbon future, but you also want abundant, reliable and affordable energy, then there’s a solution. Because a big part of the problem with left wing environmental policy is that it’s all about making energy more expensive so people consume less of it. Well, who does that hurt? It doesn’t hurt rich people who can afford more expensive energy. It affects poor people who pay more at the gas pump, who pay more for their home utilities, who pay more to power their home appliances, and also for the cost of everyday goods and services which are delivered by trucks or by electricity. So ordinary people see a higher cost of living as a result of higher energy prices. Wealthy people do too, but it’s a much more manageable expense for them. So our whole thing is to say: “Look, if you want to reduce the carbon emissions in the country, you don’t do so on the backs of poor people. You have to do so by having cheaper, more abundant forms of low carbon energy.”

We also do some work on Bitcoin and macroeconomic policy. Why? The Fed’s policy of allowing for inflation has been, again, much more harmful to poor and middle income Americans. And it has been good to high income Americans who benefit from the financialization of the economy, which low interest rates enable and supercharge. 

We do a lot of work on housing policy, how to make housing policy more affordable by building more houses and by not creating a credit-fueled asset bubble in real estate, which, again, the Federal Reserve has done. 

So those are some of our major areas. We’re also in a bunch of other areas, but those are the highlights.

PolicySphere: We end our interviews with two traditional questions. The first is:what’s the most important issue that nobody’s talking about?

Avik Roy: I think the most important issue that not enough people are talking about is the federal debt. That’s not to say that in the policy community nobody talks about the federal debt. But I would say that specifically with regards to the Federal debt, almost nobody–except for us–is talking about how the US will have an actual federal debt crisis. What will actually happen. There are plenty of people who say the federal debt is bad and that it’s too high. But that has not resonated with ordinary people because people are like: “Well, I guess the debt is bad. But, you know, here I am, driving my car and living in my house and having my job, and everything feels basically normal. I mean, yes, things are too expensive, but, you know, I don’t see the connection between the federal debt and my everyday life.” And so that’s the thing that people are not doing. If you ask the average think tank who says they’re concerned about the Federal debt: “How will the federal debt affect ordinary people?,” you rarely get a convincing answer. That’s something we spent a lot of time on. We’re actually producing a documentary on this topic. Kind of like An Inconvenient Truth, but the Federal debt version: how the federal debt will actually influence the way you live your life over the next 10, 20 years.

After all, ten years ago, you could say, okay, if you reform Medicare and you reform Social Security, we can get through this and come out the other side and we’re okay. We’re getting to the point very soon where that won’t be enough. Because in 2024, we’re spending more on interest on the federal debt than we are on national defense. In 4 or 5, ten years, we’re going to be at a point where even if you do the Paul Ryan entitlement reform stuff, the interest on the federal debt that has accumulated over that period of time is so large that entitlement reform alone doesn’t reduce the debt because the interest rate spiral reaches escape velocity. It’s like if you take out a credit card and you can’t pay off the credit card, then you take out another credit card and pay off the first credit card, but the interest payment on the second credit card is higher. And all of a sudden, you go broke, right? And that’s where we’re headed, particularly with this presidential election where neither candidate is particularly concerned about the federal debt. So I think that’s the thing I would say nobody’s talking about: how the rising federal debt will affect ordinary Americans. 

And for those who are waiting for me to say, okay, what is it? How will it affect us? The way it will affect us is through a combination of inflation and rising interest rates. I wrote a piece for National Affairs about this a few years ago called Bitcoin and the US Fiscal Reckoning, which walks through how the bond markets work and how over time, as we rely on issuing more and more Treasury bonds to borrow that there just isn’t enough money out there to lend to the United States and the bond market starts to fail. 

PolicySphere: Great. And final question: who’s the smartest person we should interview next?

Avik Roy: You know, I would probably have to say Reihan Salam. Reihan is the smartest guy that I respect out there in the think tank world.

PolicySphere: He really is.

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