A prominent public policy advocate from Houston, Leo Linbeck III, the President of Competitive Governance Action is fighting to devolve power from the federal government.
MR: In your policy pursuits, you’re the President of Competitive Governance Action (CGA). What is CGA?
L3: So, we have both a think tank and a political advocacy group. They’re founded on a pretty basic view that the problems that we face in the political realm are the result of one core issue – the failure to adapt governance in the face of increasing scale. What tends to happen is as organizations grow in a governance structure, more and more power tends to get centralized. The response to that needs to be to continue to adapt the governance to push more decision making authority out to the edges, closer to the people. It’s the principal of subsidiary. You make the decision as close to the people impacted by it as possible.
MR: What does CGA do?
L3: CGA was set up to promote a whole host of reform ideas that were based in this insight. The big issue in politics is not what is decided but who decides.
MR: Let’s talk about the Health Care Compact – a big push to scale back Washington-run healthcare. The compact has been adopted by a number of states already and has been introduced in the U.S. Congress. There’s also an effort, Repeal 16, to repeal the 16th Amendment. There are advocacy groups for just about everything these days. Why did you decide to focus on these efforts specifically?
L3: Those are the two areas we’ve focused on at the federal level. We have an additional effort we’ve done at the state level, which I’ll talk about in a second. We started with health care because it’s the blob that’s going to eat the entire system. The Affordable Care Act is just the latest step in the centralization of health care. This is not a new trend. And it’s a huge chunk of our economy – 1/6th of the economy and the centralization of this magnitude is simply not going to work. Not even the Europeans are crazy enough to run an E.U.-wide health care system.
MR: That’s saying something!
L3: There’s a reason for that. It’s a decision that’s best made local. Look at the United States, 96 percent of health care is intrastate commerce. Health care is provided by a local provider in a state to someone who lives in that state. We attack health care not by saying let’s figure out the best policy to push from Washington. Instead, let’s go to the more fundamental issue: we need to fix who decides. You can think of this as kind of like an operating system upgrade. When there’s a new operating system for Windows or Mac, you don’t go and force everyone to upgrade. You let people opt-in. The power users then move first. They find bugs and those bugs get fixed. Bigger organizations study the change and transfer over time. That’s the way to affect change that is both politically sustainable and also works better from a policy stand point.
MR: And your work on tax reform?
L3: Taxes are a little bit different because there needs to be some federal tax system. There the decision is do we centralize the decision making over the tax code or do we distribute it? You don’t want to end up with both an income tax and a consumption tax. At Repeal 16 we simply cut out the income tax as a source. Now the federal government can come up with a consumption-based tax system – whether it’s a flax tax, or a fair tax, or a VAT – or whatever it is.
L3: The third thing we’ve done is in education. The same problems we see in health care, we tend to see in education but at the state level. In Texas we developed a bill (House Bill 300) that gives districts the opportunity to opt into an alternative regulatory regime where there’s more local control and more parental choice.
MR: You obviously run your companies for a living but have a passion for public policy. When was the first time you felt compelled to jump into that arena? Was it a policy fight? A political race?
L3: My first entry into all of this was when I got involved with the charter school movement here in Houston. I’ve been very involved in helping our local charter schools grow. That naturally led to looking at policy issues. At the same time, I was looking at health care – particularly the impact Obamacare was going to have on our business and the people who work for us. And I was really frustrated. We have a very generous health care benefits program for our employees and what became clear was we were getting punished – particularly in 2018 with the “Cadillac tax” – we were going to be pummeled because we were being generous. We just need to get Washington out of the business of making these decisions. That was the original design of the constitution.
MR: Tell us a little bit about who Leo Linbeck is:
L3: Let’s see… I’ve been married for 26 years; have five kids – ages 20, 16, 11, 9 and 7. Two of the kids are homemade and three are adopted. Our three adopted kids are from three different countries: Columbia, Guatemala and Ethiopia. We have this little United Nations. And it’s just like the U.N. Lots of complaining about trivial matters while important issues are routinely ignored.
MR: Does anybody have veto power?
L3: Everybody has veto power and the guy who gets blamed is the guy who pays all of the bills!
L3: My day job is that I run Aquinas Companies. We have three main business lines – construction management, where we do a lot of institutional and cultural buildings. We have a real estate group that does real estate development acquisition. And we have a biotechnology group. We run a bio-tech studio where we start up companies in the bio-tech space here in Houston. I’m also on the faculty at Stanford Graduate School of Business and the faculty at Rice University.
MR: Tell us about your dad, Leo Linbeck Jr. He was involved in many pursuits. He was chairman of the Federal Reserve in Dallas. Like you, he was involved in a lot of tax reform efforts. What did your dad teach you during his extraordinary life?
L3: My dad was an amazing guy. And I was so blessed to work with him in our business for 25 years. The thing that was the biggest take away about my dad is that he was engaged and wanted to help shape the commons. This is what self-governance is about, a relentless focus on your personal interests or business, but also a sense that we have a responsibility to shape the commons. And if we don’t engage, then it’s left to other people. Our system only works if people in every walk of life get engaged at the level at which their talent and capabilities allow. He was always engaged. And he did it in a way that he built really powerful friendships built on a sense of mutual respect. He had a huge impact on me and I think a huge impact on our state and on our country.
MR: I can’t let you out of here with out talking about Notre Dame football. Two years ago, you made it to the National Championship. Last year, a let down. What do you see for the Golden Domers from South Bend this year?
L3: There’s a lot of hope as there is every year in South Bend. Of course we’ll have our Quarterback back next year. Actually my son will be a junior next year at Notre Dame so I’m sure we’ll make it up to at least once game. Every year looks like it’s going to be un-defeated at the beginning of the year. But we’ll see.
MR: Leo Linbeck – aka L3 – thank you so much for taking the time.
L3: Thank you.