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Success, Shareholders, and Wrestlers

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All this week, TTLA runs an interview with Michael D. Rich. Rich is the executive vice president at the Santa Monica-based RAND Corporation, the region's preeminent public policy institute.


Friday: An Introduction

Monday: A Brief History of RAND

Tuesday: Is RAND a Think Tank?

Wednesday: Complex Problems & Measuring Success

Thursday: From Santa Monica to Qatar

Friday: Success, Shareholders, and Wrestlers


TTLA: What are some of the things that have happened during your tenure here that you're personally the most proud of?


MR: I think a lot of people in sort of my era would start with something called the Health Insurance Experiment, which was one of two major social experiments launched, I think, in the Nixon administration, but continued long beyond that. That really laid the groundwork for a lot of the things that we now regard as important directions for reform and health care systems: measuring quality, being able to link the provision of different kinds of care to outcome measures. So that you know if you're going to make a change, you know what the effect on a person's life and lifestyle is.


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In the domestic areas maybe that's the most significant. [Another achievement was] probably all the studies that we did that helped the military make the all volunteer force a success. That was really in a way kind of a hypothesis in the `70s, as to whether it could work? Could you get enough of the right kinds of people and sustain it and not make it an unfair organization, or broadly unrepresentative and so on? And so I think RAND's contributions in the personnel policies have made that a success. I mean, now a large part of that success is due to the Defense Department relying on analysis. Making a lot of decisions. In fact we put a book out a year or so ago, Bernie Rostker's book that explains sort of how the Defense Department made key decisions based on analytical [methods], most of which came from RAND "? though not all.


And then I think of one other example, in another category. Something that I think is a great study, a great idea, not yet successful, hasn't passed our third test, but I think is just an example, one of the many kind of ahead of its time. And that's our work on what it will take to make a success out of an independent Palestinian state. And there are a lot of studies, a lot of activity going on. How do you get from here to independence? What's the deal like and how do you fit? We didn't address that at all. Because our view is nobody was looking at what happens the day after independence. And it's in nobody's interest for a state to become independent and then fail.


So the question for us was, what would it take for a newly independent state, Palestine to succeed? And we define success as stable, secure, peaceful, and if not prosperous, at least self-reliant. And we took every sector that we thought was important to those measures "? water and job creation and transportation and health care and education and governance and so on. And we asked what would that sector need to look like for a state to have those characteristics? What does that sector look like today? And how do you bridge the gap and how much would it cost? And I think that produced an exciting vision of what a Palestinian state "? first it answered the question whether you could ever produce a successful [state], the answer is yes, it is possible. And it showed how. And I think that one day, people will come back to that as at least a starting point for the design of an independent Palestine. We're really proud of that work, done without any, it turned out, government funding. Two sets of local donors, two unconnected husband and wife teams, both [were] interested in that.


TTLA: The Middle East expert I'll be meeting later today, I read earlier that her latest project was paid for entirely in-house.


MR: Right, let me tell you a little bit about funding, kind of the whole picture. I mentioned the pie chart, 80% government [contracts]. About 10% on top of that is foundations. And the other 10% is sort of split up this way: Maybe 3-4% private sector; maybe another 3-4% international organizations like the World Bank and maybe some universities. And then about 4% or so self-initiated research.


The self-initiated research is financed from three sources. Donors "? the donations we get. Income that we earn off of contracts. And the draw "? basically the income "? from our endowment. Our endowment [was at the time approximately] $200 million.


We don't have any shareholders but we do believe that we ought to pay dividends. I mean, we're an institution, we get a tax exemption. (It's not that we don't pay any taxes, we pay sales tax and so on, but we don't pay income tax.) And we feel we should give something back in return. And what we feel we should give back to the public is the products, like Dalia Dassa Kaye's report, the fruit of our self-initiated research. And even though it's a small part of the overall total, it's unbelievable leverage because it enables us either to do things that are too crosscutting, the kind of problem that doesn't fall within a particular government agency, so no one's going to ask about it. Or it might be too far reaching. Or too controversial for a traditional client to tackle. And Dalia's is an example of that. And the Palestine work.


TTLA: Who decides which of these in-house 'enterprise' projects get the thumbs-up to proceed?


MR: Most of it is bottoms-up. In the sense that it's not something where, I'm number two at RAND, Jim Thompson number one and we say we're going to commission this. I mean, there may be some of that, but the great, vast bulk of it we rely on these hot shots like Dalia Dassa Kaye, who you're going to meet. And people come forward with an idea "? we get more ideas than we could fund. And then we'll pick an idea based on it's uniqueness "? if it's something we think we can get funding for from a client, we're not going to spend this money, but if it's something that is complimentary to what we're doing, has high potential payoff where the person proposing has a track record of being able to achieve something big, then we'll take a chance on it. We don't expect everyone to be successful, you know? If we did, we'd probably be a little too cautious in our allocations. But basically Jim and I choose.


TTLA: Last thing, totally different topic. Could you provide a minute-long version of a tour of this office? The books, the photos, the other items?


MR: I keep a lot of books and I've got some photographs. [Pointing out various items - TTLA.] Don Rumsfeld is former chairman of RAND's board "? we have a lot of Democrats also. That was a picture I took of him. One of my great experiences was meeting this fellow, kind of fading from sight now, Jessie Ventura. When we started our Pittsburgh office, the other finalist was Minneapolis. And so Governor Ventura came to pitch us. But most of it is RAND books and reports and things like that.


-End of This Series-


Photo of RAND HQ copyright and courtesy Brett Van Ort, 2008

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