Fred Smith, president of the Competitive Enterprise Institute sent us a letter in response to this post last week.

To the Editor of the National Journal:

I write in response to your recent article about CEI encountering "financial woes."

Unless my reading of your economic reporting has been selective, I think that this is a bit like saying that it's darker after dusk. There are few businesses or nonprofits that haven't been impacted by the on-going recession. And, although your article did note that CEI's "funding rose nearly 70 percent between 2004 and 2007," it seemed to imply that the dip last year was woe-producing. As I noted, CEI's last fiscal year began in October 2008 and ended in September 2009, and the first two quarters were horrific. Had that pattern persisted, we would have experienced severe financial "woes." However, in the last two quarters contributions increased significantly and that (along with CEI's belt-tightening) allowed us to reduce the initial deficit substantially. The fact that we began the year with substantial reserves (we're not Fannie and Freddie, after all) meant that no substantial changes in our program were necessary. Like farmers, we don't always expect every year to be better than the last.

Indeed, since our year began at a period considered by many economists to be the worst economic months since the Great Depression, the National Journal article was a bit alarmist. After all, at that time, the Dow was at a 12-year low, unemployment was increasing from 7 percent to the over 10 percent we're experiencing now. And, despite the staggering loss of wealth in America and around the world, last year was CEI's second best revenue year ever. Or, to paraphrase Mark Twain, the rumors of CEI's demise are greatly exaggerated.

On a broader note, regardless of how CEI or any other policy group fares, grassroots activism by Americans who believe in liberty and free markets is on a remarkable upswing. There is a growing resistance to the "not-so-long march" towards socialization. Americans are increasingly irate at taxpayer bailouts of major corporations (our stance here did cost us some corporate support) and the proposed government take-over of health care. CEI and other free market advocates are prepared and able to mount a sustained battle against statism and for liberty.

Sincerely,

Fred L. Smith, Jr.

President

Competitive Enterprise Institute