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The Lighthouse is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.

Volume 8, Issue 43: October 23, 2006

  1. A Good Choice for the Nobel Peace Prize -- and the World's Poor
  2. Trade-Deficit Worries Are Misplaced, Says Powell
  3. Big Brother's Younger Siblings?
  4. Fast, Not Slow, U.S. Withdrawal May Temper Iraq, Eland Argues

1) A Good Choice for the Nobel Peace Prize -- and the World's Poor

When Muhammad Yunus founded the Grameen Bank of Bangladesh thirty years ago, he had loftier goals in mind than winning the 2006 Nobel Peace Prize. He sought to alleviate poverty in poor countries by providing microcredit to small-scale, mom-and-pop entrepreneurs overlooked by traditional commercial banks, such as the family who needs a cow so they can sell milk, or the widow who needs a new loom for making textiles. By most accounts, his loan program has succeeded even where charitable giving and foreign aid have failed.

"The Nobel award to Yunus and Grameen Bank is a good occasion to reflect on the colossal error of judgment the rich have made about the poor and a reminder that enterprise, not aid, is the real answer to poverty," writes Senior Fellow Alvaro Vargas Llosa, director of the Independent Institute's Center on Global Prosperity, in his latest column for the Washington Post Writers Group.

The success of Yunus's Grameen Bank (and similar efforts) can be greatly enhanced by cutting the bureaucratic red tape that hampers small-scale entrepreneurs in developing countries -- as was suggested by the work of anthropologist William Mangin, who fifty years ago discovered bustling entrepreneurs in the shantytowns surrounding Lima, Peru. Writes Vargas Llosa: "I have been looking at case of entrepreneurial success around the world for the past year and the conclusion is overwhelming: The best way to fight poverty is to eliminate barriers that currently hold back private enterprise among the poor."

"Lessons from the Poor," by Alvaro Vargas Llosa (10/18/06)
http://www.independent.org/newsroom/article.asp?id=1834
"La lección de los pobres"
http://www.elindependent.org/articulos/article.asp?id=1834

LIBERTY FOR LATIN AMERICA: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa
http://www.independent.org/store/book_detail.asp?bookID=55

Center on Global Prosperity (Alvaro Vargas Llosa, director)
http://www.independent.org/research/cogp/

El Independent: El Blog del Centro Para la Prosperidad Global de The Independent Institute
http://independent.typepad.com

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2) Trade-Deficit Worries Are Misplaced, Says Powell

Worries that the U.S. trade deficit is on track to surpass last year's total trade deficit of $717 are misplaced, because they focus on one side of the balance-of-payments accounting system while ignoring trade deficit's counterpart -- a capital surplus -- according to Research Fellow Benjamin Powell in a recent op-ed published in INVESTOR'S BUSINESS DAILY.

"A trade deficit reflects the fact that we buy more goods and services from abroad than we sell to foreigners," writes Powell, director of the Independent Institute's Center on Entrepreneurial Innovation. "Foreigners take the earnings they receive from our spending (minus the goods and services they buy from us) and invest that sum in the U.S. The U.S. has a wealth of investment opportunities, but we have a low rate of domestic saving, so lots of investments in the U.S. wouldn't get funded if foreigners weren't willing to supply us with their saving.

"As long as our country remains a good place to invest and we have a low saving rate, foreigners are going to invest in the U.S. more on net than we invest overseas. That will generate a capital account surplus and the resulting trade deficit. This is a good thing."

"Trade Deficit Is Really a Capital Surplus," by Benjamin Powell (INVESTOR'S BUSINESS DAILY, 10/5/06)
http://www.independent.org/newsroom/article.asp?id=1832
"No teman al déficit comercial"
http://www.elindependent.org/articulos/article.asp?id=1832

Center on Entrepreneurial Innovation (Benjamin Powell, director)
http://www.independent.org/research/coei/

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3) Big Brother's Younger Siblings?

In his farewell speech of 17 January 1961, President Dwight Eisenhower issued a warning that few U.S. politicians have echoed and even fewer have heeded: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." (The speech's penultimate draft named an additional link in the chain: Congress.)

Since 9/11, and especially since passage of the Homeland Security Act, private security contractors have played a large and growing role in the charade of perfidy and pork. Federal homeland security contracts have been awarded to more than 33,000 security companies (up from 3,512 in 2003). Trade publications such as GOVERNMENT SECURITY NEWS carry page after page of advertisements for surveillance cameras, infra-red telescopes, computer hard-drive imagers, and other tools that can empower Big Brother. Indeed, Eisenhower's term could be broadened and renamed the "security-industrial-congressional complex," according to Senior Fellow Robert Higgs.

"You can be sure that the winners do not include taxpayers in general or the citizens whose rights are being suffocated by the fear-exploiting opportunists who are rushing to get rich by supplying goods and services to the Surveillance State," writes Higgs in his latest article. "However unwittingly, these private-sector facilitators and handmaidens of the government's pervasive invasion of everyone's privacy have formed a new bulwark against those who seek to divert the American people from their headlong rush into tyranny."

"The Security-Industrial-Congressional Complex (SICC)," by Robert Higgs (10/19/06)
http://www.independent.org/newsroom/article.asp?id=1835
"El complejo de la seguridad-industrial-parlamentario"
http://www.elindependent.org/articulos/article.asp?id=1835

Also see, DEPRESSION, WAR, AND COLD WAR: Studies in Political Economy, by Robert Higgs
http://www.independent.org/store/book_detail.asp?bookID=65

AGAINST LEVIATHAN: Government and a Free Society, by Robert Higgs
http://www.independent.org/store/book_detail.asp?bookID=53

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4) Fast, Not Slow, U.S. Withdrawal May Temper Iraq, Eland Argues

Under pressure from congressional Democrats and Republicans alike, the Bush administration is reportedly preparing a timetable for the Iraqi government to disarm militias, reduce sectarian violence, and increase stability and security in the country. Failure to meet the specified milestones would prompt the U.S. to begin a slow withdrawal -- a strategy reminiscent of another famous military quagmire, according to Ivan Eland, director of the Independent Institute's Center on Peace & Liberty.

"A slow withdrawal of the U.S. troops from Iraq, like "Vietnamization" during the later stages of the Vietnam War, will only delay the inevitable -- policy failure -- while getting many more U.S. service men and women killed in the meantime," Eland writes in his latest op-ed.

"Instead, the U.S. should withdraw its forces rapidly to motivate the Shi’a and the Kurds running the government to share Iraqi’s oil wealth with the Sunnis, thus buying their agreement to peacefully accept the already partitioned Iraq. Militias would not be disarmed by the central government, but would police their own designated areas. In fact, the central government would remain only as a confederate shell or be dissolved entirely. Although not perfect, this scenario is Iraq’s last hope to avoid an escalating civil war and give Iraqis the hope of some peace and prosperity."

"U.S. Arrogance in Iraq," by Ivan Eland (10/23/06)
http://www.independent.org/newsroom/article.asp?id=1840
"La arrogancia estadounidense en Irak"
http://www.elindependent.org/articulos/article.asp?id=1840

"The Way Out of Iraq: Decentralizing the Iraqi Government," by Ivan Eland
http://www.independent.org/store/policy_reports/detail.asp?id=16

Center on Peace & Liberty (Ivan Eland, director)
http://www.independent.org/research/copal/

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