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

Volume 15, Issue 38: September 17, 2013

  1. U.S. Energy Freedom Would Undermine Russian Arms Exports
  2. War Fuels the Welfare State
  3. California Proposals Would Raise Costs for Homebuyers
  4. Join Us at Freedom Academy—Living Free (Orange, Calif., Sept. 21)
  5. Institute Seeks Marketing & Communications Professionals!
  6. New Blog Posts
  7. Selected News Alerts

The Independent Review: Subscribe or renew today and get a free copy of the 25th Anniversary Edition of Crisis and Levithan: Critical Episodes in the Growth of American Government, by Robert Higgs.


1) U.S. Energy Freedom Would Undermine Russian Arms Exports

Russian President Vladimir Putin may have helped avert U.S. airstrikes in Syria, but he continues to sell arms to Damascus and Tehran. American policymakers could hinder his ability to spread weapons by allowing more U.S. energy exports, according to William F. Shughart II, the Independent Institute’s long-time senior fellow and now research director.

“The right path forward will not only grow our economy and improve our own energy security, it would help us check the ambitions of petro-dictator Putin,” Shughart writes in an op-ed for Investors Business Daily.

Russia’s recent foreign-policy maneuvers, including its arm sales, according to Shughart, are enabled by its rising fortunes from energy exports, which account for about half the revenues of Gazprom, its state-owned gas company. Those fortunes may soon turn, however. Non-Russian oil-and-gas producers, including the American giant Chevron, have contracted to develop vast shale deposits in Ukraine and other former Soviet-bloc nations. Moreover, the U.S. Department of Energy has issued export licenses to American producers of liquefied natural gas (LNG). Although these events may take out some of the wind from Putin’s sails, Washington could send the Russian president a stronger message by immediately approving many more LNG export license applications.

Gain Leverage over Putin with Some ‘Shale Diplomacy’, By William F. Shughart II (Investors Business Daily, 9/13/13)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II

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2) War Fuels the Welfare State

James Madison warned a compatriot that standing armies pose a threat both to personal liberties and to economic liberties (due to the higher levels of taxation needed to equip and train them). Independent Institute Senior Fellow Ivan Eland takes Madison’s analysis a step further. U.S. wars, he argues in the latest issue of The Independent Review, have spawned a vast array of domestic spending programs that have pulled the United States far away from the ideals of limited government.

Eland notes that the biggest U.S. entitlement program—Social Security—had precedents in the pension programs created for Civil War and Revolutionary War veterans. But wartime programs also contributed to the creation of public housing, the employer-based health-insurance system, government interference in labor relations, and much more. Wars have also contributed to the growth of the welfare state via wartime tax changes that have funded non-military spending after the conflicts ended. Progressive taxation, tax withholding, estate taxes, and gas taxes originated as wartime measures. And changes to the federal income tax that were enacted during the two World Wars led to greater revenues collected during peacetime.

Eland’s analysis has an obvious strategic political implication: conservatives who wish to dismantle Big Government should, in logic, oppose military adventurism. “Since the rise of William F. Buckley and the neoconservatives in the 1950s, however, the Right has forgotten that the best way to limit government is to have peace,” Eland writes. “That important lesson needs to be relearned.”

Warfare State to Welfare State: Conflict Causes Government to Expand, by Ivan Eland (The Independent Review, Fall 2013)

The Independent Review (Fall 2013)

Order single copies of this issue or back issues.

Subscribe to The Independent Review. Respond to this subscription offer and receive a free copy of the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Robert Higgs!

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3) California Proposals Would Raise Costs for Homebuyers

California has no shortage of politicians with “well-meaning” proposals that would ultimately harm the people they are supposed to help. In two recent op-eds, Independent Institute Senior Fellow Benjamin W. Powell, co-editor of Housing America: Building Out of a Crisis, sheds light on counterproductive schemes that are supposed to help homeowners. The first comes from Richmond, Calif., where the mayor has pushed for a statute that would direct the City to use its powers of eminent domain—never a good thing.

The mayor’s plan would force lenders to sell their mortgages to the city at a deep discount below face value and thereby enable homeowners to refinance a smaller principal balance and slash their monthly payments. The city and a politically connected firm called Mortgage Resolution Partners would also benefit financially. Proponents of the plan have called it win-win, but that analysis leaves out two relevant parties: the lenders and future borrowers. Lenders would likely respond to the shakedown “by requiring higher down payments to minimize the risk of the mortgage going underwater,” Powell writes in the Huffington Post. “They will also likely demand higher interest rates to compensate for the increased risk of lending in that market. Certain banks may curtail all of their lending in Richmond.”

Powell’s second op-ed, published in the San Jose Mercury News, warns about the unintended consequences of AB 1229, a bill just passed by the California Senate that would allow cities and towns throughout the Golden State to impose inclusionary zoning—i.e., statutes that require real-estate developers devote a part of their residential projects to below-market housing. Powell studied inclusionary zoning statutes in the mid-2000s and found that they resulted in reduced housing construction and significantly higher prices for new homes exempt from the statutes. Inclusionary zoning jacked up the median cost of a new home about 8 percent in the Bay Area (an average of $44,000 on each new home) and 12 percent in Los Angeles and Orange Counties ($66,000 per new home). The lesson? Although politicians like the idea of creating affordable housing without having to raise taxes directly, someone always ends up paying the cost—dearly. “That burden,” Powell writes, “is borne by builders, land-owners, and other home buyers.”

The Attack on U.S. Property Rights Continues, by Benjamin W. Powell (The Huffington Post, 9/6/13)

Inclusionary Zoning Makes Housing Less Affordable, by Benjamin W. Powell (San Jose Mercury News, 9/11/13)

Housing America: Building Out of a Crisis, edited by Randall G. Holcombe and Benjamin W. Powell

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4) Join Us at Freedom Academy—Living Free (Orange, Calif., Sept. 21)

What are you doing this Saturday? Would you like to spend the day—and a good part of the evening—with other freedom-minded people, learning and sharing ideas about the outlook for liberty? Then please join the Independent Institute, a proud co-sponsor of Freedom Academy—Living Free, at Chapman University in Orange, Calif., from 8:00 AM to 8:00 PM!

Organized by FEE, this one-day conference is devoted to “the basic principles of what it means to live free.” The event features a diverse roster of exciting speakers, including: Lawrence W. Reed, Jeff Tucker, Jim Doti, Emily Ekins, Max Borders, and Nobel laureate economist Vernon Smith!

Seating is limited, so we encourage you to sign up ASAP!

Event information

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5) Institute Seeks Marketing & Communications Professionals!

Are you an experienced marketing and communications professional interested in helping a nationally recognized public-policy think tank deliver its message to the media, opinion leaders, publishing industry, student groups, and the general public? If so, please note: The Independent Institute is seeking to hire marketing and communications professionals to develop and implement outreach campaigns to its various and growing audiences. This is a rare opportunity to apply your expertise to serve a noble mission: to boldly advance peaceful, prosperous, and free societies grounded in a commitment to human worth and dignity.

Responsibilities may include: producing outstanding media and sales results via integrated publicity and marketing campaigns; cultivating effective relationships with the media; building the quality and integrity of the Institute’s brand and messaging; serving as a spokesperson for the Institute and the work of its Fellows; and leading department staff responsible for implementing marketing and communications campaigns.

The ideal candidates will have a proven record of developing and executing successful book, policy, and media campaigns; excellent oral and written communication skills; strong organizational and administrative abilities; a grace-under-pressure attitude; and the drive to lead an outreach program with national impact. Competitive salary and benefits are provided. For more information, please visit our Jobs Page. PLEASE, NO EMAIL INQURIES TO THE LIGHTHOUSE RETURN ADDRESS.

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6) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

Fine Whine at the Federal Trough
K. Lloyd Billingsley (9/16/13)

Public Pension Piper Calls Costly Tune for Taxpayers
K. Lloyd Billingsley (9/11/13)

How to Save $35 Billion the Easy Way
Craig Eyermann (9/10/13)

You can find the Independent Institute’s Spanish-language website here and blog here.

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7) Selected News Alerts

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