The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 15, Issue 52: December 24, 2013

1. The Bipartisan Budget Disappointment
2. Pope Francis Denies Beneficence of Free Markets
3. Obama Antitrust Activism Grounds Competition
4. The Independent Review—Winter Issue Now Available
5. New Blog Posts
6. Selected News Alerts

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The two-year budget accord reached by House Budget Committee Chairman Paul Ryan (R-WI) and Senate counterpart Patty Murray (D-OR) splits the difference between spending levels proposals by congressional Republicans and Democrats. Bipartisan agreements may sound like good governance, but this deal represents a victory lap for government spending and the agony of defeat for taxpayers.

Independent Institute Senior Fellow Ivan Eland laments the deal’s ending of budget sequestration. Although the sequester was portrayed as a complete disaster, it delivered a rare benefit: for the first time since the Korean War, federal spending in inflation-adjusted dollars fell. “From fiscal year 2009 (the George W. Bush administration’s last real budget) to fiscal year 2013, federal spending declined three percent in real terms and declined as a percent of GDP two percentage points,” Eland writes in the Huffington Post. “Those sterling accomplishments have been imperiled by the [Ryan-Murray budget deal’s] breaking of the sequester spending limits, especially on defense.” The extra military spending that the agreement would deliver: $22 billion for Fiscal Year 2014.

Independent Institute Research Fellow Craig Eyermann, who developed the Government Cost Calculator at MyGovCost.org, laments the fact the budget deal doesn’t curb the growth of Medicare, Social Security, or Obamacare. The deal does, however, have a silver lining or two, such as its requirement that new federal employees make contributions to their pensions—a feature he’d like to see adopted by government at all levels. “Given what we’ve seen with the role of government employee pensions in driving state and local governments into bankruptcy proceedings,” Eyermann writes, “it would be tremendously beneficial for both American citizens and the government’s employees if ALL government employees paid a much more fair share of their incomes toward the costs of their extremely generous retirement benefits.”

Bipartisan Budget Agreement Doesn’t Make Partisan Bickering Look So Bad, by Ivan Eland (The Huffington Post, 12/18/12)

A Two-Year Budget Deal, by Craig Eyermann (MyGovCost, 12/11/13)

MyGovCost.org – Home of the Government Cost Calculator

No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland

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What to make of Pope Francis’s new economic manifesto, Evangnelli Gaudium, in which His Holiness claims that there’s no factual basis for believing that free markets bring about “greater justice and inclusiveness in the world”? Here are excerpts from responses by three Independent Institute scholars, beginning with Independent Institute Senior Fellow Benjamin W. Powell and his Texas Tech University colleague Darren Hudson: “In the freest of countries the poorest 10 percent of the population earns an average annual income of more than $10,000,” Powell writes in the Huffington Post. “Drop down to just the next quarter of countries (the 50 to 75th percentile) and the poorest 10 percent average only $3,800. In the least free countries they earn less than $1,000.”

Second, here’s Independent Institute Research Fellow Alberto Benegas-Lynch Jr: “The Pope’s reflections are surprising due to the inaccuracies they contain,” he writes. “First and foremost, it should be clarified that the world is very far from having competition and open markets but has to varying degrees adopted measures in which the Leviathan is ever fatter and ever more vehemently tramples the rights of people through multiple absurd regulations, colossal public debts and spending, unbearable taxes and increasingly aggressive government interventions, all of which are not mentioned by the Pope in his new paper.”

Third, here’s Independent Institute Senior Fellow John C. Goodman: “[Evangnelli Gaudium] is a mixed bag,” Goodman writes in Townhall. “It does contain some anti-capitalist rhetoric, using phrases familiar on the left. But it is also full of anti-statist, anti-collectivist exhortations. On balance the entire document looks like it was written by a committee whose members all have different views. For me, however, this is a disappointment—a step back from progress I thought had been made only a few years ago. I participated in a conference at the Vatican in 1996, at which a group of pro-free enterprise intellectuals were assembled to analyze the crisis of the family and the role of government in creating it.”

Pope Francis’s Erroneous Economic Pontifications, by Benjamin W. Powell and Darren Hudson (The Huffington Post, 12/20/13)

Once Again, Pope Francis, by Alberto Benegas-Lynch Jr. (12/23/13)

Papal Economics, by John C. Goodman (Townhall, 12/20/13)

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The Obama administration has increased federal oversight of corporate mergers and acquisitions in the name of promoting market competition. Antitrust activism is typically more show than substance, although when it does have a real effect on markets, the results often are to impede competitive forces rather than to liberate them. Last month, for example, the Justice Department permitted the merger of American Airlines and US Airways—on the condition that the two bankrupt carriers would divest themselves of one tenth of the landing slots they control at airports across the country. It was a symbolic gesture meant to assure frequent flyers (and political high-flyers) at New York’s La Guardia Airport and Washington’s Reagan National Airport that the Antitrust Division is making sure that the newly merged airline won’t stick them with higher fares—no matter how groundless such worries might be.

“Structural” antitrust remedies such as asset divestiture are relatively easy for the federal antitrust busybodies to monitor, even though the economic ills they are allegedly enacted to cure are hard to predict. They’re intrusive restrictions, to be sure, but not nearly as intrusive as so-called “behavioral” remedies, as Independent Institute Research Director William F. Shughart II and his Utah State University colleague Diana W. Thomas explain in the Washington Times. Examples of the latter include anti-retaliation requirements and firewalls to keep sensitive information from moving from one part of a corporate entity to another. Such restrictions may sound benign, but they tend to hamper competition and innovations by discouraging the entry of new firms and the expansion of established ones.

The White House’s top antitrust officer, Christine Varney, has justified her agency’s renewed activism by suggesting that the Great Recession was caused in part by the Bush administration’s lax antitrust enforcement. Shughart and Thomas are unconvinced. “It is now equally plausible to claim that the Obama administration’s activist, anti-market-friendly antitrust agenda helps explain in part the nation’s failure to return to the path of economic prosperity,” they conclude.

Antitrust Busybodies, by William F. Shughart II and Diana W. Thomas (The Washington Times, 12/19/13)

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

Antitrust and Monopoly: Anatomy of a Policy Failure, by Dominick T. Armentano

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The winter 2014 issue of The Independent Review is hot off the press! This edition of the Independent Institute’s 160-page scholarly journal includes a stimulating mix of timely topics and enduring themes, including a symposium on Nobel laureate economist James M. Buchanan and classical liberalism. Read it and gain a deeper understanding of the ideas and legacy of a hero of the liberty movement who pioneered the study of government failure, public choice, and constitutional economics. Other subjects in the winter issue include Iceland’s and Ireland’s recent banking crises, healthcare without government intervention, economics lessons from The Treasure of the Sierra Madre, worrisome trends in unemployment, and a tribute to the late Charles K. Rowley.

As always, The Independent Review includes insightful book reviews written by leading subject-matter experts. The new issue features reviews of the following books: John P. Tiemstra’s Stories Economists Tell: Studies in Christianity and Economics; Jonathan V. Last’s What to Expect When No One’s Expecting: America’s Coming Demographic Disaster; Samuel Gregg’s 
Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future; James T. Bennett’s They Play, You Pay: Why Taxpayers Build Ballparks, Stadiums, and Arenas for Billionaire Owners and Millionaire Players; and Benn Steil’s The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order. Read them all to better understand current trends and historical turning points.

Special Internet Offer: Subscribe to The Independent Review now—and select a free book. It’s never too late for great holiday gifts!

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From The Beacon:

From MyGovCost News & Blog:

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

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