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

Volume 16, Issue 10: March 11, 2014

  1. The Worst Barriers to Upward Mobility? Bad Laws
  2. Two Ominous Health Policy Trends
  3. A Bridge Too Late—and That’s Not the Worst of It
  4. The White House in East Asia
  5. Challenge of Liberty Student Seminars—Sign Up Now!
  6. New Blog Posts
  7. Selected News Alerts


1) The Worst Barriers to Upward Mobility? Bad Laws

In a speech he gave last December in the impoverished Anacostia district of Washington, DC, President Obama clouded the issue of income mobility and offered false solutions to the real problems that low-income Americans face. He stated that the country has recently suffered from “diminished levels of upward mobility.” In fact, a comprehensive study published in January by the National Bureau of Economic Research found that overall income mobility has changed little since the federal government declared a war on poverty 50 years ago. Of course, this doesn’t mean that barriers to economic advancement are non-existent. Not only do such barriers exist, but also they are often the results of poorly conceived public policies. If we are to increase upward mobility, we must pay closer attention to how these policies shape the geography and demography of poverty.

Income mobility has changed little at the national level, but some neighborhoods and regions display far less mobility than others. According to Independent Institute Senior Fellow Benjamin Powell three public policies have been especially pernicious in thwarting upward mobility in these communities: (1) minimum wage laws, which prevent many low-skilled youth from getting a foot on the first rung of the job ladder; (2) poorly performing public schools, where academic achievement is low and dropout rates are high; and (3) the war on drugs, which has diverted many youth into the criminal justice system and further away from gainful employment. Powell notes that each of these policies has disproportionately harmed the economic prospects of African-American communities.

“Barriers to mobility remain,” Powell writes in the Huffington Post. “But those barriers are more a product of government interference in our lives than an inherent feature of a market economy.” Sadly, President Obama’s support for a hike in the federal minimum wage and his opposition to competition among the nation’s K-12 schools reinforce the obstacles to upward mobility.

Government Policies Harm Income Mobility, by Benjamin W. Powell (The Huffington Post, 3/4/14)

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2) Two Ominous Health Policy Trends

Independent Institute Senior Fellow John C. Goodman always has interesting insights about developments in healthcare policy. This week we look at two op-eds he’s written recently. The first focuses on the health risks of the “cookbook” approach to medical treatment that the federal government and its health insurance proxies increasingly favor. The second is on a federal agency’s plan to regulate into extinction one of the most popular parts of Medicare Part D.

Regarding the first topic, Goodman notes that he is not completely opposed to the use of algorithms in medicine. In fact, he lauds MinuteClinics for their superb use of computer protocols to treat walk-in patients. But “cookbook medicine” has serious limitations, particularly if this approach is pushed on doctors by impersonal bureaucracies that create perverse incentives. And “that is exactly what is happening in American medicine,” Goodman laments.

Regarding Medicare Part D, Goodman warns that the federal Center for Medicare and Medicaid Services “has proposed new regulations that would eliminate the most popular [prescription drug] plans: ones that offer seniors lower premiums (and lower cost sharing) in return for patronizing a preferred pharmacy network. “The actuarial firm Milliman contends that this proposed regulatory change will actually cost the Medicare program nearly $1 billion per year, adding more than $9 billion to the cost of the program over the next decade,” Goodman writes. Nearly 60 percent of Medicare Part D plans, covering 14 million seniors nationwide, feature preferred pharmacy networks. “Seniors—and taxpayers—will pay higher prices for their medications if they lose this option.”

Popular Medicare Drug Plans Are Under Assault, by John C. Goodman (Forbes, 2/25/14)

Worse Than Death Panels: Cookbook Medicine, by John C. Goodman (Townhall, 2/22/14)

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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3) A Bridge Too Late—and That’s Not the Worst of It

Did an eagerness to avoid another delay in the opening of a new span for one of the most heavily traveled bridges in the United States compromise public safety? A recent hearing about the San Francisco–Oakland Bay Bridge raised this question and others, as reported in an op-ed by Independent Institute Policy Fellow and Communications Counsel K. Lloyd Billingsley.

The hearing, held January 4 in Sacramento by state senator Mark DeSaulnier, allowed several experts to air their concerns about bridge safety. A metallurgical engineer explained that long metal rods on the new span snapped because they used an inferior grade of steel that is prone to “hydrogen embrittlement.” An engineer for Caltrans, the state transportation agency, testified that bridge panels that suffered from cracked welds had been outsourced to China even though the Chinese prefer to have their own panels welded in England. A Caltrans geologist called for a criminal investigation. The director of a different agency admitted that bridge managers had “traded time for money” but insisted that quality was never sacrificed. Any problems with safety concerns and cost overruns—the new span is $5 billion over budget—were likely made possible or worsened by lack of transparency. “Caltrans audits itself,” DeSaulnier said.

DeSaulnier complained that the Bay Bridge’s costly problems have made taxpayers reluctant to fund other infrastructure projects. “He gave no examples, but the prime candidate is surely the state’s high-speed rail project,” Billingsley writes. “According to its supporters, the ‘bullet train’ will solve transportation woes, aid the environment, and boost the state economically, all for only $68 billion. If any California taxpayer believes that, as the saying goes, Caltrans has a bridge to sell you.”

Bay Bridge Safety Concerns Remain as Geologist Calls for ‘Criminal Investigation,’” by K. Lloyd Billingsley (Oakland Tribune, 3/1/14)

Street Smart: Competition, Entrepreneurship, and the Future of Roads, edited by Gabriel Roth

MyGovCost.org – Home of the Government Cost Calculator

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4) The White House in East Asia

The foreign-policy establishment talks about America’s “pivot toward Asia.” Independent Institute Senior Fellow Ivan Eland and Research Fellow Angelo M. Codevilla identify several problems with the White House’s security stance toward East Asia.

In a recent piece for the Huffington Post, Eland argues that punitive economic sanctions against North Korea—a nuclear power—may prove to be extremely counterproductive: “The decrepit communist economy of North Korea has little that the world wants to buy; trying to snuff out any limited exports with general economic sanctions merely makes it more likely that the North Koreans will try to peddle its nuclear bomb technology around the world to earn scarce foreign currency.”

Codevilla argues that as China’s naval power grows in the Western Pacific, the U.S. military presence in East Asia may have a provocative effect: “Keeping it there without the military capacity or the political intention to maintain the Pax Americana would only get us into the middle of a war for stakes largely not our own and whose initial stages we would likely lose,” he writes.

There Will Be Blood, Our Own, by Angelo M. Codevilla (Library of Law and Liberty, 3/3/14)

North Korea Abuses Human Rights: Tell Us Something We Don’t Already Know, by Ivan Eland (The Huffington Post, 2/24/14)

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

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5) Challenge of Liberty Student Seminars—Sign Up Now!

Attention, students: Seating is filling up quickly for the Independent Institute’s Challenge of Liberty Student Seminars. This year we are delighted to offer three seminars—one for high-school students (at our headquarters in Oakland, Calf.) and two for college students (on college campuses in Berkeley, Calif., and Denver, Colo.).

Learn about economics, history, and political thought with like-minded students. These events are intellectually stimulating, academically rewarding, and socially a lot of fun!

College: June 16–20 (Denver, CO)
College: July 7–11 (Berkeley, CA)
High School: July 14–18 (Oakland, CA

For more, see our information about curriculum, faculty, speakers, enrollment, and videos.

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6) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

Why Obamacare Is Unaffordable
K. Lloyd Billingsley (3/10/14)

Blowing the Budget in the Wind
Craig Eyermann (3/8/14)

The Surge in Ruling-Class Verbal Abuse
K. Lloyd Billingsley (3/5/14)

President Obama’s New Budget: It’s Big and It’s Bad
Craig Eyermann (3/4/14)

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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