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

Volume 16, Issue 16: April 22, 2014

  1. Corporate Welfare Painted Green
  2. Sinking the Jones Act Would Help Lift the Economy
  3. Climate Change Views Approach a Tipping Point
  4. Tax Freedom Day—Better Late than Never
  5. New Blog Posts
  6. Selected News Alerts


1) Corporate Welfare Painted Green

Silicon Valley electric car manufacturer Tesla Motors is both a victim and victimizer. It is a victim of laws enacted in Arizona, Maryland, New Jersey, Texas, and Virginia that prohibit automakers from selling directly to consumers. (New York and Ohio will soon join the list.) Tesla is also a victimizer—a corporate welfare queen whose business model relies on a $465 million federal loan, Chinese government-subsidized lithium-ion batteries, and a California government-created “marketplace” for clean-air credits. As Independent Institute Senior Fellow Benjamin W. Powell notes, both kinds of victimization—the prohibitions and the subsidies—harm the public.

The bans on manufacturer-to-consumer auto sales harm consumers by reducing competition for the benefit of auto dealers. The government subsidies harm the taxpayers who are forced to fund them. But what about the environmental benefits of zero-emissions vehicles? The notion that Tesla’s electric cars can curb carbon dioxide emissions overall is pure fantasy, according to Powell. It’s a case of looking only at one locale while ignoring the effects on activity elsewhere in the world.

“To the extent that more widespread use of electric cars in the United States lessens our demand for oil, it depresses the price of oil compared to what it would have been, and simply leads to greater oil consumption in other parts of the world,” Powell writes. Tesla is a technological innovator—and a crony capitalist. To determine whether it is truly a market innovator, it would have to forego government subsidies and succeed on a level playing field. “If the government left the auto industry alone, market prices would dictate which technologies should go into the production of automobiles and how those cars should be delivered to consumers,” Powell continues. “Some companies would win and some would lose, but all consumers would be better off.”

Affording Tesla the Freedom to Fail, by Benjamin W. Powell (The Washington Times, 4/14/14)

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2) Sinking the Jones Act Would Help Lift the Economy

You might not have heard of the Jones Act, but you feel the effects of the 1920 law when you gas up your automobile. You might also have felt it if you lived on the East Coast this past winter and had to wait for road salt to get shipped to your state. The law requires that only vessels built, registered, and crewed by Americans ship cargo between ports in the United States. Not only does the law drive up energy prices, it also creates economic dislocations by slowing down the transport of goods across the country and hampering the ability of markets to correct undesirable fuel shortages and surpluses. As Independent Institute Senior Fellow William F. Shughart II explains in a recent op-ed, the Jones Act is currently hindering markets from shipping excess sweet crude from the Gulf Coast to refineries in the mid-Atlantic region. There’s simply not enough domestic tanker capacity to handle the supply.

The United States has been witnessing a boom in energy production, thanks in part to hydraulic fracturing technology and the development of shale deposits. Repealing the Jones Act—a law created to (unfairly) serve a domestic shipping industry that looks nothing like it did more than 90 years ago—would help Americans to enjoy the benefits of today’s energy boom, Shughart argues. Granting occasional waivers of the Jones Act, as Barack Obama did in the aftermath of Hurricane Sandy, will not suffice. The law should be completely gutted so that foreign vessels can help American energy suppliers and consumers immediately.

“Leaving the Jones Act in full force condemns millions of Americans on the East and West Coasts to needlessly inflated energy prices, and also weakens us internationally,” Shughart writes. “Rather than keep this bad law afloat, our leaders should scuttle this costly relic of the past.”

Antiquated Law Adds Billions to Fuel Costs, by William F. Shughart II (New York Post, 4/14/14)

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

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3) Climate Change Views Approach a Tipping Point

The U.S. Supreme Court will decide later this year whether or not the Environmental Protection Agency can use the risk of global warming as the basis for curtailing coal-generated electricity. According to Independent Institute Research Fellow S. Fred Singer, the Court could bring about a paradigm shift away from climate alarmism—if it cites the growing number of studies that challenge the conclusions of the Intergovernmental Panel on Climate Change (IPCC).

Those studies, collected and republished by the Non-governmental International Panel on Climate Change (NIPCC), look closely at the biological and societal impacts of climate change as well as the physical science that informs—or should inform—the public-policy debate. The NIPCC finds that the human contribution to global climate change is very small and practically indistinguishable from natural variability; that modest temperature rises have been and will continue to have positive effects overall on flora, fauna, and human welfare; that the cost of mitigation through emissions reductions would far exceed any benefits; and that the many laws and regulations already adopted to combat global warming now merit re-evaluation, modification, or repeal.

The Supreme Court decision could reverse momentum for more greenhouse gas restrictions. But if the Court sides with coal regulators, the odds will increase for a treaty to come out of next year’s Paris conference on climate change. The adoption and enforcement of such a treaty would hardly be a sure thing, however. “So far, only Western Europe seems to be keen on ratifying [a greenhouse-gas treaty]—and even there, doubts are developing,” Singer writes. “Eastern Europe is definitely against any new Protocol, as are Japan, Australia, and Canada.”

The Coming Paradigm Shift on Climate, by S. Fred Singer (American Thinker, 3/27/14)

Hot Talk, Cold Science: Global Warming’s Unfinished Debate, by S. Fred Singer

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4) Tax Freedom Day—Better Late than Never

Tax Freedom Day, the date by which the average U.S. taxpayer has earned enough to cover his or her federal tax liability, came April 21 this year. That’s three days later than in 2013, according to the Tax Foundation. Are you getting your money’s worth? And what can you expect to pay the taxman during the course of your life? Find out by downloading the MyGovCost free mobile app.

Not only is Tax Freedom Day later than last year, the tax code is getting longer. Wolters Kluwer, publisher of the CCH Standard Tax Reporter, determined that the federal tax code in 2013 was—brace yourself!—73,954 pages long, up from 73,608 pages in 2012. Federal spending has also gone up in recent years.

“From 2009 through 2013, federal spending has increased at an average annual rate of 3.0 percent per year, while the total national debt has risen at an average annual rate of 10.8 percent per year,” writes Independent Institute Research Fellow Craig Eyermann, creator of the Government Cost Calculator at MyGovCost.org. And while we’re writing about numbers, here are three others that Eyermann suggests you try to wrap your head around—10, 20, and 205. Here’s what they mean. 10: Over the past 10 years, the federal government’s total public debt outstanding has risen by $10 trillion. 20: Social Security’s Old Age and Survivor’s Insurance Trust Fund is on track to be depleted in 20 years. 205: The national debt is $17.5 trillion, but the fiscal gap—the difference between projected revenues and projected spending—is $205 trillion—about 10 percent of GDP every year as far as the eye can see!

MyGovCost Mobile App

MyGovCost Online Government Cost Calculator

Sizing Up the Tax Code, by Craig Eyermann (MyGovCost News & Blog, 4/19/14)

Ten, Twenty, Two Hundred Five, by Craig Eyermann (MyGovCost News & Blog, 4/14/14)

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5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

Are Members of Congress Underpaid?
K. Lloyd Billingsley (4/21/14)

Sizing Up the Tax Code
Craig Eyermann (4/19/14)

Bombs and Budgets
K. Lloyd Billingsley (4/18/14)

Government Generational Money Grab
K. Lloyd Billingsley (4/16/14)

Trapped by the State
Carl Close (4/15/14)

Ten, Twenty, Two Hundred Five
Craig Eyermann (4/14/14)

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

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6) Selected News Alerts

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