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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 3: January 20, 2015

  1. Public Schools and the Per-Pupil-Spending Myth
  2. The Case against ‘Heliocentric’ Health Insurance
  3. Martin Luther King and the Inclusive Society
  4. Peter Thiel on Entrepreneurship, Liberty, and the Future (San Francisco, 1/27/15)
  5. Europe’s Next Economic Crisis?
  6. New Blog Posts
  7. Selected News Alerts



1) Public Schools and the Per-Pupil-Spending Myth

With the release of Education Week’s latest annual study of K-12 school funding earlier this month, public-school bureaucrats across the United States have kicked into high gear, striving to outdo each other in the “our-students-get-fewer-dollars-than-yours” public-relations contest. It’s quite a spectacle.

As Independent Institute Research Fellow Vicki E. Alger notes in the Wall Street Journal, numerous state agencies and their supporters (including the UCLA Undergraduate Students Association, the National Education Association, Wallet Hub, Missouri Public School Advocates, and the Open Sky Policy Institute) are claiming that when it comes to per-pupil spending, their state is 49th lowest in the nation. Not all of them are necessarily lying in the hope of procuring more tax dollars—after all, there are so many different ways to torture the spending data to get them to “confess.” But even when performed honestly, rankings of educational spending are beside the point.

The truth is that higher per-pupil spending does not guarantee that a state will enjoy exceptional academic achievement. “For the approximately $7,000 a year Illinois spent on instruction, its low-income eighth-graders did no better than the national averages in reading and math,” Alger writes. “States that spent less per pupil tended to have better educational outcomes.” Moreover, students in states with comparatively strong parental-choice programs, such as Arizona and Oklahoma, tended to score higher on standardized tests. The reason shouldn’t be surprising, Alger explains: “Schools have to compete for students, which forces them to improve their performance.”

Education’s No Dollar Left Behind Competition, by Vicki E. Alger (The Wall Street Journal, 1/11/15)

School Choices: True and False, by John D. Merrifield

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2) The Case against ‘Heliocentric’ Health Insurance

The new U.S. Congress—and the American public—will be hearing numerous ideas for improving the healthcare system, including several spelled out in publications such as Independent Institute Senior Fellow John C. Goodman’s Priceless: Curing the Healthcare Crisis and Healthcare Solutions for Post-Obamacare America. But one of the most badly needed reforms may be so obvious that, paradoxically, we usually overlook it. That reform, according to Independent Institute Senior Fellow John R. Graham, is for the United States “to move beyond the ‘Heliocentric Doctrine’ of health insurance, whereby patients and insures switch dance partners every January 1.”

“This nonsensical Heliocentric Doctrine is enshrined in employer-based plans, Obamacare exchange plans, and Medicare plans,” Graham writes in the Daily Caller. Not only is the practice of tying most insurance plans to the calendar year completely arbitrary, but it can lead to costly absurdities. Graham makes this point with a hypothetical example of two brothers—identical twins—both diagnosed with a genetically caused cancer in the second half of last year. Their medical histories are exactly alike in every relevant way except one: one of them incurred medical expenses stemming from a skiing accident in the first half of the year, leading him to reach his out-of-pocket limits earlier than the other. This difference can result in the brothers paying wildly different costs for their cancer treatments. But it doesn’t have to be this way—not if we drop the Heliocentric Doctrine of health insurance.

“In other countries where private health insurance dominates, with Switzerland being the prime example, no one tolerates this absurdity,” Graham continues. “Instead, patients and insurers have contracts that last multiple year, and each are rewarded for good behavior during the long term. This type of health insurance is especially effective for very sick people with lots of illnesses, who would no longer have to worry about losing their doctors because of having to choose a new plan every year.”

A New Year’s Resolution: Moving Beyond the Heliocentric Doctrine of Health Insurance, by John R. Graham (The Daily Caller, 1/2/15)

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

Healthcare Solutions for Post-Obamacare America, by John C. Goodman

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3) Martin Luther King and the Inclusive Society

Dr. Martin Luther King, Jr., played a pivotal role in making the United States a more just and inclusive society. Yet ironically, many who claim to follow in his footsteps actually walk a different path, focusing not on advancing civil rights for all but on championing a narrower cause. Case in point: The state advisory panels that help set the federal civil rights agenda can display an elitist mindset, refusing even to consider alternative viewpoints on civil rights controversies. This thesis comes to us from historian and Independent Institute Research Fellow Jonathan Bean, editor of Race and Liberty in America: The Essential Reader. Judging by his time on the Illinois State Advisory Committee to the U.S. Civil Rights Commission, Bean says, “a spirit of inclusiveness may be the exception, not the rule.”

A good indicator for how open a group is to hearing a different perspective is whether or not its leaders understand the steps for acknowledging ideas that challenge their own, Bean suggests. Yet not only was Bean’s committee chair unaware of the procedures for properly dealing with Bean’s first dissent from a committee report, but the chair couldn’t even recall a committee member ever having dissented before! (Incidentally, Bean’s dissent included taking the committee to task for refusing to acknowledge that union opposition to Walmart helped perpetuate “food deserts” in Chicago.)

Another indicator is whether or not a group seeks out a range of opinions on contested topics and considers the strongest arguments for alternative viewpoints. Again, the example of the Illinois State Advisory Committee is instructive. Last month it issued a report on immigration reform that criticized Senate Bill 744, a bill that would have admitted fewer immigrants under the family reunification provision but would have admitted more immigrants with work skills highly valued by employers. Not a single witness at the committee’s hearings articulated the key arguments in favor of the bill, even though during the 2012 presidential race both Barack Obama and Mitt Romney had put forward economic competitiveness as a rationale for taking in more high-skilled immigrants. The committee’s indifference to the range of public opinion on this issue and others is a sad commentary on today’s official civil rights community. “King’s dream of a more just society is poorly served by ignoring viewpoints that disagree with our own,” Bean writes.

Civil Rights Are Too Important to Leave to Special-Interest Advocates, by Jonathan Bean (The Daily Caller, 1/16/15)

Race and Liberty in America: The Essential Reader, edited by Jonathan Bean

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4) Peter Thiel on Entrepreneurship, Liberty, and the Future (San Francisco, 1/27/15)

Legendary entrepreneur and investor Peter Thiel gets frequent coverage in the news media (see here, here, here, here, here, and here), and his #1 New York Times bestselling book, Zero to One has been extensively and favorably reviewed (see, for example, The Atlantic, Wall Street Journal, Forbes, San Francisco Chronicle, Fortune, and The Economist).

In his new book, Peter Thiel presents his often contrarian ideas about competition, progress, technology, and finding value in unexpected places—to build a future that we have yet to dream, but which may someday become reality. In our January 27th luncheon in San Francisco, “Developing the Developed World,” he will bring these ideas to life, offering insights on how to create true innovations in “the world of atoms”—not just “digits and bits”—and how to foster a peaceful, prosperous, and freer future marked by globalization in a world of limited resources.

This presentation and luncheon will be held at the Olympic Club’s City Clubhouse, 524 Post Street, San Francisco.

Date: Tuesday, January 27

Time: 11:30 a.m. (Registration)
Noon – 2:00 p.m. (Luncheon)

Where: The Olympic Club
524 Post Street
San Francisco, CA 94102

Tickets: Regular Seating: $125 ($100 for Institute Members)
Preferred Seating: $150
Tables of 10 Starting at $1,250
Attire: Business Casual

Book: Peter Thiel’s Zero to One: Notes on Startups, Or How to Build the Future (Pre-order at $20 per copy: 25% Discount)

Event page

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5) Europe’s Next Economic Crisis?

The euro is at a nine-year low against the dollar, but Europeans can’t pin the problem on crazed terrorists, unassimilated immigrants, or Vladimir Putin. Instead, they have each other to blame—especially leaders who have spent far beyond their countries’ means. Unfortunately, more bad decisions will be made if Mario Draghi, the president of the European Central Bank, has his way.

Rather than focus on getting Greece, Spain, Portugal, Italy, and Ireland to stick to a sensible spending plan, Draghi advocates that Europe try to inflate its problems away, according to Independent Institute Senior Fellow Ivan Eland. One problem: such approaches don’t work, not over the long term. Another problem: rising prices due to quantitative easing create additional problems for the economy, by distorting price signals and misallocating scarce capital. Rapidly rising prices and unsustainable asset bubbles can result, leading ultimately to another recession.

“A better course of action is to delay gratification, continue belt-tightening austerity, and lay the groundwork for long-term legitimate economic growth,” Eland writes in the Huffington Post. “Unfortunately, this is unlikely to happen, because governments in Europe and America are so accustomed to intervening in economies to alleviate short-term pain. It’s too easy to just turn on the printing presses.”

Is Another Euro Crisis at Hand?, by Ivan Eland (The Huffington Post, 1/5/15)

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty (Updated Edition), by Ivan Eland

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6) New Blog Posts

From The Beacon:

The State of the Disunion
Mary Theroux (1/19/15)

The Moral Argument Governor Brown’s Inaugural Speech Left Out
Lawrence J. McQuillan (1/14/15)

Individual Liberties and the Right to Die
Abigail Hall (1/14/15)

No Jobs Bump from Obamacare
John R. Graham (1/13/15)

From MyGovCost News & Blog:

California’s Bloated Judicial Bureaucracy
K. Lloyd Billingsley (1/19/15)

Tax Hikes to Fund Bureaucrat Pensions
Craig Eyermann (1/18/15)

The Widespread Misery Inherent in the System
K. Lloyd Billingsley (1/16/15)

Bullet Train Boondoggle Breaks Ground
K. Lloyd Billingsley (1/14/15)

No-Brainers for Cutting Federal Spending
Craig Eyermann (1/13/15)

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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  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org