The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 8: February 24, 2015

1. A Healthy Alternative to Federally Mandated Paid Sick Time
2. A Quiet Response to Real Terrorist Threats Is Best
3. Oil Prices and Wall Street ‘Greed’
4. Google Should Resist Pressure to Change Waze App
5. New Blog Posts
6. Selected News Alerts

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Should employers be required to give their workers seven days of paid sick leave per year? President Obama has proposed just such a mandate, but Independent Institute Senior Fellow John C. Goodman offers an alternative that would truly help workers but without imposing costly, counterproductive burdens on their employers. His idea? Liberate health savings accounts so they can accommodate sick leave.

Here’s how it would work: Employers would be allowed to deposit seven days of untaxed wages in a worker’s health savings account (HSA), in addition to normal contributions. When the worker takes off work due to illness, she may lose her normal pay but may withdraw from her HSA an amount equal to her lost wages. Those deductions would be taxed as regular income. Any amount that she keeps in her HSA would grow tax-free. One feature of this proposal, which employers should like, is that it gives workers an incentive not to take sick leave when they’re not really sick. Another advantage, which workers should like, is that it solves the problem of their losing any unused sick time they have accrued over the course of the year. In addition, Goodman’s proposal would be completely voluntary.

“If workers bear the full cost of any mandated benefits,” Goodman writes, “is there any public policy reason for government to get involved? None that I can think of. Presumably workers and their employers are perfectly capable of arriving at mutually agreeable allocation of their compensation between taxable wages and other benefits. In fact, if the overall cost of labor is the same, employers have an incentive to give employees precisely the fringe benefits they prefer.”

Should Paid Sick Leave Be Mandatory? Why Not Liberate Health Savings Accounts Instead?, by John C. Goodman (Forbes, 2/6/15)

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

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

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The Somali militant group al Shabab is calling on Muslims to attack the Mall of America in Bloomington, Minnesota. How should the U.S. government respond? Although the urge to retaliate with airstrikes against suspected militant assets is strong, Independent Institute Senior Fellow Ivan Eland argues that the American people would be better off with a less warlike approach. Yes, arrest and prosecute guilty parties. But doing much more beyond that would give al Shabab the publicity it needs to recruit more followers.

A sensible approach to counterterrorism, according to Eland, requires that we draw a distinction between groups that target the United States (such as al Qaeda) and those that have more limited, regional aspirations (such as al Shabab and ISIS). It also requires that we focus on the first group by quietly using law enforcement and occasional clandestine actions rather than all-in military strikes that leave a big footprint, harm innocent civilians, and help militants win sympathies from the locals.

Writes Eland: “Ironically, this smarter, limited, and more effective strategy against terrorists is not followed much by American politicians, such as Obama and the younger Bush, because they, as do the terrorist groups, also crave publicity.”

The U.S. Government Is Making the Problem of Islamist Extremism Worse, by Ivan Eland (The Huffington Post, 2/23/15)

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

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Oil prices have fallen by more than half since last summer, as anyone who has filled up their car at the gas station might have guessed. The reason is simple: supply and demand. Spurred in part by growing demand from India and China, energy companies have been hard at work to increase supply—and they’ve succeeded beyond expectations. Thus, the world’s proven oil reserves have increased dramatically over the past few years, and our ability to bring that energy to market—and at a cheap price—finally caught up. “Today’s oil price reflects only the operating costs of existing wells,” Independent Institute Senior Fellow Benjamin Powell writes in the Washington Examiner.

Changes in supply and demand are the fundamental causes of price changes, but a surprising number of pundits and politicians don’t see it that way. Vermont Senator Bernie Sanders is a prime example. In 2012, he blamed high gas prices on “Wall Street greed.” But as Powell notes, by the same logic, Sanders must think that today’s low prices stem from some new benevolence on the part of financiers and oil executives. Yet, no one who thinks clearly could ever entertain such a thought, because the level of “greed” present in markets (that is, a focus on one’s material self-interest) is virtually unchanging.

If we can educate people about the true causes of price changes, then there’s hope that we can correct their misconceptions about speculation and arbitrage. “Speculation actually helps to moderate price swings,” Powell continues. “Speculators buy oil when they expect its price to be higher in the future and they sell oil when they expect prices to fall. When their forecasts are correct, this makes more oil available when it is most expensive and takes oil off the market when it is less expensive, limiting wild price swings.”

Wall Street Altruism Fueling Low Gas Prices?, by Benjamin Powell (The Washington Examiner, 2/14/15)

Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development, edited Benjamin Powell

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Entrepreneurs who joined with President Obama and his entourage at Stanford University recently for the White House Cyber Summit should resist calls from law enforcement to restrict mobile apps that enable ordinary people to locate police. Such technology provides tangible benefits for society, and prohibiting it would constitute an unjust infringement on free speech. That’s the basic message of a recent Beacon post by Independent Institute Senior Fellow Lawrence J. McQuillan that the California Political Report picked up last week.

Last December, in the wake of the assassination of two New York City police officers, Los Angeles police chief Charlie Beck wrote to Google co-founder Larry Page, and complained about the current configuration of the Waze traffic app (which the search-engine giant acquired in 2013). Beck told Page that the app’s police-location function made it easier for criminals to cause mischief. But McQuillan quotes one police officer who says that the Waze app could lead to improvements in public safety, such as by increasing compliance with traffic laws, and quotes another who says that the Waze app would be an inferior location device for any malcontents who wish to know the whereabouts of police. (The assassin of the NYPD officers did not use Waze when he killed them.)

“Larry Page should talk with Beck, and politely decline his request to alter the app,” McQuillan writes. “Google should also fight any future legislation that tries to impose Beck’s vision. Citizens have a right to communicate with each other about where they see law enforcement in public and what officers are doing. This right must be protected and defended vigorously.”

LAPD Targets Citizens’ Free Speech Rights, by Lawrence J. McQuillan (The Beacon, 2/13/15)

The Militarization of U.S. Domestic Policing, by Abigail R. Hall and Christopher J. Coyne (The Independent Review, Spring 2013)

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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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