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

Volume 9, Issue 19: May 7, 2007

  1. Time for Iraqi Self-Determination
  2. Return of the Latin American Idiot
  3. Privateers and Private Military Services
  4. The Challenge of Liberty Seminars for Students

1) Time for Iraqi Self-Determination

It’s unlikely that the surge of U.S. troops in Iraq will give the weak al-Maliki government enough time to meet the benchmarks established by the Bush Administration. Not only has the Iraqi government fired high-levels officials who wanted to go after radical Shi’ite militias, but a crucial draft agreement for oil revenue sharing by Shi’ites and Sunnis is languishing in the Iraqi parliament, reports Independent Institute Senior Fellow Ivan Eland in his latest op-ed.

Furthermore, the divisions in Iraqi society run so deeply that congressional Republicans and Democrats will increasingly blame Iraq, rather than failed U.S. policies in Iraq, for that country’s continuing civil strife, Eland predicts.

“The administration and congressional Democrats and Republicans have not yet admitted that any Iraqi government, short of another Saddam-like dictatorship, cannot maintain a unified Iraq,” Eland writes.

“It may be too late to save Iraq from a massive bloodbath, but the only hope remaining is to attempt to use a U.S. withdrawal to hammer out an agreement that would decentralize the Iraqi government, allow self-determination among the various groups, and create oil revenue sharing…. The Bush administration doesn’t have much time left to orchestrate a ‘withdrawal with decentralization’ because the main groups in Iraq are splintering and may not be able to guarantee that their sub-factions will observe any agreement that is reached. It is still worth an administration attempt, though. The alternative is full blown civil war with U.S. forces caught in the crossfire.”

“Time for Iraqi Self-Determination,” by Ivan Eland (5/7/07) Spanish Translation

The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland

“The Way Out of Iraq: Decentralizing the Iraqi Government,” by Ivan Eland

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2) Return of the Latin American Idiot

Decrying “foreign imperialism,” waving Marxist banners, and promising to liberate the masses from poverty, a new generation of self-styled revolutionaries has risen in Latin America. These left-wing populists work to replace one type of oligarchy with another—at the expense of greater freedom and opportunity of ordinary Latin Americans. And their efforts have been applauded by such intellectual elites of the developed world as Harold Pinter, Jose Saramago, Joseph Stiglitz, Noam Chomsky, James Petras, and Ignacio Ramonet, explains Independent Institute Senior Fellow Alvaro Vargas Llosa.

“This intellectual lapse would be quite innocuous if it didn’t have consequences,” writes Vargas Llosa in the May issue of Foreign Affairs. “But, to the extent that it legitimizes the type of government that is actually at the heart of Latin America’s political and economic underdevelopment, it constitutes a form of intellectual treason.”

In a radio interview in Colombia, for example, economist Joseph Stiglitz defended nationalization programs in Bolivia and Venezuela. “He seems unaware that, south of the Rio Grande, nationalizations are at the heart of the disastrous populist experiences of the past,” writes Vargas Llosa. “Stiglitz also ignores the fact that in Latin America, there is no real separation between the state’s institutions and the administration in charge, so government companies quickly become conduits for political patronage and corruption.”

Worse than overlooking the successful privatization of Venezuela’s leading telecom firm in the 1990s (the company has grown twenty-five percent in the past three years), Stiglitz and his ilk seem oblivious to the moral support that their misguided words give to rulers who are exerting an increasingly authoritarian grip on the ruled.

“The Return of the Idiot,” by Alvaro Vargas Llosa (Foreign Policy, May 2007) Spanish Translation

Be sure to check out Alvaro Vargas Llosa’s books:

The Che Guevara Myth and the Future of Liberty

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression

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3) Privateers and Private Military Services

In recent years, private contractors have played a growing role in supporting the armed services of many different countries. How might military outcomes differ if governments allow the private sector to play a leading, rather than supplementary, role in carrying out military operations? The history of privateering sheds light on this question. Privateers—private ships licensed to carry out warfare, often in exchange for the right to seize the cargo of enemy ships—were widely used in the late 18th and early 19th century because they were far less expensive and easier to mobilize than larger navies, explains Independent Institute Research Director Alexander Tabarrok in “The Rise, Fall, and Rise Again of Privateers,” the cover story of the spring 2007 issue of The Independent Review.

Privateering played a crucial role in the American Revolution, with approximately 700 private ships employed for the cause of independence, compared to about 100 ships in the U.S. Navy. And U.S.-employed privateers practically determined the outcome of the War of 1812, sinking up to 2,500 British ships and inflicting $40 million in damage (about $525 million in today’s dollars). By the end of the war, however, privateering came under assault.

“Both the British and U.S. government, for example, made it illegal to pay or to demand ransom,” Tabarrok writes. In March of 1813, the U.S. Congress drastically changed the incentives for privateers: the government would pay a privateer half the value of a British ship he had sunk, burned, or destroyed. This policy proved fatal: how could the government confirm that a privateer had sunk an enemy ship as claimed? By making it difficult to monitor a privateer’s performance, Congress had in effect lobbed a lethal cannonball at the program.

Here is one lesson to draw, according to Tabarrok: Like the use of private security contractors in today’s hotspots, privateering in the 19th century was an example of “contracting out”—not the full privatization of security—and thus operated in the context of incentives and constraints established by the government. And it was this institutional setting, and not necessarily any inherent limitations of the private sector per se, that ultimately prevented privateering from realizing its full potential.

“The Rise, Fall, and Rise Again of Privateers,” by Alexander Tabarrok (The Independent Review, Spring 2007)

Also see, “The Market for Force,” by Bruce L. Benson (The Independent Review, Winter 2007)

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If you like Alexander Tabarrok’s article on privateers, you’ll probably also enjoy these books:

Judge and Jury: American Tort Law on Trial, by Eric Helland and Alexander Tabarrok

Changing the Guard: Private Prisons and the Control of Crime, edited by Alexander Tabarrok

Entrepreneurial Economics: Bright Ideas from the Dismal Science, edited by Alexander Tabarrok

The Voluntary City: Choice, Community, and Civil Society, edited by David Beito, Peter Gordon, and Alexander Tabarrok

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4) The Challenge of Liberty Seminars for Students

Few students have the opportunity to learn the basic ethical and economic principles of open markets and free societies—principles essential not only for understanding an ideal social order, but also for understanding, appreciating, and preparing young people for the world they will soon enter.

To help high-school and college-age students better understand real-world issues they will encounter after they leave school, the Independent Institute sponsors annual student seminars on The Challenge of Liberty. Two sessions will be held June 18-22 and August 6-10 at the Independent Institute Conference Center in Oakland, Calif.

From the five-day series of lectures, readings, film and multimedia presentations, and small-group discussions, our students will learn what economics is, how it affects their lives, and how it can help them achieve better lives for themselves, their communities, and the world at large.

The Challenge of Liberty Summer Seminars (Session 1: June 18-22; Session 2: August 6-10)

About the book, The Challenge of Liberty: Classical Liberalism Today, ed. by Robert Higgs and Carl Close

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