Volume 9, Issue 35: August 27, 2007
- Moral Mess-Ups in the Subprime Mortgage Meltdown
- Carnage in Iraq
- Javits and Trade in Latin America
- Troop Withdrawal: Looking Beyond Iraq (Washington, D.C., 9/21/07)
1) Moral Mess-Ups in the Subprime Mortgage Meltdown
The latest turmoil in the world of financethe meltdown of many subprime mortgage lenders in the United Stateshas both outward and inward dimensions, according to Independent Institute Senior Fellow Alvaro Vargas Llosa. Regarding the former, the effects of the subprime bust reach far beyond U.S. borders. For example, the German government has rescued one large investor in subprime mortage-backed securities originating in the United States, and so the European Union may consider new restrictions on the types of investments its financial institutions may make.
Regarding the latter, the subprime mortgage collapse also signals a type of moral deficiency. And theres plenty of blame to go around, argues Vargas Llosa. Desperate homebuyers, for example, discarded the principle of living well within their means in favor of borrowing seemingly cheap loans. And this shortcoming was enabled by that of another party: the monetary policymakers who failed to consider that their easy money policies of the past several years would lead to unsustainable spending.
Considering the consequences suffered by many ordinary people, there is something immoral about having disregarded basic economic notions for quite some time, writes Vargas Llosa in his latest column. In recent years, many people forgot that in order to consume and invest, one needs to save. This elementary truth was lost as millions of people responded to perverse government-generated incentives by living beyond their means. What we are seeing today is nothing less than the inevitable price of behaving irresponsibly.
Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa
The Che Guevara Myth, by Alvaro Vargas Llosa
Center on Global Prosperity (Alvaro Vargas Llosa, Director)
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2) Carnage in Iraq
President Bush has recently warned that leaving Iraq would result in massive carnage, citing the supposedly premature withdrawal from Vietnam as an example of the chaos we should expect. According to Independent Institute Senior Fellow Robert Higgs, however, this outlook neglects the large-scale violence already taking place.
“No one knows precisely how many Iraqis have perished from violence since the U.S. forces unleashed shock and awe on them in March, 2003 as a prelude to ‘liberating’ them and shoving the blessings of ‘democracy’ down their throats,” Higgs writes in a new op-ed. “Estimates vary from several scores of thousands to several hundreds of thousands.” As for the Vietnam analogy, Higgs concedes, “we must expect that if the U.S. forces were to leave, more carnage would occur.” However, “[t]he United States. . . cannot prevent this distressing outcome. Indeed, its invasion and occupation have created conditions that make such an outcome virtually unavoidable.”
Moreover, the U.S. presence actually encourages bloodshed, Higgs argues, just as British control of Iraq incited violent resistance until Iraq was granted independence in 1932. “No one has a magic sword to slay the dragons of ethnic, tribal, religious, and ideological hatred and conflict that suffuse Iraqi society.” The very idea that “the U.S. armed forces could waltz into Iraq and establish a viable liberal democracy, initiating a cascade of similar political transformations across the Middle East, ranks among the greatest delusions of modern history.”
“The Carnage in IraqPast, Present, and Future ,” by Robert Higgs (8/27/07)
Neither Liberty Nor Safety, by Robert Higgs.
Resurgence of the Warfare State: Crisis Since 9/11, by Robert Higgs.
3) Javits and Trade in Latin America
As explained in last weeks Lighthouse, Latin American businesses are starting to invest very heavily overseasin part because of limited opportunities at home. Serendipitously, underdevelopment and overregulation can spur globalization. But a quicker path for promoting global prosperity is international economic liberalization, as the late New York Senator Jacob Javits long recognized.
Professor Salvador Rivera examines Sen. Javitss tireless efforts to promote trade within Latin America in the latest addition to the Independent Institute Working Papers Series. This aim, Rivera explains was not an ancillary whim [of Javitss], but the result of a lifes work.
Rivera describes Javits as an intellectual warriorand an unsung hero who did more to promote prosperity in Latin America than anyone in the White House. The struggle for which he fought was a much more complex form of engagement that did not involve bullets or bombs . Future historians will note that Javitss efforts and achievements served as a precursor to the continuing liberalization, economic interdependence, and globalization of the modern world.
Jacob K. Javits and Latin American Economic Integration, by Salvador Rivera (Independent Institute Working Paper #68)
4) Troop Withdrawal: Looking Beyond Iraq (Washington, D.C., 9/21/07)
Sooner or later the United States will begin withdrawing from Iraq. Will the result be a catastrophe for U.S. interests, or are such predictions overstated? Can we expect a wider regional war, a safe haven for al-Qaeda in Iraq, or a disruption to Americas oil supplies? What can the United States do to minimize the risks of withdrawal? Is diplomacy with Syria, Iran, and other nations the answer? Could Iraq benefit from political decentralization or even gerrymandering for the equitable distribution of oil resources?
With the new Independent Policy Reports, Do We Need to Go to War for Oil? and A Diplomatic Road to Damascus (forthcoming), this timely and far-reaching Independent Policy Forum will feature foreign policy experts Ivan Eland, Leon T. Hadar, and David R. Henderson.
Do We Need to Go to War for Oil?, by David R. Henderson
The Way Out of Iraq: Decentralizing the Iraqi Government, by Ivan Eland