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

Volume 10, Issue 11: March 17, 2008

  1. Latin America’s Natural Gas Disaster
  2. Five Years of “Homeland Security”
  3. An Arms Treaty Nears Orbit
  4. Essay Contest Winners to Speak at Private Enterprise Conference

1) Latin America’s Natural Gas Disaster

Populist and nationalist regulations on natural gas have created a crisis in Latin America. The problem began in 2002, when Argentina imposed price controls on natural gas, according to Alvaro Vargas Llosa, director of the Independent Institute’s Center on Global Prosperity. As a result of the price controls, foreign investment dried up and supply fell drastically short of demand, creating a shortage that prompted Argentina to cut its natural gas exports to Chile to one tenth of previous levels. Chileans, of course, feel shafted by their neighbor and official ally.

Meanwhile, Bolivian President Evo Morales nationalized his country’s natural gas industry. He later backtracked, but not before he scared away private investment. Consequently, Bolivia significantly curtailed its natural gas exports to Argentina—a move that has created tensions between the two left-wing governments. But wait, there’s more! Peru has plans to export liquefied natural gas to Mexico—but not to neighboring Chile, owing to resentments from the War of the Pacific in the 19th century. Venezuela has the largest natural gas reserves in Latin America, but that won’t really help solve the shortage. Venezuela has subsidized its oil industry at the expense of developing its natural gas. Under the leadership of Hugo Chavez, the country has exported lots of subsidized oil throughout Latin America and the Caribbean, but it won’t be able to sustain those levels, owing to government-induced inefficiencies and corruption.

“This absurd situation—a continent awash in natural gas and yet trapped in a chronic energy crisis—is the result of policies that promised to protect national treasures from predatory foreign capitalism,” writes Vargas Llosa in his latest syndicated column. “The region is poorer than it would have been if the political and institutional framework under which natural gas is exploited were conducive to competitive private investment and free domestic and international trade. And it is also less integrated and stable than it would have been if a market free from demagoguery had been allowed to blossom. Populism and nationalism have had the exact effect on Latin Americans that nationalizations, price controls and predatory taxation were supposed to avert.”

“A Natural Gas Disaster,” by Alvaro Vargas Llosa (3/12/08) Spanish Translation

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

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2) Five Years of “Homeland Security”

Five years after its birth, the Department of Homeland Security (DHS) is a disaster of bureaucratic excess, pork-barrel spending, managerial incompetence, and missed opportunities, according to Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty.

“The department’s growing pains have made it a slow learner and a downright ugly child,” Eland writes in his latest op-ed. “Born in an atmosphere of tension and fear, and cobbled together from pieces of other government departments and agencies, the prospects for this Frankenstein offspring were always dim.”

DHS has 208,000 employees, a $38 billion annual budget, and 86 congressional committees and subcommittees looking over its shoulder. What it doesn’t have is a coherently organized and smartly executed plan to enhance homeland security. Instead, it has a color-coded “terror alert” system useless for anything except domestic political consumption, the tragic failure of its Hurricane Katrina operations, worthless promises to complete a $22 billion electronic baggage inspection system in 16 years, and myriad other failures and disappointments. “Thus, at the age of five, DHS has all the bureaucratic sclerosis of an octogenarian and is on the road to juvenile delinquency,” concludes Eland.

“Happy Birthday, DHS!” by Ivan Eland (3/11/08)

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

Putting “Defense” Back into U.S. Defense Policy: Rethinking U.S. Security in the Post-Cold War World, by Ivan Eland

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3) An Arms Treaty Nears Orbit

When the U.S. government destroyed one of its own spy satellites last month, the maneuver may have been more about responding to a Chinese missile launched a year ago than about eliminating a defective piece of sophisticated surveillance equipment. On January 11, 2007, China shot down one of its own weather satellites—an act whose purpose the U.S. military and intelligence analysts would like to establish. Was China quietly sending a warning to the United States?

“More likely, the Chinese were telling us that if we don’t sit down at the negotiating table in Geneva, they will challenge us in space,” writes Mike Moore, author of the recent Independent Institute book, Twilight War: The Folly of U.S. Space Dominance, in a recent op-ed in the Washington Times. “China has no real interest in a Cold War-style military competition with the United States; it would distract them from their main business, the Wal-Marting of America. China wants a new space treaty—not a costly High Noon-in-space showdown.”

In the aftermath of these displays of anti-satellite weaponry, the United States should join China to lead a fight against the militarization of space, Moore argues. If ratified by the United States, the Prevention of an Arms Race in Outer Space Treaty, Moore concludes, “would be hugely difficult [to verify and enforce] but would be much more productive than a new-age arms race.”

“An Arms Race Treaty Nears Orbit,” by Mike Moore (Washington Times, 3/6/08)

“Commentary—The Independent Institute,” by Mike Moore (Washington Examiner, 2/27/08)

Twilight War: The Folly of U.S. Space Dominance, by Mike Moore

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4) Essay Contest Winners to Speak at Private Enterprise Conference

Winners of the 2007 Olive W. Garvey Fellowship Competition will discuss their prize-winning essays at the upcoming annual conference of the Association of Private Enterprise Education (APEE), to be held April 6-8 at Harrah’s Las Vegas Hotel and Casino.

The speakers at the Garvey Competition session, scheduled for Monday, April 7, include APEE Past-President Edward Stringham (San Jose State University), Mary Theroux (The Independent Institute), Jason Sorens (University at Buffalo), Art Carden (Rhodes College), and John Parker (University of Alabama). Sorens and Carden placed second ($5,000) and third ($1,500), respectively, in the 2007 Garvey Contest’s Faculty Division, and Parker placed first ($2,500) in the Student Division. The topic: “Is Foreign Aid the Solution to Global Poverty?”

Beginning this year, the 2008 Sir John M. Templeton Fellowships Essay Contest replaces the Garvey Fellowship Competition. This year’s topic is on property rights as human rights. Top Prizes: $10,000 (Faculty Division); $2,500 (Student Division). Deadline: May 1, 2008.  Click below for more details, including contest rules and eligibility requirements.

2008 Sir John M. Templeton Fellowships Essay Contest

Association of Private Enterprise Education

2007 Garvey Fellowship Winning Essays

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