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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 16: April 21, 2015

  1. The True Costs—and Beneficiaries—of Green Energy
  2. Gender Pay Gap: Untangling the Truth
  3. How the FDA Could Save Thousands of Lives
  4. No American Interests Served by U.S. Intervention in Yemen
  5. New Blog Posts
  6. Selected News Alerts


1) The True Costs—and Beneficiaries—of Green Energy

Earth Day is celebrated once a year, but policymakers make lasting choices about natural resources day in and day out. Legislation dealing with some aspect of fossil fuels or clean energy, for example, comes up frequently in state houses and the halls of Congress. Wind power has been the leading beneficiary of the alternative-energy zeitgeist, but as Independent Institute Research Fellow Randy T. Simmons explains in a recent piece in Newsweek, subsidies for this technology have cost taxpayers far more than they realize--$30 billion over the past 35 years.

One reason, according to Simmons, is that the public overlooks key costs associated with wind power. The venerable financial advisory firm Lazard estimates that wind power costs $37 to $81 per megawatt hour, but after factoring in hidden costs, such as the need to run coal or natural gas plants when the skies are still (i.e., “baseload cycling”), the true cost of wind power is more like $149 per megawatt hour. Moreover, electricity consumers typically have little say in energy policy. Consequently, state-level mandates for renewable energy usage ensure that they are forced to buy more expensive but ostensibly “clean and green” power such as wind energy. If not consumers, who benefits? Foreign-owned wind companies, who in 2010 were awarded 84 percent of U.S. clean-energy grants.

Ethanol is another product that has benefited from government mandates. As Independent Institute Research Fellow Randall Holcombe explains, the requirement that gasoline refineries add ethanol to their fuel products has doubled the price of corn, resulting in a transfer of $32 billion from consumers to farmers in 2011 alone. That amounts to an average benefit of $79,875 per U.S. corn farmer. Holcombe writes: “This is a good example of how legislation providing concentrated benefits to an interest group and imposing disbursed costs on everybody can maintain political supports.”

What’s the True Cost of Wind Power?, by Randy T. Simmons (Newsweek, 4/13/2015)

The Costs and Benefits of Ethanol, by Randall Holcombe (The Beacon, 3/18/15)

Beyond Politics: The Roots of Government Failure, by Randy T. Simmons

Aquanomics: Water Markets and the Environment, edited by B. Delworth Gardner and Randy T. Simmons

The New Holy Wars: Economic Religion vs. Environmental Religion in Contemporary America, by Robert H. Nelson

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2) Gender Pay Gap: Untangling the Truth

Last Tuesday, April 14, marked Equal Pay Day, an occasion created to help publicize the so-called gender gap in the American paycheck. News reports frequently claim that women in the United States earn 77 cents for every dollar that men earn, and the group behind last week’s event, the National Committee for Pay Equity, argues that gender discrimination directly accounts for a significant portion of that difference, perhaps 20 percent. Two Independent Institute scholars take issue with this idea.

Research Fellow Abigail R. Hall, who until recently had been job hunting in academia, notes that women and men often choose college majors and careers paths that are measurably different in their expected incomes. Moreover, women are more likely than men to work part-time jobs. (That said, Hall writes, “women actually tend to earn more than men with the same part-time jobs.”) The idea that a significant portion of the male-female earnings gap results from gender discrimination within the same job category (i.e., “unequal pay for equal work”) would mean that employers would be “overpaying” their male workers if they could replace them with less expensive female workers.

“If men and women were truly providing ‘equal work,’ but women were systematically paid less than their male counterparts, entrepreneurial business leaders could make a killing hiring women,” Hall writes. “The fact that we don’t observe this is yet another indication that the statistic is seriously flawed.” Senior Fellow Robert Higgs agrees. “If employers truly discriminate between equally value-productive male and female employees,” he writes, “they do so only in cases that are few and transitory, because the systematic, persistent conduct of such discrimination is inconsistent with everything we know about how people make decisions in labor markets and about what we presume business owners in general are trying to do, namely, make profits.”

The Gender Wage Gap—A Myth that Just Won’t Die, by Abigail Hall (The Beacon, 4/7/15)

Employers Do Not Systematically and Persistently Pay Women Less than Men for Equally Valuable Work, by Robert Higgs (The Beacon, 4/14/15)

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3) How the FDA Could Save Thousands of Lives

About 30,000 Americans suffer from amyotrophic lateral sclerosis (ALS)—a.k.a. Lou Gehrig’s disease—a horrible ailment that causes patients to gradually lose control of their muscles. Currently, there is no known cure for ALS, and the only drug approved for helping the afflicted adds at most just a few months to their lives. That’s why it’s vital that the U.S. Food and Drug Administration (FDA) accelerate the approval of a new drug that offers hope for ALS patients—GM6, developed by Pasadena-based Genervon Biopharmaceuticals.

More than 500,000 people have signed an online petition urging the FDA to approve the drug—thanks in part to the Ice Bucket Challenge, the campaign that went viral on YouTube last summer—so it’s conceivable that agency officials will soon override their overly cautious tendencies and issue an approval. But life and health shouldn’t have to come down to a publicity campaign. “In a free society, of course, dying patients shouldn’t have to petition bureaucrats for permission to take promising new drugs, so long as they understand there are risks involved,” Independent Institute Senior Fellow Benjamin W. Powell writes in National Review.

Under the current FDA approval process, too many regulations stand between life-enhancing pharmaceuticals and the patients who need them. Although these regulations, which include clinical trials that can take 12 years and cost $1 billion to complete, sometimes keep unsafe drugs off the market, they also prevent the terminally ill from getting drugs they need to extend their lives. Most of all, they usurp the ability of patients to decide, in consultation with their doctors, how much risk-taking is acceptable to them. “In the long term,” Powell writes, “the FDA should get out of the approval process, for the benefit of the rest of us.”

Dear FDA, Step Aside So We Might Live, by Benjamin W. Powell (National Review, 4/14/2015)

Is the FDA safe and effective? See FDAReview.org.

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4) No American Interests Served by U.S. Intervention in Yemen

President Barack Obama should resist pressure to intervene militarily in Yemen—and in the Middle East in general. Getting more involved would reduce American security without advancing any genuine legitimate national interests, according to Independent Institute Senior Fellow Ivan Eland.

“As for oil, in my book No War for Oil: U.S. Dependency and the Middle East, I use economic principles to debunk the need to send U.S. military forces to the Middle East in a neo-imperial attempt to keep a U.S. thumb on the world’s oil supplies,” Eland writes in the Huffington Post. “Economically, it is still cheaper to pay the market price for oil, even if goes higher, than it is for the taxpayer to fund a constant and unneeded U.S. military presence in the region to ‘defend’ oil. Yemen has little oil, but neighboring Saudi Arabia is swimming in it, and thus the United States tries to coddle that country.”

Eland notes that public outrage ignited by barbaric beheadings conducted by ISIS militants has caused many Americans to forget the enormous cost and folly of the U.S. military quagmires in Iraq and Afghanistan. “Terrorism and instability in the Middle East will always exist,” Eland continues, “but if the United States lessens its martial activities there, terrorist groups will not focus their efforts on attacking the United States. We could be safer and save a whole lot of taxpayer dollars at the same time.”

Yemen: Another Failed U.S. Military Intervention, by Ivan Eland (The Huffington Post, 4/13/15)

No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland

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5) New Blog Posts

From MyGovCost News & Blog:

Not Getting the Job Done
Craig Eyermann (4/17/15)

Tax Freedom Day Delayed in 2015
Craig Eyermann (4/14/15)

You can find the Independent Institute’s Spanish-language website here and blog here.

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6) Selected News Alerts

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