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

Volume 11, Issue 19: May 11, 2009

  1. The Decline of American Liberalism—Arthur Ekirch’s Landmark Book Is Back in Print!
  2. Chrysler’s Bleak Future
  3. U.S. Foreign Policy Crises and Economic Policy Blunders
  4. Successful Investing and Independent Thinking
  5. This Week in The Beacon

1) The Decline of American Liberalism—Arthur Ekirch’s Landmark Book Is Back in Print!

When the Declaration of Independence spoke of the right to life, liberty, and the pursuit of happiness, the Founders understood these as natural rights, and they saw the protection of these rights as the sole legitimate function of government. Soon after 1776, however, the political philosophy that guided the Founders—classical liberalism—found itself on the defensive as various tenets of collectivism gained adherents. By the end of the 19th century, the Progressive movement, which favored government intervention at home and abroad, had in many respects eclipsed it. And by the mid-20th century, individual liberty had long been passé in intellectual circles, and the welfare-warfare state was in full force.

The Independent Institute is very pleased to reprint the landmark analysis of that trend, The Decline of American Liberalism, by the late historian Arthur A. Ekirch, Jr., a founding member of the Independent Institute’s Board of Advisors. First published in 1955 and last printed in 1976, this powerful and lucid work has long been revered by learned advocates of individual liberty. In his foreword to the new edition, Independent Institute Senior Fellow Robert Higgs notes that the book is still timely more than 50 years after it was written.

“Even now virtually every reader is sure to learn much from Ekirch’s descriptions and evaluations,” writes Higgs. “Even now, to my knowledge, no good substitute for The Decline of American Liberalism is available, and this new printing serves a valuable purpose by preserving and making conveniently available the great classical-liberal historian’s most important contribution to American political and intellectual history.”

“Mr. Ekirch has written an intelligent and important book . . . a serious historical interpretation which is at the same time highly readable.”
The New York Times

“...a formidable indictment, and Mr. Ekirch marshals a large body of evidence for it—enough to make his book stimulating and rewarding reading.”
The Economist

“Brilliant, penetrating and often illuminating study of American political history...” –The New Republic

The Decline of American Liberalism, by Arthur A. Ekirch, Jr.

About Arthur A. Ekirch, Jr.

Robert Higgs discusses The Decline of American Liberalism in Reason.tv Interview

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2) Chrysler’s Bleak Future

President Obama’s annulment of the contracts between Chrysler and its bondholders will make it hard for the automaker to recover because the new owners will have conflicting goals. Independent Institute Senior Fellow William F. Shughart II explains in his latest op-ed.

“The reconfigured Chrysler stands to have three sets of owners: Fiat (35 percent), UAW retirees (55 percent), and the U.S and Canadian governments (10 percent collectively),” Shughart writes. “Reconciling their separate and divergent objectives may well be impossible. Fiat will want profitability, the union will want to protect pensions and healthcare benefits, and governments will want to protect jobs and pursue who knows what other political ends—tellingly, the administration’s first priority is to preserve UAW jobs.”

Mixed enterprises—firms owned partly by private stockholders and partly by the government or by customers and employees—routinely perform worse than both private companies and wholly state-owned enterprises, according to Shughart. The Obama administration has therefore set a bad precedent with its restructuring of Chrysler. “Its exit strategy, which depends on restoring the company to profitability, is as naïve as the Bush administration’s plan for withdrawing from Iraq,” Shughart continues. “Don’t bet on a robust Chrysler or GM materializing anytime soon.”

“Bleak Future for Chrysler and GM,” by William F. Shughart II (5/6/09)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, ed. by William F. Shughart II

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3) U.S. Foreign Policy Crises and Economic Policy Blunders

One government intervention intended to correct a problem often begets another problem, prompting another intervention. The housing boom was created largely by Federal Reserve monetary parties meant to keep the economy humming after the 9/11 terrorist attacks. Thus today’s economic crisis is partly the result of U.S. foreign policies responsible for provoking Osama Bin Ladin, according to Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty.

It wouldn’t be the first time that U.S. foreign policies have laid the foundation for bad domestic economic policies. In this respect, according to Eland, the current economic crisis parallels an early American economic crisis. The turmoil caused by the War of 1812, Eland argues, led to the creation of the Second Bank of the United States in 1817, which flooded the market with new credit.

“In 1818, this led to excessive real estate speculation and a consequent bubble,” writes Eland. “The bubble burst during the Panic of 1819, which was the first recession in the nation’s history. Sound familiar?”

“How the U.S. Empire Contributed to the Economic Crisis,” by Ivan Eland (5/11/09)

Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

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

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4) Successful Investing and Independent Thinking

Warren Buffet’s company is down 30 percent, but investor Jim Rogers is thriving. His secret: avoiding the mob mentality. That simple rule helped him earn 4,200 percent in ten years. It’s also the guiding principle he teaches in his new book, A Gift to My Children: A Father’s Lessons for Life and Investing.

“I asked Rogers if he thought that capitalism would eventually open up China’s political system the way it did in South Korea and Taiwan,” writes Alvaro Vargas Llosa, a Senior Fellow with the Independent Institute’s Center on Global Prosperity.  Rogers answered in the affirmative. In fact, China now has thousands of political demonstrations each year. Rogers has even moved his family to Singapore and has his daughters learning Mandarin.

“Rogers encourages his daughters to be ‘citizens of the world’ and not fear other people because they ‘are basically the same, no matter what ethnic group,’” Vargas Llosa continues. “That is his answer to the ‘growing sentiment of isolationism and xenophobia on the part of some of our leaders and citizens.’”

“An American Eccentric,” by Alvaro Vargas Llosa (5/6/09) Spanish Translation

Lessons from the Poor: Triumph of the Entrepreneurial Spirit, by Alvaro Vargas Llosa

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa

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5) This Week in The Beacon

If you haven’t done so yet, please be sure to check out the past week’s offerings from the Independent Institute’s blog, The Beacon.

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