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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 11, Issue 39: September 28, 2009

  1. Obamacare Is Destined to Go Postal
  2. Eland Urges Obama to Withdraw Quickly from Afghanistan
  3. Cuban Doctor’s Odyssey Highlights Castro’s Farce
  4. The Myth of Unregulated Tobacco
  5. This Week in The Beacon

1) Obamacare Is Destined to Go Postal

A first-class U.S. postage stamp costs 44 cents, up from 2 cents in 1950. Had its price kept pace with inflation, a stamp today would sell for only 18 cents. Instead, stamp prices grew nine times as fast as the general rate of inflation. They outpaced inflation largely because the U.S. Postal Service cannot profit from cost-reducing, quality-enhancing innovation the way that private carriers, such as Federal Express and United Parcel Service, can.

President Obama recently drew an analogy between the U.S. Postal Service and a public option for healthcare insurance, but he overlooked the cost-escalation “virus” that plagues government mail delivery. Supporters of publicly financed health insurance contend that a public option would keep costs under control in part because it would not face pressures to earn profits. According to Independent Institute Senior Fellow William F. Shughart, however, publicly funded plans would have weaker incentives to control costs precisely because they could not earn profits for doing so.

“Had the president grasped more fully the lesson he was trying to teach his town-hall audience, he would have said that if a public insurance option is included in the health-care reform package that emerges from Congress, an option that now seems increasingly unlikely, it will operate more like the U.S. Postal Service than FedEx or UPS,” writes Shughart. “The U.S. Postal Service’s problems (not unlike the problems of Medicare and Medicaid) should provide clear warning that the costs of any government health insurance program will balloon, precisely because the government insurance program wouldn’t have to make a profit.”

“Profit Motive Makes the World Go ‘Round,” by William F. Shughart II (Minneapolis Star Tribune, 9/23/09)

“The Modern Health Care Maze: Development and Effects of the Four-Party System,” by Charles Kroncke and Ronald F. White (The Independent Review, Summer 2009)

American Health Care: Government, Market Processes, and the Public Interest, edited by Roger D. Feldman

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2) Eland Urges Obama to Withdraw Quickly from Afghanistan

President Obama has resisted calls from within his military to send more troops to Afghanistan -- a politically savvy position he should develop by quickly withdrawing U.S. troops from that country, according to Ivan Eland, Senior Fellow at the Independent Institute and Director of its Center on Peace & Liberty.

Eland writes in his latest op-ed: “Obama clearly understands what George W. Bush and Dick Cheney pooh-poohed -- that public opinion in foreign countries affects U.S. security -- but again his policy does not go as far as facts require.” But at the same time, Obama appears somewhat conflicted, having previously escalated the war in Afghanistan, although not to the troop levels some of his military leaders have recommended.

Although Eland applauds Obama’s scrapping of missile defense in Eastern Europe and the president’s pledge to pull out of Iraq by the end of 2011, he warns that unless Obama begins to quickly withdraw troops from Afghanistan he runs the risk that political and institutional pressures to escalate in Afghanistan will build.

“Obama Needs to Expand on His Good Instincts in Foreign Policy,” by Ivan Eland (9/23/09)

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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3) Cuban Doctor’s Odyssey Highlights Castro’s Farce

Hilda Molina, Cuba’s first female neurosurgeon, founded the country’s International Center for Neurological Restoration in the late 1980s and soon afterward took a seat at the National Assembly. Then came political pressure for her center to emphasize the treatment, not of Cuban patients, but of foreigners who paid in dollars. She urged her son, also a neurosurgeon, to defect to Argentina. She resigned from the center, quit the National Assembly, and returned the medals the government had awarded her. In return, the Castro regime vilified her.

“A few years ago,” writes Independent Institute Senior Fellow Alvaro Vargas Llosa, “when Argentine President Nestor Kirchner asked Castro to let Molina visit Buenos Aires, the dictator replied, ‘Never!’ In a foreword to a book titled ‘Fidel, Bolivia y algo mas,’ Castro accused Molina of being ‘excellent material for blackmail.’ By then she had become an international cause celebre.”

Eventually Cuba bowed to international pressure and allowed Molina to visit her son in Argentina, where Vargas Llosa recently met her: “As I listened to Molina, I kept thinking that her story was not about the tragedy but about the perfect face that is Cuba’s communism. What else can be said about a regime that reserves its medical institutions for capitalist dollars in the name of abolishing capitalism and that for 15 years, in the name of anti-imperialism, prevents a woman from crossing borders in order to join her son? Yes, one perfect farce.”

“Hilda Molina in Buenos Aires,” by Alvaro Vargas Llosa (9/23/09) Spanish Translation

The Che Guevara Myth and the Future of Liberty, by Alvaro Vargas Llosa

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

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

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4) The Myth of Unregulated Tobacco

Last June the U.S. Food and Drug Administration acquired legal authority to regulate tobacco products. The FDA will now regulate nicotine content, ban flavored cigarettes (except for menthol-flavored smokes), and regulate marketing practices. Uncertainties about how the FDA will manage its new authority led some medical experts and health advocates to give the new law mixed reviews, but Senator Christopher Dodd lauded it, claiming that the tobacco industry had long gone “basically unregulated.”

In truth, tobacco regulation dates back to 1629 in colonial Massachusetts Bay. In the 20th century, the Federal Trade Commission, the Federal Communication Commission, and Congress itself entered the picture. Ironically, much of that regulation helped to cartelize the tobacco industry and generate higher profits, economist Bruce Yandle explains in a recent piece for The Freeman. In 1960, the tobacco industry agreed to an FTC deal to cut all tar and nicotine claims from cigarette advertising. Did this measure thwart competitive pressures that might have yielded safer tobacco products?

Writes Yandle: “One can only speculate about what might have happened had the FTC not outlawed health-effects advertising and had the industry not become one of the more regulated industries in America.”

“The Myth of Unregulated Tobacco,” by Bruce Yandle (The Freeman, September 2009)

Regulation and the Reagan Era, edited by Roger E. Meiners and Bruce Yandle

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5) This Week in The Beacon

Here are the past week’s offers from our blog, The Beacon.

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