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Volume 11, Issue 44: November 2, 2009
- The Health Hazards of Daylight Saving Time
- The Case Against Insider Trading Laws
- Lessons from Mexico
- Somalia Debacle Repeats Past U.S. Mistakes
- This Week in The Beacon
Daylight-saving time was touted as an energy-conservation measure, but a study of Indiana before 2006, when the Hoosier State had three different time regimes, showed no difference in energy consumption attributable to the semi-annual ritual of changing the clocks. Moreover, a study published last year in the New England Journal of Medicine reported that daylight saving time may be hazardous to your health.
Many people experience the sudden time change in the form of grogginess or declining productivity at work, but for a small fraction of the population extremely sensitive to disruptions of the body’s circadian rhythms, the semi-annual change in the body’s physical, chemical, electrical, hormonal and immunological environment is as serious as a heart attack—literally.
“When a small elevated risk of heart attack per person is multiplied by 1.5 billion people [worldwide] exposed to that risk, you realize that many men and women suffer debilitating heart attacks and death every time we spring forward and fall back,” writes Independent Institute Senior Fellow William F. Shughart II. “Adding to the bill, some students of daylight-saving time suggest that accidents involving pedestrians spike immediately after the return to standard time as well, because drivers have not yet adjusted to commuting home in the dark.... The twice-a-year ritual of time travel actually kills.”
“Unhealthy Time Change,” by William F. Shughart II (Sacramento Bee, 10/28/09)
The recent arrest of prominent hedge fund manager Raj Rajaratnam for insider trader raises the specter of a new era of prosecutions for an often demonized but fundamentally misunderstood activity. As Independent Institute Research Fellow Donald Boudreaux explains in a recent Wall Street Journal op-ed, lawmakers and prosecutors too often blur the crucial distinction between two kinds of insider trading. Insider trading that violates a fiduciary duty, i.e., constitutes a breach of contract, should be actionable. But insider trading that involves no such breach should not be a crime.
From the standpoint of economic efficiency, insider trading of the latter sort is a good thing, according to Boudreaux, because it allows equity prices to reflect information about a corporation’s prospects more quickly than if no insider trading were allowed. We want share prices to reflect the best estimates about a stock sooner rather than later because accurate prices enable capital to be allocated according to underlying realities rather than old news or wishful thinking. In contrast, insider trading laws prevent share prices from reflecting accurate information about a corporation’s prospects and thereby foster capital misallocation and hinder sustainable economic growth.
“Not only do insider-trading prohibitions slow economic growth, promote corporate mismanagement and discourage investment diversification, their application also is unavoidably biased,” Boudreaux writes. Because insider “nontrading” (i.e., an insider holding stocks already owned) is undetectable, insider nontraders cannot be prosecuted. The phenomenon of insider nontrading is probably common, and there is no reason to believe that it scares aware ordinary investors. No undesirable consequences result from insider nontrading, according to Boudreaux, and this may be another reason not to fear allowing corporations to determine which type of insider trading is permissible and which type constitutes a breach of fiduciary duty.
“Learning to Love Insider Trading,” by Donald J. Boudreaux (Wall Street Journal, 10/24/09) Spanish Translation
Earlier in the decade Mexico was poised for progress. That flame has sputtered as economic nationalism thwarted capital investment and innovation in Mexico’s oil industry and escalation of the drug war sucked up resources that could have facilitated reform. Mexico’s recent backsliding offers several lessons for would-be reformers in China, India, Brazil, Turkey and South Africa, according to Independent Institute Senior Fellow Alvaro Vargas Llosa.
The lessons? Never underestimate the old guard; its capacity for resilience can be powerful, as Russia has seen even more than Mexico. Never sleep on your laurels; Chile has made this mistake too. Never tie your fate to only one trading partner or investor. Pick your fights wisely; political capital, like scarce economic resources, should be allocated to the highest priorities.
“I have much sympathy for Mexican President Felipe Calderon,” writes Vargas Llosa. “Yet he made what a large number of his Mexican supporters think was a colossal mistake in devoting to the drug war the energy and resources that he should have committed to completing the truncated reforms. The evidence indicates that the drug cartels are simply shifting some of their operations to Central America while continuing to corrupt the Mexican institutions and suck the blood out of an administration consumed by the struggle with the enemy it has picked.”
“Mexico’s Debacle—A Teaching Moment,” by Alvaro Vargas Llosa (10/28/09) Spanish Translation
Lessons from the Poor: The Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa
Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa
The Che Guevara Myth and the Future of Liberty, by Alvaro Vargas Llosa
Like his predecessor, President Obama fails to appreciate how U.S. foreign policy has fanned the flames of Islamist extremism. This truth holds not only in Iraq and Afghanistan, but also in Somalia, according to Independent Institute Senior Fellow Ivan Eland.
“Al-Shabab, the militant Islamist movement now trying to take over the country, had minimal popular support before the CIA began supporting corrupt warlords,” writes Eland. The problem escalated when U.S.-backed Ethiopia invaded Somalia. “Such foreign intervention and occupation caused popular support for al-Shabab to skyrocket into the current problem.”
Foreign policy interventionism has enjoyed bipartisan support since the end of World War II, argues Eland, due largely to the vested interests in industry and the government security bureaucracy that have lobbied for it. The United States meddles in the Muslim world and elsewhere “because politically powerful interest groups benefit from the policy at the expense of the general public,” Eland concludes.
“Obama Still Doesn’t Quite Get It,” by Ivan Eland (10/28/09) Spanish Translation
Video: Ivan Eland on Joe Biden’s Poland Visit (10/22/09)
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
Visit the Independent Institute’s Spanish-language blog, El Independent. Below are the past week’s offerings from our English-language blog, The Beacon.
- “Can the Rampaging Leviathan Be Stopped or Slowed?” by Robert Higgs (11/2/09)
- “Drugs: Should They Be Legal or Illegal?” by Art Carden (11/1/09)
- “Robert Higgs on Fox News: The Folly of Obama’s Spending Spree,” by David Theroux (10/31/09)
- “If You Like Congress’s Health Plan, Ya Wanna Buy a Bridge?” by Mary Theroux (10/31/09)
- “Florida’s Public Option,” by Randall Holcombe (10/29/09)
- “Sisyphus and Higher Education,” by Jonathan Bean (10/27/09)
- “Gary Johnson May Run for President,” by David Beito (10/27/09)
- “Resigning from the Empire,” by Anthony Gregory (10/27/09)
- “Democracy’s Most Critical Defect,” by Robert Higgs (10/27/09)
