Volume 11, Issue 46: November 16, 2009
- The Case for Debt Repudiation
- Conservative Magazines vs. the Presumption of Liberty
- Lessons from Counterinsurgency Wars
- Avoiding Insurance Catastrophes
- This Week in The Beacon
1) The Case for Debt Repudiation
By the end of 2009, the U.S. Treasury Department will have hit its debt ceilingagain. Adam Smith warned more than two centuries ago that national debts, once they reach above a certain level, are rarely paid. A government is far more likely to debase the currency, and employ accounting tricks to hide its debt, than to make good on its financial obligations.
Echoing Smith, Independent Institute Research Fellow Scott Beaulier and George Mason University economics professor Peter Boettke call for the same remedy that the author of The Wealth of Nations called for: repudiation of the national debt.
“Rather than erode debt obligations through inflation, the debt could be repudiated through bankruptcy proceedings,” write Beaulier and Boettke. “Like individual bankruptcy cases, the United States government would admit that they are unable to pay off existing debts. The repudiation forces future politicians to credibly commit to sounder economic policies and, perhaps, would help to avoid future cycles of deficits, debt, and debasement.”
“Hiding Debt Just a Juggling Trick,” by Scott Beaulier and Peter Boettke (East Valley Tribune, 11/16/09)
2) Conservative Magazines vs. the Presumption of Liberty
In the inaugural issue of his magazine, National Review founder William F. Buckley Jr. wrote: “It is the job of centralized government (in peacetime) to protect its citizens’ life, liberty, and property. All other activities of the government tend to diminish freedom and hamper progress.”
Buckley’s proclamation might be shared by many rank-and-file conservatives, but a review of the contents of leading conservative magazines in the United States shows weak support for liberty in matters related to sex, gambling and drugs, according to a study by Daniel Klein and Jason Briggeman published in The Independent Review.
“On the whole, the conservative magazines reveal that conservatives fail to uphold the presumption of liberty,” write Klein and Briggeman, who reviewed hundreds of issues of National Review, The Weekly Standard, The American Spectator, and the now-defunct American Enterprise. Whatever political principles these leading conservative magazines have espoused, the presumption of liberty is not among them.
“Conservative Magazines and the Presumption of Liberty,” by Daniel Klein and Jason Briggeman (The Independent Review, Fall 2009)
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3) Lessons from Counterinsurgency Wars
The United States has won a few successful counterinsurgency wars in its history, but a victorious anti-guerilla campaign is the exception rather than the rule. When such a campaign succeeds, it is usually because the insurgents were not united and the counterinsurgency was able to exploit divisions among insurgents to achieve victory. For example, after the United States took possession of the Philippine Islands following the Spanish-American War, U.S. forces were able to defeat guerilla leader Emilio Aguinaldo because most Filipinos did not support him.
This lesson has major implications for U.S. policy in Iraq and Afghanistan. At first glance it might seem that the U.S. military can exploit divisions among the insurgencies of both countries, but further analysis suggests that the odds are stacked against the U.S. campaigns, according to Ivan Eland, Senior Fellow and Director of the Independent Institute’s Center on Peace & Liberty.
“In Iraq, the United States was able to take advantage of al-Qaeda-in-Iraq’s brutal killing of civilians to divide the Sunni Guerilla movement and bribe the Awakening Councils to battle the group,” writes Eland. “The problem in Iraq is that as U.S. forces draw down, the now reduced guerrilla war could turn into a civil war among the Sunni, Shi’ite, and Kurdish ethno-sectarian groups. In Afghanistan, the Taliban is unquestionably brutal, but Afghans do regard the United States as a foreign occupier, are suspicious of the U.S. long-term military presence, do not support a surge of U.S. forces, do not think it will defeat the Taliban, and thus support negotiating with the insurgents.”
Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland
The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland
4) Avoiding Insurance Catastrophes
Florida homeowners are in a bind. They would like affordable insurance protection against hurricane damage, but at least one major carrier, State Farm Insurance, is ending its underwriting of homeowners insurance in the Sunshine State. Insurance for commercial properties, however, will stay put. The reason is that although state regulators have forced onerous regulations on homeowners insurance, they have left commercial insurance much less regulated, according to Independent Institute Research Fellow Patricia Born.
“One thing government could do to make sure affordable coverage is available to homeowners in hurricane-prone coastal areas in the Gulf of Mexico, Florida, and along the Atlantic Coastnot to mention those areas of the Midwest and mid-South that are hit regularly by tornadoes, and areas of the far West that regularly are threatened by mudslides and wild fireswould be to loosen the grip of regulation and allow insurers to become more creative,” writes Born. “We also might allow them to charge premiums that more closely reflect their actual risksso long as there is full public disclosure of exactly what those risks are over a long period of time.”
According to Born, insurers that offer residential coverage often are required to offer policies that cover the dwelling, its contents, detached outbuildings, and personal liability protection. In addition, state regulators often limit where and under what conditions insurers can enter or exit the market, how much they must charge for a policy, the terms for non-renewal of a policy, and the circumstances and amount of a premium increase.
“How to Avoid Insurance Catastrophe,” by Patricia Born (Daytona Beach News Journal, 11/6/09)
Also see, “Catastrophes and Performance in Property Insurance: A Comparison of Personal and Commercial Lines,” by Patricia Born and Barbara Klimaszewski-Blettner
5) This Week in The Beacon
- “It’s High Time to Take Back Our Schools,” by Mary Theroux (11/16/09)
- “Random Sightings on a Walk through My Notebook,” by Robert Higgs (11/16/09)
- “You Gotta Be Kidding Me,” by Anthony Gregory (11/13/09)
- “Constitutional Questions about Government Health Care,” by Randall Holcombe (11/13/09)
- “Another Weak Case for Staying in Afghanistan,” by Anthony Gregory (11/12/09)