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

Volume 12, Issue 30: July 26, 2010

  1. How to Prevent an Oil Spill
  2. Will Cuba Be Freed?
  3. Hayek and the Constitution of Liberty
  4. Lifting the Gaza Embargo
  5. This Week in The Beacon

1) How to Prevent an Oil Spill

BP merits nearly all the blame for the Deepwater Horizon oil gusher. The oil giant ignored widely accepted safety procedures in its rush to meet a self-imposed deadline, according to Independent Institute Senior Fellow William F. Shughart II. However, BP’s negligence is not the only culprit. The federal government’s flawed system of auctioning drilling rights invites abuse.

“The solution is to privatize the ownership of the outer continental shelf so that decision-makers are forced to weigh the full costs and benefits of their actions,” writes Shughart in Human Events.

In an op-ed for the Columbus, Indiana, Republic, Shughart also examines other factors that helped cause the gusher, including the principal-agent problem created by BP’s lease of the Deepwater Horizon from Transocean; a federal law limiting liability for damages caused by offshore oil spills; a federal agency’s flawed computer models; and federal laws that limit oil drilling on land and in shallow waters. “More regulation will not necessarily work any better than existing regulation,” Shughart writes. “What will work is getting the incentives right—through clearly defined ownership, responsibility and liability—and exploiting proven oil reserves onshore and in shallow waters offshore.”

“Preventing Another Deepwater Disaster,” by William F. Shughart II (The Republic, 7/21/10)

“BP and the Tragedy of the Commons,” by William F. Shughart II (Human Events, 7/21/10)

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

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2) Will Cuba Be Freed?

Havana’s announcement that it will release 52 political prisoners—Cuban journalists, librarians, and activists imprisoned since the “Black Spring” crackdown of 2003—raises a question: Is genuine political reform forthcoming, or are Fidel and Raul Castro bluffing again? As Independent Institute Senior Fellow Alvaro Vargas Llosa reminds us in his latest column, the Castro regime has freed political prisoners on previous occasions, only to deport them and later to initiate more arrests of dissidents.

On the other hand, some developments suggest that genuine reform may be coming to the oppressed island after all. Most notably, following Cardinal Jaime Ortega’s negotiations with Raul, which preceded the announcement of the prisoner release, the church leader traveled discreetly to Washington to tell American officials that the Cuban president was serious about reform. Vargas Llosa cautions, however, against unbridled optimism. The Castro regime, he notes, may recognize that some degree of political accommodation is necessary to generate international support and investment and thereby ensure its survival after Fidel dies. In other words, Cuba’s future is uncertain.

“Not even Raul Castro himself knows whether reform will really occur,” writes Vargas Llosa. “But one thing is clear: The ‘Black Spring’ Heroes and their Ladies in White have revealed to us, against all odds, that the Castros are not invincible. After 51 years, this is a soothing thought.”

“Cuba: Is It Different This Time?” by Alvaro Vargas Llosa (7/21/10) Spanish Translation

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

Lessons from the Poor: 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

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3) Hayek and the Constitution of Liberty

The separation of powers has been among the most celebrated hallmarks of constitutional government for more than two centuries. One of the greatest defenders of liberal constitutionalism in the twentieth century—economist and political philosopher F. A. Hayek (1899–1992)—held a view more nuanced than most. Hayek valued the separation of powers, but he believed that it couldn’t safeguard individual liberty unless the prevailing culture favors limited government, explains attorney Scott A. Boykin in the summer issue of The Independent Review.

Constitutions are consciously designed, but a country’s culture is not, Hayek argued. Like a market economy, a culture is the by-product of the countless interactions of individuals who are not fully aware of how their activities affect society. Both market economies and cultures are examples of “spontaneous order,” but each uses a different mechanism to help coordinate the actions of individuals.

In a market economy, market prices play that role. Cultures, on the other hand, facilitate social coordination by means of (often unspoken) cultural “rules” that create rational expectations about human behavior. If enough people adopt rules and values that are inconsistent with the requirements of a free society, Hayek concluded, the constitutional separation of powers would eventually succumb to pressures that will erode liberty. For Hayek, “liberalism requires not only certain political practices, but also a cultural inclination toward liberalism,” writes Boykin.

“Hayek on Spontaneous Order and Constitutional Design,” by Scott A. Boykin (The Independent Review, Summer 2010)

“Hayek Revisited: Planning, Diversity, and the Vox Populi,” by Will C. Heath (The Independent Review, Summer 2007)

“The Puzzle of Hayek,” by Gerald P. O’Driscoll Jr. (The Independent Review, Summer 2004)

“From Smith to Menger to Hayek: Liberalism in the Spontaneous-Order Tradition,” by Steven Horwitz (The Independent Review, Summer 2001)

Hayek’s Political Economy: The Socio-Economics of Order, by Steve Fleetwood, reviewed by Norman Barry (The Independent Review, Fall 1997)

Subscribe to The Independent Review.

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4) Lifting the Gaza Embargo

Israel loosened its economic embargo and blockade of Gaza following criticism of its botched attack on a Turkish relief ship. In his latest op-ed, Independent Institute Senior Fellow Ivan Eland argues that the blockade has been bad for Israel as well as Gaza.

“Overall, the blockade helped Hamas, the precise target of the Israeli policy,” writes Eland, director of the Center on Peace & Liberty. Because the blockade has fostered a siege mentality, Palestinians who dislike Hamas have supported the party more than they otherwise would have done. In addition, Hamas has profited financially from the blockade via both smuggling and the taxation of smuggling.

The complete lifting of the embargo would benefit Palestinians and Israelis alike, Eland argues. “Increased commerce among Gazans and among Gaza, Israel, and the world would undermine the Islamic radicalism on which Hamas prospers,” writes Eland.

“Ending the Gaza Blockade Might Help Israel as Much as Gaza,” by Ivan Eland (7/21/10)

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

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

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

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5) This Week in The Beacon

This week in The Beacon, contributors touched on topics ranging from American political culture to the privatization of municipal services to the Washington Post’s reports on the U.S. intelligence community.

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