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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 37: September 15, 2015

  1. Healthcare, Cars, and Love Gov
  2. Starbucks CEO versus Krugman/Clinton on Youth Wages
  3. Berkeley's Soda Tax Loses Its Fizz
  4. New Blog Posts
  5. Selected News Alerts



1) Healthcare, Cars, and Love Gov

Here’s a question that may seem to come out of left field: Can we learn anything about healthcare by looking at car care? A clean bill of health from the family doctor isn’t a mechanic’s A+ certification of that old gold Chevy from the corner used-car lot, as the irascible Ross Perot might say. Nevertheless, we can learn a lot by comparing health and cars, Independent Institute Senior Fellow John R. Graham argues in a recent op-ed at Real Clear Policy.

For starters, in 2014 there were almost as many Americans from ages 18 through 84, each needing at least a minimal level of healthcare coverage, as there were cars driven on the roads. Moreover, the average amount spent on healthcare was $9,176 per person; the average spent to operate and maintain a sedan: $8,876. Beyond these rough similarities there are, of course, crucial differences. Among the most significant, at least for public policy, is that healthcare insurance is encumbered by far more government intervention than is car insurance. Moreover, most of the money spent on healthcare was paid by third-parties, rather than paid out of pocket. The result: “The status quo leads to ever-increasing government control to ensure that our dollars go to insurers instead of doctors directly,” Graham writes.

The growth of the third-party payment system in healthcare—and concomitant government intrusion—is effectively satirized in Episode 3 of our Love Gov video series, “A Remedy for Healthcare Choices,” Graham explains. As series protagonist Alexis Smith learns while becoming increasingly involved with Scott “Gov” Govinski, government intervention has led to greater intrusion into some of the most intimate aspects of our lives. “Obamacare was a significant tightening of ‘Gov’s’ grip, but it won’t be the last as long as we accept that insurance should control access to health care,” Graham concludes.

Why There’s No Car Care Crisis, by John R. Graham (Real Clear Policy, 9/11/15)

VIDEO: Love Gov: From First Date to Mandate

A Better Choice: Healthcare Solutions for America, by John C. Goodman

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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2) Starbucks CEO versus Krugman/Clinton on Youth Wages

Paul Krugman used to scoff at calls to raise the minimum wage, but in a recent column for the New York Times he endorsed Hillary Clinton’s proposal to do just that. Krugman hasn’t overthrown the economic principles that explain why such a policy is counterproductive. He has simply asserted that government policymakers are more capable of determining the most efficient wage strategy for workers than are the employers for whom they work, according to Independent Institute Senior Fellow John C. Goodman.

Krugman and Clinton seem to think that trying to circumvent the principles of economics is a sound way to advance the interests of low-wage, low-income workers, including young people just entering the labor force. In contrast, Goodman notes, a legitimately promising idea for helping youthful workers has been announced in the New York Times by someone with experience actually meeting a payroll: Starbucks chairman and chief executive Howard Schultz. Schulz and his wife Sheri have started a foundation that will promote new jobs, internships, and apprenticeships for teens and young adults. Their first major goal: to enroll 100,000 people, ages 16 to 24, within three years.

“Although they don’t say so, their editorial clearly implies that the wage that is paid to these youths doesn’t really matter,” Goodman writes. “What matters is they learn the life skills of showing up for work on time, following orders, conducting themselves in appropriate ways, etc. If they learn those skills, their wages will rise through time without any help from government.”

Why Raising the Minimum Wage Is a Bad Idea, by John C. Goodman (Townhall, 9/6/15)

A Better Choice: Healthcare Solutions for America, by John C. Goodman

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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3) Berkeley's Soda Tax Loses Its Fizz

Voters in Berkeley, Calif., have just been served a potent drink of economic reality. A ballot measure that a 73 percent majority passed last November—a tax hike on sugary beverages, which was promised to reduce consumption of the drinks—has fallen flat. A study published in August by the well-respected, non-partisan National Bureau of Economic Research finds that the tax hike, which amounted to one cent per ounce, has done little to reduce purchases of the targeted beverages. That’s because “only about 22 percent—not 100 percent—of the tax increase has been passed on to consumers in higher prices,” writes Independent Institute Research Director and Senior Fellow William F. Shughart II.

Voters should take away several lessons from this episode and similar tax hikes, Shughart explains. First, the party that collects an excise tax isn’t necessarily the party that bears most of the burden. Second, such tax hikes encourage consumers to behave in ways to mitigate impact, such as by making more purchases in neighboring cities that haven’t raised taxes. Third, and related, selective tax hikes can have dubious consequences, such as encouraging consumers to shift their purchases to substitutes that may be less healthy than the taxed product. Fourth, low-income households are often hit harder by taxes on consumer goods than are affluent households.

“Singling out one group of taxpayers and demonizing them for making poor dietary choices is a common strategy nowadays for pushing through new taxes or raising existing ones,” Shughart writes. “That strategy may succeed at the polls, but not in the marketplace.”

Berkeley’s Soda Tax Loses Its Fizz but Offers Important Lessons, by William F. Shughart II (The Daily Caller, 9/9/15)

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

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4) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

The Malady of Deficits and Self-Delusion
Craig Eyermann (9/14/15)

Fighting Bureaucracy with Incompetence
Craig Eyermann (9/10/15)

Government Monopoly Game Punishes the Poor
K. Lloyd Billingsley (9/8/15)

You can find the Independent Institute’s Spanish-language website here and blog here.

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5) Selected News Alerts

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  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org