The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 50: December 15, 2015

1. Union Hypocrisy on Pension Reform
2. Nuclear Power, Yes; Federal Subsidies, No
3. Trumbo Whitewashes Stalin’s Man in Hollywood
4. Los Angeles’s Road to Deadly Unintended Consequences
5. New Blog Posts
6. Selected News Alerts

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California’s public-employee unions oppose efforts to get a measure on the November ballot that would help contain the state’s massive public-pension crisis. In essence, the ballot measure would enable state and local governments to give new employees a pension plan immune to underfunding: a 401(k)-style, defined-contribution plan that’s fully funded each step of the way. The union bosses say the reform would be foolish, but an investigation into their own practices reveals blatant hypocrisy, according to Independent Institute Senior Fellow Lawrence J. McQuillan and Policy Researcher Hayeon Carol Park.

“The reality is that many of California’s most militant and powerful government unions provide their own employees with the same kind of 401(k) plans they are now attacking,” McQuillan and Park write in an op-ed for the Sacramento Bee. “When union officials bad-mouth 401(k)s, Californians should ask two key questions: If 401(k)s are so bad, why are they good for your own employees? And if 401(k)s are good for employees of the union, why wage war on the proposed ballot measure?”

Unions that offer their workers defined-contribution plans include, according to McQuillan and Park, “the California Association of Highway Patrolmen, California Correctional Peace Officers Association, California Nurses Association, California Professional Firefighters, California Teachers Association and California State Employees Association SEIU Local 1000.” The double standard is especially worrisome because the adoption of 401(k)-style pension plans for all new public employees would be “a vital step toward sparing future generations greater pension pain,” write McQuillan and Park.

Unions Are Hypocrites on 401(k)s, by Lawrence J. McQuillan and Hayeon Carol Park (The Sacramento Bee, 12/1/15)

California Dreaming: Lessons on How to Solve America's Public Pension Crisis, by Lawrence J. McQuillan

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Nuclear power in the United States, we explained in The Lighthouse two weeks ago, is subject to excessive government regulations that make energy production more expensive—and more reliant on the dirtiest of dirty fossil fuels: coal. This week we look at government intervention on the opposite side of the ledger: a massive federal subsidy to nuclear power in the form of the Price-Anderson Nuclear Industries Indemnity Act. “Price-Anderson clearly is a form of corporate welfare that indemnifies the nuclear industry in a worst-case scenario,” writes Independent Institute Research Director William F. Shughart II.

Signed by President Eisenhower in 1957 to help jumpstart the use of nuclear technology for civilian purposes—part of the president’s “Atoms for Peace” campaign—Price-Anderson puts taxpayers on the hook for damages caused by a nuclear “incident” that exceed the size of the victims’ compensation fund into which the nuclear industry is required to pay. But it also empowers the fund to seek additional payments from the industry. Does the second provision mitigate the taxpayer risk associated with the first provision? Probably not.

The reason, Shughart explains, is that the nuclear power industry has supported reauthorization of Price-Anderson whenever the issue has come up. In other words, the industry views the law as providing it with a net benefit. The implications are worrisome. Because the industry presumably would not be paying for the full cost of a nuclear mishap, its incentives to practice “safety first” are weaker than they might otherwise be; the problem of moral hazard is apparent. “Because the nuclear industry itself will not bear the full costs of a devastating accident, such accidents are more likely to happen than otherwise,” Shughart concludes.

The Atomic Age and Limited Liability for Nuclear Accidents, by William F. Shughart (The Hill, 11/20/15)

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

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The Screen Actors Guild announced last week the nominations for its twenty-second annual awards. Trumbo—the biopic about Hollywood screenwriter Dalton Trumbo (Roman Holiday, Sparatcus) during the anti-communist blacklist—is up for Best Ensemble Cast, Best Actor (Bryan Cranston in the title role), and Best Actress (Helen Mirren as gossip columnist Hedda Hopper). One irony of the nominations is that among the ideological opponents who tried to neutralize Trumbo’s pro-Soviet influence was a president of the Screen Actors Guild, Ronald Reagan. But greater ironies abound, namely the contrast between Trumbo’s public persona and his pro-Soviet affiliation, which he began during the years of the Hitler-Stalin Pact of 1939-1941, according to Independent Institute Policy Fellow K. Lloyd Billingsley.

A member of the Hollywood Ten, Trumbo faced the Hollywood blacklist after he refused in 1947 to cooperate with the House Un-American Activities Committee. The reason for Trumbo’s refusal may have had more to do with expediency than with individual conscience. “The reason Trumbo and other Stalinists defied the committee, as John Huston learned some years later, was that they had already testified to a California committee that they were not Communists,” Billingsley writes. Having lied earlier, full disclosure might have come at a heavy price.

Trumbo the movie takes artistic license with Trumbo the man. The real Trumbo, according to Billingsley, poetically resembled the prison commandant he portrayed in a movie he co-wrote, Papillion (1973). “That is a suitable role for a man who defended murderous dictators and the totalitarian regimes that walled in their subjects,” Billingsley writes. “That’s how Dalton Trumbo and the other screen Stalinists should be remembered.”

Tinseltown Turns Back the Clock with Trumbo Tribute, by K. Lloyd Billingsley (The Daily Caller, 12/2/15)

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The Los Angeles City Council has moved forward with a 20-year plan—Mobility Plan 2035—to make room for more bus and bike lanes. The plan, however, would cause greater automobile congestion, according to the city’s environmental impact report. Independent Institute Research Fellow Gary M. Galles, who lives one county away from the City of Angels, notes that the plan would have life-or-death consequences.

“The worsened congestion would be especially life-threatening in cases of sudden cardiac arrest, which requires rapid medical intervention to save a life,” Galles writes in the Los Angeles Business Journal. Even if Mobility Plan 2035 were to eliminate all pedestrian deaths caused by car crashes—a big if—more might die from the delay of emergency vehicles responding to heart attacks. Lengthening a response time by three minutes worsens a victim’s chance of surviving almost four-fold.

“The Los Angeles City Council failed to consider the dangerous delays its recommendations would cause, despite a mandate that its decisions reflect ‘substantial evidence,’” Galles writes. “Until emergency responder effects are thoroughly investigated, the plan should be put on hold, not on a pedestal.”

Traffic Plan May Fuel Health Risks, by Gary M. Galles (Los Angeles Business Journal, 12/7/15)

Street Smart: Competition, Entrepreneurship, and the Future of Roads, edited by Gabriel Roth

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6) Selected News Alerts

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