The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 18, Issue 3: January 19, 2016

1. Supreme Court Considering Race in College Admissions
2. Remembering Prohibition
3. Abolish Selective Service
4. Hidden Costs of Obamacare’s Slacker Mandate
5. New Blog Posts
6. Selected News Alerts

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The Civil Rights Act of 1964 prohibited racial discrimination of any kind. Now the Supreme Court will decide whether or not exceptions are permissible in college admissions. The name of the case before the Court is Fisher v. University of Texas, and the legal standard that a race-based policy must clear is called “strict scrutiny.” But as Independent Institute Research Fellow Jonathan Bean notes, “strict scrutiny” has dubious origins: It made its first appearance in the nation’s highest court in Korematsu v. United States, the case that upheld the internment of Japanese Americans during World War II.

If the United States is to return to a principled, colorblind approach, it could do so simply by accepting the plain meaning of the Civil Rights Act. “With that act, the crowning achievement of the civil-rights movement, Congress did everything in its power to emphasize nondiscrimination,” Bean writes. Unfortunately, the Supreme Court has been undermining that achievement, beginning with its invention of a “diversity” loophole for race-based college admissions in its 1978 decision in Regents of the University of California v. Bakke. A colorblind civil rights policy could also take its cue from the Constitution’s Equal Protection Clause, Bean adds.

If the Supreme Court uses “strict scrutiny” to allow racial discrimination in college admissions, it will be a dark day for civil rights. “The near certainty that the court will continue to muddle the law is dispiriting,” Bean writes. “Knowing how we got into this ‘strict scrutiny’ mess is a place to start.”

Racial Preferences and the Folly of ‘Strict Scrutiny’, by Jonathan Bean (Washington Examiner, 1/5/16)

Race and Liberty in America: The Essential Reader, edited by Jonathan Bean

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January 16 marked the 96th anniversary of the beginning of Prohibition. After years of campaigning to ban booze and beer, the temperance movement heaved a sigh of relief as saloons were shuttered and law enforcement began its quixotic crackdown on the selling of alcoholic beverages. Any peace of mind should have been short lived. In his latest op-ed for The Hill, Independent Institute Research Director William F. Shughart II commemorates America’s failed experiment to outlaw “demon rum,” as the teetotaling lobbyists termed it, and highlights its unintended consequences.

Prohibition was supposed to make the nation better. Instead, the opposite happened. Writes Shughart: “Bootlegging and smuggling thrived; violent crime flourished as the organized gangs that supplied alcohol to willing consumers protected their turfs; corruption among public officials and law enforcers was rampant. Some people were blinded or killed by adulterated black-market spirits.” Today’s “war on drugs” has had similar consequences, Shughart notes.

But what the 18th Amendment gave us in 1920, the 21st Amendment took away 14 years later—although not completely. Criminal gangs baptized by Prohibition redirected their efforts toward other illegal enterprises. “Enforcement of the 18th Amendment started on January 16, a date worth remembering for public-policy hubris,” Shughart continues. “But be sure to celebrate its repeal next December 5!”

Jan. 16, 1920: Another Day That Should Live in Infamy, by William F. Shughart II (The Hill, 1/15/16)

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

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When U.S. Defense Secretary Ash Carter announced in December that American women would become eligible for all combat positions in the armed forces in 2016, he pushed an important question to the foreground: Would females soon be required to register with Selective Service after they reached age 18, just as males have had to do since 1980? This in turn raises a more fundamental question: Would a military draft be good for the United States? For those who understand the hidden costs of military conscription—or, for that matter, any type of involuntary servitude—the answer is: no. In his latest op-ed, Independent Institute Senior Fellow Benjamin W. Powell makes the essential economic argument.

“A military draft may lower the government’s cost of going to war, but it raises the cost to society as a whole,” Powell writes. “When government meddles with the price system it misdirects and wastes labor.”

Consider a young software engineer conscripted into the military. His civilian job in the private sector, writing code that makes consumer products work better or allows businesses to lower their costs, may have earned him a salary of $100,000. But if he’s drafted into a military job that pays him only $19,000, then he’s paying a “draft tax” amounting to $81,000 per year and society is losing out on the roughly $100,000 of economic value he created annually. Making it harder for the government to reinstate military conscription—such as by abolishing Selective Service, as proposed in a bill sponsored by Representatives Peter DeFazio and Mike Coffman—would therefore help preserve the economic gains that society enjoys when workers are free to take the highest-paying civilian jobs they can find.

Time to Abolish Selective Service, by Benjamin W. Powell (The Hill, 12/7/16)

The Civilian and the Military: A History of the American Antimilitarist Tradition, by Arthur A. Ekirch Jr.

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Obamacare’s so-called “slacker mandate”—which requires that health plans include dependent children up to age 26 on their parents’ policies—has had an unintended but predictable consequence: it has raised unemployment for young adults by eliminating the need for their own health coverage. The mandate has, as the Washington Post puts it, “helped millennials chill out.” A study from the National Bureau of Economic Research has even estimated how jobless young adults are spending their extra time: about 10 minutes more are spent exercising, 20 minutes sleeping, and 30 minutes socializing (for 23-25 year olds). The slacker mandate also has other unintended consequences, explains Independent Institute Senior Fellow John R. Graham.

Parents pay for the mandated coverage for adult dependents through higher premiums. But parents are not the only ones who pay. Another study from the National Bureau of Economic Research finds that “the slacker mandate reduced wages among workers without children by $210 a month,” Graham writes, “but it did not reduce wages among workers with children (either minor or adult) by a statistically significant amount.”

“The latter result makes sense, because the working parents simply paid higher premiums to keep their adult dependents on their employer-based plans,” Graham continues. “The former result is shocking. How to explain it? I suspect it is easy in the short term to impose these costs on workers without kids because of the high information and friction costs to those workers of learning and responding to the cost of the mandate.” Indeed, the cost shifting may have been a prime reason behind the political push for the mandate, Graham concludes.

Guess Who Pays the “Slacker Mandate”? Workers with No Kids!, by John R. Graham (The Beacon, 1/14/16)

The Cost of Obamacare’s “Slacker Mandate”, by John R. Graham (The Beacon, 12/1/15)

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

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6) Selected News Alerts

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