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

Volume 13, Issue 36: September 7, 2011

  1. The Chimera of Government Jobs Programs
  2. Jobs, Wages, and Walmart
  3. Poland’s Solidarity Trade Union Turns 31. Celebrate Lech Walesa on Nov. 15
  4. New Blog Posts

A Gala for Liberty: 25th Anniversary


Please join with us to celebrate The Independent Institute’s 25th Anniversary Dinner: A Gala for Liberty, November 15th, at the Ritz-Carlton in San Francisco. Honorees Lech Walesa, Mario Vargas Llosa, and Robert Higgs will be presented with the Alexis de Tocqueville Award as champions of individual liberty, entrepreneurship, personal responsibility, civic virtue, and the rule of law.


1) The Chimera of Government Jobs Programs

In an op-ed for Investor’s Business Daily, Independent Institute Senior Fellow Benjamin Powell argues that President Obama’s new jobs proposal is likely to fail for the same reason that three years of federal “stimulus” spending failed to reduce unemployment as advertised. “The problem is: Government doesn’t create jobs that add value to the economy; companies and entrepreneurs do,” Powell writes.

Government job-creation schemes divert resources away from job creation in the private sector, Powell argues. Moreover, government job programs easily evolve into make-work projects. In contrast, private-sector jobs are oriented toward the creation of economic value—goods and services that consumers are willing to buy at market prices—by employing inputs such as land, labor, and capital goods efficiently.

Obama’s appointment of economist Alan Krueger to head the Council of Economic Advisors is also discouraging: the Princeton professor’s views of minimum-wage laws run counter to the notion that companies try to use less labor when government forces them to pay a higher price for it—a principle that helps explain why unemployment is currently highest among younger workers. The Krueger appointment may make some business leaders more cautious, further delaying their plans to expand their companies and hire more workers. “Through taxes, mandates and regulation the government typically discourages hiring and destroys jobs,” Powell continues. “What Washington should do right now is step aside.”

Gov’t Is Job Killer, Not Creator, by Benjamin Powell (Investor’s Business Daily, 9/01/11)

Video: Benjamin Powell on the Federal Government as an Unpopular Industry (Fox Business Freedom Watch, 8/29/11)

An Independent Institute Classic: Out of Work: Employment and Government in Twentieth Century America, by Richard Vedder and Lowell Gallaway

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2) Jobs, Wages, and Walmart

Shoppers in Washington, DC, may find comfort in Walmart’s announcement that the retail giant will open four stores in the District starting next year. But despite its popularity with consumers, Walmart has no shortage of critics who complain that it reduces employment, pays low wages, and destroys communities. Independent Institute Research Fellow Art Carden takes on each of those claims in an op-ed for the Washington Examiner.

The claim that Walmart displaces at least as many jobs as it creates runs counter to two studies, Carden explains. One found that the opening of a Walmart store tends to increase the overall number of jobs in the retail sector, but slightly decreases jobs in the wholesale sector. “Another study,” Carden writes, “estimated that each new Walmart job displaces 1.4 retail jobs, but still creates enough new labor in other sectors that its overall effect is neutral.”

Carden also ably critiques the notion that Walmart tends to drive down wages. Studies that look only at money wages present only half the picture: what matters more are real wages—that is, the amount of goods that money wages can buy. “Based on estimates of Walmart price effects,” Carden writes, “Charles Courtemanche and I have made a back-of-the-envelope calculation that Walmart Supercenters (i.e., those that sell groceries) alone saved the average household $177 in 2002. If we multiply that conservative estimate by the number of households in the 2000 census, we get a savings of $18.7 billion—more than four times the supposed loss in earnings.” Also, Carden’s own research revealed no evidence that the opening of a Walmart store tends to reduce a community’s “social capital.”

A Case Against the Case Against Walmart, by Art Carden (Washington Examiner, 9/1/11)

Does Wal-Mart Reduce Social Capital?, by Art Carden and Charles Courtemanche (12/22/08)

Is Wal-Mart Good or Bad for America? A Debate Featuring Ken Jacobs and Richard Vedder (5/08/07)

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3) Poland’s Solidarity Trade Union Turns 31. Celebrate Lech Walesa on Nov. 15

Last week marked the 31st anniversary of the Gdansk accords, the agreement reached between Poland’s communist government and striking workers that led to the formal recognition of the trade union Solidarity. As co-founder and leader of Solidarity, Lech Walesa helped inspire the popular movement that ultimately liberated the Soviet bloc from the grip of totalitarianism. The Polish people, according to one writer, equated the Solidarity movement with the slave revolts of ancient Rome—and likened Walesa to Spartacus. Lech Walesa is one of three honorees at the Independent Institute’s upcoming Gala for Liberty, to be held November 15 at the Ritz-Carlton Hotel in San Francisco, California.

In addition to Walesa, the Independent Institute will be awarding its Alexis de Tocqueville Award to famed writer Mario Vargas Llosa and economist and historian Robert Higgs at the gala.

The Institute has expanded its list of gala co-chairs. It now includes four former heads of state (Vicente Fox of Mexico, Jorge Quiroga of Bolivia, Mart Laar of Estonia, and Jimmy Carter), six Nobel Laureates in Economics, three recipients of the Nobel Peace Prize, two Templeton Prize winners, and one Nobel Laureate in physics.

Seating for the Independent Institute’s Gala for Liberty is filling up, so we urge you to reserve a space today!

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4) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

The Independent Institute’s Spanish-language blog has surpassed 3 million page views! You can find it here.

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