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

Volume 13, Issue 39: September 27, 2011

  1. Beyond the Obama Jobs Delusion
  2. Deficit Reduction: What Would Jefferson and Madison Do?
  3. Uncle Sam’s Road to Nowhere
  4. Good Intentions Gone Wrong
  5. New Blog Posts

Media Alert! Independent Institute President David J. Theroux will appear on John Stossell’s television show Stossel on Fox Business Network, Thursday, Sept. 29, at 10 PM Eastern Time (7 PM Pacific Time).


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) Beyond the Obama Jobs Delusion

President Obama’s $300 billion jobs bill won’t work, and not simply because of strong opposition from a Republican House of Representatives. According to Independent Institute Research Fellow Dominick T. Armentano, the basic problem with the President’s plan is that it would weaken the prospects for job growth in the private sector. This is true even to the extent that the plan would offer subsidies to private employers. Case in point: federal subsidies to Solyndra, the now-bankrupt maker of solar panels that was once heralded by the White House as the future of “green” jobs, diverted huge resources away from financially sounder private employers.

Suppose the taxes to pay for those subsidies had never left taxpayers’ wallets to begin with. “The $528 million that was wasted on Solyndra could have been spent by consumers supporting local retailers and their employees,” Armentano writes in a new op-ed. “Instead it was pure crony capitalism with money and jobs down the drain.”

Moreover, almost all of the new public-works jobs proposed by Obama would be temporary ones: once a project is completed, the newly employed would then lose their jobs. But there’s nothing to ensure that most private employers will have started to rehire workers by then. Therefore, if the White House wants to promote a net increase of sustainable and self-financing jobs, it must employ a different strategy: it must create a policy climate that is more conducive to private investment and hiring. “America doesn’t need another political jobs bill, but it does need a dramatic change in public policy,” Armentano writes. “We need sound money and a balanced (and far lower) budget; we need a moratorium on any new taxes and business regulation; and we need the Supreme Court to step up and declare Obamacare unconstitutional.”

The Obama Jobs Bill Hoax, by Dominick T. Armentano (9/21/11) Spanish Translation

Out of Work, by Richard K. Vedder and Lowell E. Gallaway

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2) Deficit Reduction: What Would Jefferson and Madison Do?

When Congress’s deficit reduction supercommittee makes its recommendations by November 23rd, the twelve-member panel will have had numerous options for identifying federal programs worthy of major cutbacks and elimination. But if the Joint Select Committee on Deficit Reduction, as it’s formally known, genuinely seeks to promote long-term fiscal responsibility, it must honor the country’s Founders by pushing for radically reducing the bloated U.S. defense budget, especially by calling for the rapid withdrawal of U.S. troops from Afghanistan, Iraq, and elsewhere, according to David J. Theroux, president of the Independent Institute.

In an op-ed published last Thursday in the Christian Science Monitor, Theroux explains that James Madison viewed war as perhaps the most dangerous enemy of liberty because it leads to more debt and taxes, and to more power for the rulers at the expense of the ruled. Thomas Jefferson held similar views, Theroux notes. Near the beginning of Jefferson’s presidency he told his friend William Short that “peace and recovery from debt” were the young republic’s most urgent issues.

“If we heed the words of Madison and Jefferson, it becomes clear why it’s a fool’s errand to advocate reductions in entitlement spending and the end of subsidies alone, as long as wars foment the expansion of big government,” writes Theroux. “The vibrant blessings of American liberty can be restored only when the US ends its invasive wars and restores its constitutional republic of limited government.”

Founding Fathers’ Advice to Deficit ‘Super Committee’: Bring US Troops Home David Theroux (Christian Science Monitor, 9/21/11)

MyGovCost.org: Home of your Government Cost Calculator

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

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3) Uncle Sam’s Road to Nowhere

Private entrepreneurs created more than 10,000 miles of toll roads in the eastern United States in the 19th century. In the 1990s, private investors built the first electronically tolled express lane in the United States—Southern California’s SR 91—without any funds from Uncle Sam. Private toll-lane networks would be feasible in Atlanta, Dallas/Ft. Worth, Houston, Los Angeles, San Francisco, Seattle, Miami, and Washington, DC. Unfortunately, Congress is too divided about highway policy to let the private sector move forward, according to Independent Institute Research Fellow Gabriel Roth, editor of Street Smart, the Institute’s award-winning book on innovation in road transportation.

The first step toward privately funded “smart roads” may be to remove federal hands from gasoline and diesel fuel taxes collected at the pump. Those taxes bankrolled the construction of the interstate highway system, but the Highway Trust Fund was supposed to have been abolished by statute decades ago. Republican and Democratic lawmakers seem unwilling to let state governments spend fuel taxes on highway maintenance as they see fit. However, according to Roth, the federal status quo won’t deliver an efficient, self-sustaining, innovative system of surface transportation.

“The operable rule should be simple: The federal government should not be involved in financing any infrastructure project that can be provided commercially,” writes Roth in the Daily Caller. “Transfer of highway funding responsibilities to the states would help job creation by reducing both costs and bureaucratic delays. It would also encourage the involvement of the private sector and spur innovation, as companies seek better ways to move people and goods safely and profitably.”

The President’s Road to Nowhere, by Gabriel Roth (The Daily Caller, 9/12/11)

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

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4) Good Intentions Gone Wrong

Economics can’t tell you everything: it can’t tell you what values to pursue, for example. But what it has to offer is immensely valuable for those who wish to understand how the world works. For example, economic principles can tell you which public policies will promote a desired outcome and which will make their advocates look like wishful-thinking do-gooders with big hearts and soft heads. In his latest piece at Forbes.com, Independent Institute Research Fellow Art Carden looks at two examples of popular policies that harm the people they are supposed to help: rent controls and minimum-wage laws.

Consider rent controls. Holding down rents below the market level harms many of the most vulnerable prospective tenants. Because they aren’t getting markets determined in a free market, “landlords can be choosier about who they take on as tenants,” Carden writes. “In a free and competitive market, a bigoted landlord would at least have to pay for his bigotry in the form of lower profits.... When rents are controlled, the penalty for bigotry is effectively removed.”

Minimum wage laws, which hold the wage for entry-level jobs above the market rate, have a similar perverse effect: not only will they result in some prospective workers having a harder time getting a job, but some minimum-wage employees will receive less in the way of non-wage benefits than they would have gotten without a minimum-wage law in force. “Employees might have to pay for meals and uniforms that employers used to provide,” Carden writes. “Working conditions might deteriorate. Employers might not offer as much flexibility in scheduling as they did previously. Employees might not be able to work as many hours as they would like at the going wage.” Minimum-wage laws and price controls are but two examples of good intentions gone wrong.

Unintended Consequences: Hurting When You Think You’re Helping, by Art Carden (Forbes.com, 9/23/11)

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5) 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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