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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 13, Issue 50: December 13, 2011

  1. The Welfare State Neutralizes Opponents
  2. Pro-Market versus Pro-Business
  3. Progressivism: Causes and Consequences
  4. Move Over, “Like” Button!
  5. New Blog Posts

1) The Welfare State Neutralizes Opponents

An index published by the Heritage Foundation estimates that the number of Americans dependent on select federal programs for cash income and other support tripled to 64.3 million from 1962 to 2009. Had the index included all transfer programs, the number of dependents might easily have risen to 100 million, according to Independent Institute Senior Fellow Robert Higgs. Despite its limitations, the Heritage index is useful for illustrating both the sheer magnitude of the increase in government dependency and the challenge of dismantling the welfare state.

Political analysts from Etienne de la Boitie to David Hume to Ludwig von Mises have noted that the elites who govern a society are ultimately slaves to public opinion because in order to stave off rebellion and maintain their ill-gotten privileges, they must convince the public that the existing regime has legitimacy. The growth of the welfare state, however, complicates this analysis as more and more people receive a larger and larger share of the spoils taken from other segments of society (including from each other). The parasitic class comes to include not only the ruling elite, but also the elderly, the unemployed, and the indigent—people who have no real influence over the ruling elite but who feel grateful to them for whatever crumbs are thrown their way. This development, Higgs argues, helps calm the rulers’ anxieties of rebellion.

“Every person who becomes dependent on the state simultaneously becomes one less person who might act in some way to oppose the existing regime,” Higgs writes. “In these circumstances, it is hardly surprising that the only changes that occur in the makeup of the ruling elite resemble a shuffling of the occupants in the first-class cabins of a luxury liner. Never mind that this liner is the economic and moral equivalent of the Titanic and that its ultimate fate is no more propitious than was that of the ‘unsinkable’ ship that went to the bottom a century ago.”

The Welfare State Neutralizes Opponents by Making Them Dependent on Government, by Robert Higgs (Big Government, 12/8/11) Spanish Translation

Conning Americans: How Politicians Create Dependence on Government, featuring Charlotte Twight (2/13/02)

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2) Pro-Market versus Pro-Business

In his latest op-ed, Independent Institute Senior Fellow Ivan Eland examines two recent events that illuminate differences between a “pro-market” outlook and a “pro-business” outlook. This issue has bearing on public policy for several reasons, not the least of which is that lobbying the government for legislative or regulatory changes can be motivated by either outlook (among others). Consider recent lobbying by American high-tech companies in the business of storing digital data so that customers can retrieve their data inexpensively at a future date. Those firms face competition from overseas rivals who can market their own cloud-computing capabilities as a service that would allow American customers to get around some of the restrictions on data privacy that fall under the USA PATRIOT Act.

The lobbying of the American firms could become a potential force for “freeing up the market for real and robust global competition in cloud computing,” Eland writes. That example of lobbying by American companies is essentially pro-market. In contrast, consider the lobbying of American financial institutions that pressured the U.S. government to get involved in Europe’s fiscal problems. The American financial institutions urged Uncle Sam (via intervention by the Federal Reserve) to prevent European banks from dumping dollar-denominated assets and bonds.

This type of lobbying neither derives from a pro-market outlook nor serves to uphold the integrity of a free market, Eland suggests. Rather, it is motivated by a quest for corporate welfare. “Even if the Europeans were satisfied, the U.S. government would probably still have a pro-business policy of helping its financial institutions with European exposure,” Eland writes. “Thus, pro-market lobbying to change PATRIOT Act intrusions and regulations is beneficial to society, but pro-business lobbying for corporate welfare is not.”

Pro-Business vs. Pro-Market: What’s the Difference?, by Ivan Eland (12/7/11) Spanish translation

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

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3) Progressivism: Causes and Consequences

The Progressive crusade of the late 19th century did not burst onto the American political scene ex nihilo. It was a river born of many small streams. The Liberal Republican movement of the 1870s contributed to it by propagating the belief that bureaucratic decision-making was less messy and more efficient than the democratic process. Populism contributed to Progressivism by fostering the belief that government should be expanded. Certain segments of academia contributed the belief that social science informed by biology could make government activism more enlightened. Post-millennial Protestant reformers also contributed by taking up causes that would later be championed by the Progressives. “All these tendencies, plus an ingrained American penchant toward panic, pointed toward a busy future,” writes Independent Institute Research Fellow Joseph R. Stromberg in the December 2011 issue of The Freeman.

Progressivism was not a monolith, Stromberg explains. Some Progressives sought to “restore” competition in the economy by various means, including the creation and enforcement of antitrust laws. Others wished not to break up large corporations but to regulate them. Some, such as New Republic editor Herbert Croly, tried to bridge the divide. The Progressive movement also had its geographical divisions. Eastern Republicans such as Teddy Roosevelt opposed self-government, whereas western Progressives sought to promote it by freeing it from the yoke of big business. And western Progressives tended to oppose American militarism and imperialism, whereas their eastern counterparts “favored forceful American expansion into overseas markets,” Stromberg writes. “If this required empire—and even war to secure the deal—they were up for it.”

The Progressive movement died out in the 1920s, but the New Deal revived elements of it. The early New Deal adopted a corporatist version, on the model of the World War I economy, but it exorcised the Jeffersonian elements of the Progressive movement. It also laid the groundwork for an American brand of fascism, although it didn’t complete the job, as journalist John T. Flynn (himself a former Jeffersonian Progressive) argued in his 1944 book, As We Go Marching. Flynn failed to foresee the developments he believed would have made the United States a fascist state. “Flynn was right, however, about what would hold American fascism together: executive power effectively above the law,” Stromberg writes. “Long ago, tidy-minded eastern Progressives championed executive power but did not perfect it. Other hands—‘liberal’ and ‘conservative’—did that. Today important ‘conservatives’ and Chicago-tinged theorists proclaim executive supremacy a universal blessing.” Progressivism can’t be blamed for every ill that has since befallen the republic, but it can be blamed for a lot.

The Twisted Tree of Progressivism, by Joseph R. Stromberg (The Freeman, 12/7/11)

Richard T. Ely’s Social Gospel of ‘Progressivism’: Socialism, Fascism, Racism, Eugenics and Militarism, by David Theroux (The Beacon, 11/29/11)

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4) Move Over, “Like” Button!

The Internet has changed the way we give feedback, but not always for the better. Rude comments left by anonymous readers, flame-wars started on message boards by so-called trolls, and pointless political screeds that show no indication that the author read the material he or she is commenting on. Is there a better way? Yes! In a recent piece, Forbes.com blogger and Independent Institute Research Fellow Art Carden offers a host of inspired and entertaining ideas for web developers and online media companies to improve the quality of the Great Conversation 2.0.

The model is the Facebook “like” button. But what Carden proposes is eight more buttons that would give people a quick way to offer their assessments—buttons that satirize the way people often interact with the web media.

Carden’s proposal includes a middle-finger button (as opposed to a timid thumbs-down “dislike” button), a “You’re Worse than Hitler!” button (featuring the likeness of the little dictator), a button depicting a supply-and-demand diagram to call out questionable economic analyses, and an all-encompassing “What about the Troops/September 11/The Children?” button featuring a yellow ribbon, the Twin Towers, and Tiny Tim. There’s more, so check it out!

Better Facebook? Better Comments? Buttons We Need, by Art Carden (12/2/11)

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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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