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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 14, Issue 10: March 6, 2012

  1. Blind U.S. College Boosterism Ignores the Dropout Problem
  2. Fannie and Freddie Continue to Drain Taxpayers
  3. Energy Protectionism Is Bad Policy
  4. Climate Deniers Give Skeptics a Bad Name
  5. New Blog Posts

1) Blind U.S. College Boosterism Ignores the Dropout Problem

Florida Governor Rick Scott caused a stir recently, when he argued that subsidies for college education do far more to help society at large when they help students get degrees in science, technology, engineering, and math—subjects that help produce innovations with large spillover effects. He has a point. Most taxpayer subsidies for higher education actually do little or nothing to benefit the taxpayers. But Governor Scott neglected to mention a related problem with our schools: the alarming rate of dropouts in the United States—roughly 40 percent at the college level and, for males, 25 percent at the high school level. The problem arises in part because educational policymakers in the United States act as if classroom learning makes sense for everyone. In contrast, many European countries do a better job educating students and preparing them for the labor market because they reject that assumption, according to Independent Institute Research Director Alex Tabarrok.

Consider Germany. It graduates 97 percent of its high-school students but sends a smaller fraction to college than the United States does, Tabarrok explains in The Chronicle of Higher Education. After high school many grads go into training and apprenticeship programs. Austria, Denmark, Finland, the Netherlands, Norway, and Switzerland also send a large share of students to apprenticeship programs, yet one hears few complaints that these Europeans are not “well rounded,” the standard claim of Americans who believe that a college education is appropriate for most every American. Europe’s apprenticeships provide rigorous technical training that combines theory with practice—and wages. Employers pay the apprentices because they see them as future employees. In contrast, vocational programs in the United States typically receive little input from employers and are treated simply as programs for at-risk students. This, Tabarrok argues, needs to change.

“The focus on college education has distracted government and students from apprenticeship opportunities,” Tabarrok writes. “Why should a major in English literature be subsidized with room and board on a beautiful campus with Olympic-size swimming pools and state-of-the-art athletic facilities when apprentices in nursing, electrical work, and new high-tech fields like mechatronics are typically unsubsidized (or less subsidized)? . . . We need to provide opportunities for all types of learners, not just classroom learners. Going to college is neither necessary nor sufficient to be well educated. Apprentices in Europe are well educated but not college schooled. We need to open more roads to education so that more students can reach their desired destination.”

Tuning In to Dropping Out, by Alex Tabarrok (The Chronicle of Higher Education, 3/4/12)

Launching the Innovation Renaissance, by Alex Tabarrok

Entrepreneurial Economics: Bright Ideas from the Dismal Science, edited by Alex Tabarrok

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2) Fannie and Freddie Continue to Drain Taxpayers

Last week Fannie Mae—formally known as the Federal National Mortgage Association—reported its earnings (losses, rather) for 2011. The government-sponsored enterprise reported a whopping $17 billion in losses for the year, three billion dollars more than it reported losing in 2010. Taxpayers would benefit from taking Fannie Mae, and its cousin Freddie Mac, off of government subsidies, but the agency that oversees them has made little progress in doing so, according to Independent Institute Research Fellow Vern McKinley, author of Financing Failure: A Century of Bailouts.

The Federal Housing Finance Agency (FHFA) recognizes that it’s highly undesirable for Fannie and Freddie to continue to cost taxpayers enormous sums: it estimates that the U.S. Treasury will pay Fannie and Freddie a total of $220 billion to $311 billion through 2014, an amount that includes the bailouts they received in September 2008, during the height of the financial crisis. But the agency says it cannot plan to wind down Fannie and Freddie without congressional action.

“Although not a bald-faced lie, this characterization is certainly misleading, as if to say the pair remains in limbo until Congress acts,” writes McKinley. “FHFA has the power to take them out of conservatorship and place them in receivership which would allow FHFA to ‘place [Fannie Mae and Freddie Mac] in liquidation and proceed to realize upon the assets of [Fannie Mae and Freddie Mac] in such manner as the Agency deems appropriate.’ No excuses.”

Fannie and Freddie Limbo, by Vern McKinley (MyGovCost.org, 3/2/12)

Financing Failure: A Century of Bailouts, by Vern McKinley

MyGovCost.org—Home of the Government Cost Calculator

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3) Energy Protectionism Is Bad Policy

New York Times columnist Thomas Friedman recently lauded America’s growing energy production and argued that the trend is good for Americans. Moreover, he called for the U.S. government to assist the trend by enacting a price floor—via a tax—that would prevent energy prices from falling below a level that would discourage domestic energy production. U.S. energy independence is desirable, according to Friedman, because it would divert oil revenues away from oil-exporting Middle Eastern despots. In his latest op-ed, Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty, takes Friedman to task for advocating what amounts to energy protectionism.

Friedman’s policy would not work as advertised, according to Eland. China and India have a near-insatiable thirst for oil, and so Middle Eastern oil exporters would not suffer if they were to lose American customers. In addition, the vast majority of U.S. consumers are harmed when they are made to pay above-market prices.

“In my new book, No War for Oil: U.S. Dependency and the Middle East, I refute the need for even worrying about American dependence on imported energy and note that if Americans want energy independence, they will pay through the nose for it,” Eland writes. “Protectionism and neo-mercantilism, the government subsidization of certain private businesses at the expense of consumers, are as inefficient in energy as they are in other products and commodities.”

Energy Protectionism Is Not Good Policy, by Ivan Eland (2/29/12)

No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland

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4) Climate Deniers Give Skeptics a Bad Name

The discipline of climate science has more divisions than most of the public is aware. In his latest piece for American Thinker, atmospheric physicist and Independent Institute Research Fellow S. Fred Singer compares three broad segments: (1) “warmistas,” who are characterized by their “fixed views about apocalyptic man-made global warming”; (2) “deniers,” who think that a greenhouse effect would violate the Second Law of Thermodynamics and thus would be impossible; and (3) “skeptics,” who generally hold that human activities can contribute to global warming but that the contribution is not nearly as large as the warmistas claim. Singer, a self-identified climate skeptic, takes to task both the warmistas and the deniers.

The models of the warmistas—such as those touted by the UN Intergovernmental Panel on Climate Change—seem to be based on arbitrary assumptions that allow the models to fit global surface temperature data, according to Singer. However, the models are not tested against other temperature data, such as those obtained from satellites, weather balloons, oceans, or temperature proxies such as tree rings and ice cores. Climate deniers also have problems explaining various observations, depending on who is doing the denying, Singer argues.

Some deniers, for example, don’t believe that human activity has led to more carbon dioxide in the atmosphere. One subgroup ignores isotopic evidence that disproves their hypothesis that the warming of oceans is responsible for increased atmospheric carbon dioxide in the 20th century. Others attribute higher carbon dioxide levels to volcanic eruptions rather than to the burning of fossil fuels, but they have produced no evidence showing that CO2 has surged after a major eruption. “I have concluded that we can accomplish very little with convinced warmistas and probably even less with true deniers,” Singer writes. What, then, should careful scientists do? They should and will continue to make measurements, perfect their theories, and hope that the truth will become clearly evident, Singer concludes.

Climate Deniers Are Giving Us Skeptics a Bad Name, by S. Fred Singer (American Thinker, 2/29/12)

Video: S. Fred Singer Interviewed on KUSI San Diego on Global Warming (2/15/12)

Hot Talk, Cold Science: Global Warming’s Unfinished Debate, by S. Fred Singer

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5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

You can find the Independent Institute’s Spanish-language blog here.

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