The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 14, Issue 12: March 20, 2012

1. Timothy Geithner: Bailout Peddler
2. The ‘Study Abroad’ Boondoggle
3. Afghan Occupation Merits Greater Skepticism
4. John Stossel in Oakland, CA, April 19th!
5. New Blog Posts

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U.S. Treasury Secretary Timothy Geithner is rumored to be leaving his post by year’s end. His current effort to put a positive spin on the four-year-old bailout of Bear Stearns can therefore be viewed as a move to enhance his legacy. But that intervention wasn’t an unambiguous success: a good case can be made that the Bear Stearns bailout was the “original sin” in a series of ill-conceived measures that have perpetuated the vulnerabilities of the financial system, according to Independent Institute Research Fellow Vern McKinley.

The Federal Reserve—particularly the New York Fed, which Geithner headed at the time—was caught completely off-guard by the troubles at Bear Stearns and other financial institutions. Geithner made matters worse by appealing to the public’s fears to justify intervention, practically demanding bailouts when cooler heads at the Fed and the FDIC cautioned against them. “Of course, the bailout of Bear Stearns was no elixir, as we ultimately did face lower incomes, lower home values, lower retirement savings, and rising unemployment,” McKinley writes in Investor’s Business Daily.

Geithner’s praise of the Dodd-Frank Act—which nominally prohibits future taxpayer bailouts, but leaves Fannie Mae and Freddie Mac intact and poised to create a future crisis—raises further concerns. So does his and his cohorts’ efforts to keep the bailout decision-making process secret from the public, even years later. Ultimately, history may not look too kindly on Geithner. Both the Tea Party, on the right, and Occupy Wall Street, on the left, have judged the bailouts as corporate favoritism that belies the free-market rhetoric that emanates from much of the political ruling class. Geithner’s legacy is to have helped justify those perceptions.

Timothy Geithner’s Bailout Legacy Not One To Be Proud Of, by Vern McKinley (Investor’s Business Daily, 3/15/12)

Financing Failure: A Century of Bailouts, by Vern McKinley

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Study-abroad programs have proliferated at American colleges and universities in recent years, despite their poor reputation for cultural immersion and academic rigor. Several factors have contributed to their rise: they’ve been cash cows for institutions of higher education, students have enjoyed partying abroad immensely, and many employers have increasingly favored job applicants with overseas experience. Thankfully, some schools are taking steps to improve the educational quality of study-abroad programs. But too many programs have escaped scrutiny—an especially egregious oversight at a time when federal financing is under severe strain, according to Independent Institute Senior Fellow Richard K. Vedder.

In an op-ed for Bloomberg, Vedder writes: “Should students be able to borrow money from the U.S. government, when the government in turn borrows some of the funds from Chinese and other investors to finance these junkets overseas? Federal student debt now exceeds a trillion dollars, so the padding of these numbers by foreign study programs may have broader macroeconomic implications on already stressed federal finances. At a time when we are straining to meet our entitlement and other obligations, we should scrutinize the efficacy of these programs.”

Vedder urges the agencies that accredit colleges and universities to monitor study-abroad programs and certify that they are achieving true academic goals. If the agencies aren’t willing to do this, then organizations such as the Educational Testing Service or ACT could give country-specific exams to test the knowledge of returning students. Schools with consistently poor results could be made to face financial consequences. “The time has come to analyze this use of educational resources dispassionately, using honest assessments of the costs and benefits,” Vedder concludes.

Study Abroad, Goof Off and Fool Your Future Boss, by Richard Vedder (Bloomberg, 3/12/12)

The Academy in Crisis: The Political Economy of Higher Education, edited by John W. Sommer

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The recent killing of 16 Afghan civilians by a U.S. soldier has prompted growing calls for the United States to speed up its withdrawal of troops from the longest war in American history. That these voices include those of Rick Santorum and Newt Gingrich—two superhawks no one has ever mistaken for doves—shows how frustration with the war has spread across party lines. Independent Institute Senior Fellow Ivan Eland applauds the growing skepticism about the U.S. war in Afghanistan but wonders why it isn’t even more widespread.

A recent editorial in the Washington Post, for example, asked why Afghans aren’t more thankful for the sacrifices that American soldiers have made on their behalf. The author seems to have forgotten that after years of night raids, property destruction, and collateral damage, many Afghans view American soldiers simply as an unwelcome occupying force. “Although the Taliban are brutal,” Eland writes in a recent op-ed, “they have one overwhelming positive quality in the eyes of locals—they are Afghans.”

Afghanistan is one country where ordinary locals resent U.S. intervention. But American history offers many other examples of military campaigns that weakened U.S. stature in the developing world—including countries that were subjected to lesser-known U.S. invasions such as Lebanon in 1958, the Congo in 1960, and the Dominican Republic in 1965. “If Americans had greater exposure to all of these historical and more recent U.S. government actions against foreign peoples—and they rarely do—perhaps they would be more ashamed of their government’s policy and would pressure their leaders to be more restrained abroad in the future.”

America Is a Great Country, but Its Attitude Overseas Needs Work, by Ivan Eland (3/7/12)

The Afghan Curtain Falls More Rapidly, by Ivan Eland (3/14/12)

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

Video: Ivan Eland on Syria’s Plight and Future (RT, 2/13/12)

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Emmy Award and Peabody Award–winning TV journalist John Stossel has long argued that the government is not a neutral arbiter of truth. A self-described skeptic, he has dismantled society’s sacred cows with unerring common sense. In his April 19 talk at the Independent Institute, Stossel will debunk the most sacred cow of all: the belief that government can solve our problems.

Stossel insists that we discard the idea of the “perfect” government—left or right—and retrain our brains to look only at the facts, and to live as free individuals. In this upcoming event, he will explain why government never creates more jobs, why free trade works, why regulations harm consumers, why government protection harms the disabled, why minimum-wage laws destroy jobs for the disadvantaged, why “health insurance for everyone” is destructive, why government schools fail, why gun control increases crime, and more. Above all, Stossel will explain why he thinks the time has come for Americans to break free of the government stranglehold.

Event: Why Government Fails—But Free Individuals Succeed
Date: Thursday April 19, 2012
Time: Reception: 6:30 p.m.; Program: 7:00 p.m.
Where: The Independent Institute Conference Center
at 100 Swan Way, Oakland, CA 94621 (Map and Directions)
Admission: $15 for Independent Institute Members, $20 non-members.
Special Admission: $35 for Members, $40 non-members, includes a copy of No, They Can’t: Why Government Fails—But Individuals Succeed (26% off the cover price)

About the Speaker: John Stossel is the celebrated journalist and host of the weekly program Stossel on Fox Business Network, a syndicated columnist for Creators Syndicate, and author of the new book, No, They Can’t: Why Government Fails—But Individuals Succeed. His previous New York Times bestselling books include Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media and Myths, Lies, and Downright Stupidity: Get Out the Shovel—Why Everything You Know Is Wrong. In addition to having received 19 Emmy Awards, Mr. Stossel has been honored five times for excellence in consumer reporting by the National Press Club, and he is the recipient of the George Polk Award for Outstanding Local Reporting and the George Foster Peabody Award.

"There's nothing matter-of-fact about John Stossel's fact-finding. He seeks the truths that destroy truisms, wields reason against all that's unreasonable, and uses and upholds the ideals that puncture sanctimonious idealism. He loves liberty in a way that goes far beyond liberalism. He makes the maddening mad. And Stossel's tales of the outrageous are outrageously amusing."

—P. J. O'Rourke, best-selling author of Eat the Rich and Parliament of Whores

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From The Beacon:

From MyGovCost News & Blog:

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

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