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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 7, Issue 7: February 14, 2005

  1. LIBERTY FOR LATIN AMERICA by Alvaro Vargas Llosa
  2. Poor Countries Need Homegrown Market-Based Reforms, Not Foreign Aid
  3. U.S. Trade for North Korean Disarmament
  4. 2005 "Liberty, Economy & Society" Summer Seminars

1) LIBERTY FOR LATIN AMERICA by Alvaro Vargas Llosa

New Book Explains How to Undo 500 Years of State Repression

We are pleased to announce the publication of LIBERTY FOR LATIN AMERICA: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa, senior fellow at the Independent Institute.

In LIBERTY FOR LATIN AMERICA, Alvaro Vargas Llosa offers an incisive diagnosis of Latin America's woes -- and a prescription for finally getting the region on the road to both genuine prosperity and the protection of human rights.

When the economy in Argentina -- at one time a model of “free-market” reform -- collapsed in 2002, experts of all persuasions asked: What went wrong? Vargas Llosa shows that what went wrong in Argentina has in fact gone wrong all over the continent for over five hundred years. Chronicling Latin America's political and economic history, he shows how the republics of the 19th century and the revolutions of the 20th century -- populist uprisings, Marxist coups, state takeovers, and First World-sponsored privatization -- have all run up against the oligarchic legacy of statism. Illiberal elites backed by the U.S. and Europe have perpetuated what he calls the “five principles of oppression” in order to maintain their hold on power. Consequently, the region has become a laboratory for political and economic suicide, while comparable countries in Asia and Eastern Europe have prospered, Vargas Llosa explains.

LIBERTY FOR LATIN AMERICA is divided into four parts. In Part I, Vargas Llosa explores the failure of Latin America, outlining the five principles of oppression: corporatism, state mercantilism, privilege, wealth transfer, and political law. In Part II, he examines how developed nations achieved their success and highlights elements in Latin America that point the right way. In Part III, he discusses every aspect of reform, ending with an assessment of the moral and cultural void into which Latin America has been thrown. Finally, Part IV is a call to arms, which ends with a proposal to remove the five principles of oppression, genuinely reforming institutions and the underlying culture for the benefit of the disempowered public.

In his concluding chapter, Vargas Llosa writes: "The history of Latin America is replete with violence against the individual, a recurrent revolution of the wrong kind. The many symptoms of individual sovereignty sparkling in the thick night of oppression indicate that such is not the natural, voluntary fate of Latin Americans. The recurrence, generation after generation, of the five principles of oppression, however, has ingrained in the minds of many people certain presuppositions that conspire against their own liberation.... My hope is that one of these days, by making the right kind of revolution, Latin America will prevent the umpteenth revolution of the wrong kind."

Praise for LIBERTY FOR LATIN AMERICA: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa (Farrar, Straus and Giroux):

"You may not agree with everything Alvaro Vargas Llosa says in his LIBERTY FOR LATIN AMERICA, but you should take very seriously his central argument: that lack of political and economic freedom is at the root of our region's underdevelopment. With this volume, Alvaro makes an important contribution to the present debate on the causes of Latin America's poor economic and social performance."
-- ERNESTO ZEDILLO, former President of Mexico; Director, Center for the Study of Globalization, Yale University

"LIBERTY FOR LATIN AMERICA is a gripping account of five hundred years of Latin American oppression. But it's not just another re-cycle of that well-worn story. Far from it. Vargas Llosa marshals an impressive array of evidence to successfully make his incisive case: no rule of law, no liberty, no progress. This book is essential reading
-- STEVE H. HANKE, Professor of Applied Economics, Johns Hopkins University; Columnist, FORBES magazine

"Alvaro Vargas Llosa has just published a remarkable book, titled LIBERTY FOR LATIN AMERICA. It is a must-read for all those who are interested in the causes of underdevelopment, and especially for those who have hopes of a remedy. Far from being an essay that goes with the wind, the young Vargas Llosa, a veteran journalist and elegant writer, has constructed his study on a solid scientific basis with an intimate knowledge of the Latin American reality."
-- PEDRO SCHWARTZ, LA VANGUARDIA (Spain); Syndicated Columnist and President of Fundesco

To purchase LIBERTY FOR LATIN AMERICA: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa, see http://www.independent.org/store/book_detail.asp?bookID=55

For a detailed summary, see http://www.independent.org/publications/books/book_summary.asp?bookID=55

BOOK TOUR:

Alvaro Vargas Llosa will appear at the following venues:

Feb. 16. World Affairs Council, 6PM
312 Sutter Street, San Francisco, CA

Feb. 17 Cody's Books, 7:30PM
2454 Telegraph Avenue, Berkeley, CA

For his current itinerary, see http://www.independent.org/events/detail.asp?eventID=106

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2) Poor Countries Need Homegrown Market-Based Reforms, Not Foreign Aid

The United Nations' recent call to cut world poverty by 50 percent -- by having richer countries give twice as much aid to poorer countries -- is "unlikely to promote economic progress and may actually impede," according to Benjamin Powell, director of the Independent Institute's Center on Entrepreneurial Innovation.

"The best way to lift the world's poor masses out of poverty is for their economies to grow and develop. But aid has a horrible track record of promoting development," writes Powell in a recent op-ed. "Numerous economic studies find that increased aid has not fostered better economic performance. African countries now have over 50 years of official development aid with little to show for it. Because aid does nothing to improve economic performance, doubling aid will only double the money wasted on an ineffective program."

If the U.N. wants to promote economic development, it should promote economic freedom, not foreign aid, according to Powell.

"Aid may actually decrease economic freedom in recipient countries because the assistance is often given to governments, increasing their size and power relative to the private sector," writes Powell. "Since governments often reward their political supporters, aid can also delay reform by keeping corrupt governments and their bad policies in power. Aid can also teach impoverished citizens and would-be entrepreneurs that the way to get ahead is to seek government handouts rather than expanding consumer markets.

"The U.N. report did contain one pro-market recommendation: the easing of trade barriers. Encouraging third world countries to lower trade barriers and reducing our own barriers would help impoverished countries raise incomes, employment, and living conditions by expanding the industries to which they are best suited. Getting poor countries to reform is the challenge."

See "Doubling Aid Will Not Help World's Poor," Benjamin Powell (1/28/05) http://www.independent.org/newsroom/article.asp?id=1454

Also see, "State Development Planning: Did it Create an East Asian Miracle?" by Benjamin Powell (Independent Institute Working Paper #54, 9/28/04)
http://www.independent.org/publications/working_papers/article.asp?id=1370

For more on economic development and foreign aid, see
http://www.independent.org/issues/search.asp?subID=16

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3) U.S. Trade for North Korean Disarmament

To encourage North Korea to disband its nuclear weapons, the United States should offer the Stalinist holdout a "carrot" of removing trade sanctions, rather than threaten to use more economic and military "sticks," which would likely make Kim Jong Il even more erratic and dangerous, according to Ivan Eland, senior fellow and director of the Independent Institute's Center on Peace & Liberty.

"The economic isolation of the north and perpetual U.S. saber rattling make a paranoid North Korean regime even more likely to build up its nuclear stockpile," writes Eland in his latest op-ed.

"Instead of economic and military coercion, the United States should take the more positive approach of offering an end to economic sanctions and a non-aggression treaty with the north in exchange for a verifiable elimination -- not freeze -- of the North Korean nuclear program."

Such a policy has been used successfully elsewhere, Eland reminds us. "The promise of reintegration into the world economy played a big role in getting Libya to give up its nuclear program."

See "A Fresh Approach to North Korean Nukes Is Needed," by Ivan Eland
http://www.independent.org/newsroom/article.asp?id=1465

To purchase THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland, see
http://www.independent.org/store/book_detail.asp?bookID=54

To purchase PUTTING "DEFENSE" BACK IN U.S. DEFENSE POLICY, by Ivan Eland, see
http://www.independent.org/store/book_detail.asp?bookID=19

"The Way Out of Iraq: Decentralizing the Iraqi Government," by Ivan Eland
http://www.independent.org/publications/policy_reports/detail.asp?type=full&id=16

Center on Peace & Liberty
http://www.independent.org/research/copal/

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4) 2005 "Liberty, Economy & Society" Summer Seminars

For High School and College Students (Oakland, Calif., June 13-17 & August 8-12)
http://www.independent.org/students/seminars/

Attention, Students:

Want to learn how the world really works -- and how to improve it? “Liberty, Economy & Society,” is a fascinating, five-day seminar on the workings of market forces and how they affect your life.

Led by economist Brian Gothberg, each session includes a stimulating and fun lecture on economic principles, their applications in history and current affairs, and plenty of classroom discussion to help you become more confident in communicating your social ideas and values.

In this informal but information-packed seminar, you will learn:

* How the price system creates order out of “chaos”
* The ongoing battle between competition and monopoly
* The root causes of unemployment, inflation, homelessness, environmental decline, crime, failed schools, and much more
* Solutions for making the world a better place to live in!

Space is limited, so early registration is encouraged. For more information, visit http://www.independent.org/students/seminars/

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