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

Volume 7, Issue 39: September 26, 2005

  1. Telecom Mergers Would Promote Competition
  2. The Foreign-Aid Diversion
  3. Nuclear Non-Proliferation Begins at Home

1) Telecom Mergers Would Promote Competition

Federal regulators should approve two major proposed telecommunications mergers currently under their review -- Verizon and MCI, and SBC and AT&T -- according to Benjamin Powell, director of the Independent Institute's Center on Entrepreneurial Innovation.

"Critics claim these mergers would reduce competition and promote monopoly," writes Powell in a new op-ed. "In reality, these mergers are part of a healthy competitive process and would foster innovation and bring benefits to consumers."

Innovations such as e-mail, instant messaging, high-speed wireless communications, and Voice-over-Internet Protocol have made today's communications market far different than that of twenty years ago. But many merger opponents have not incorporated these developments into their view of what constitutes the "relevant market" in communications, according to Powell.

"Verizon, MCI, SBC, and AT&T don't just face competition from other traditional phone companies," writes Powell. "They face competition from companies like Comcast, Cox Cable, Microsoft, IBM, Intel, and America Online." Approving the mergers would allow Verizon-MCI and SBC-AT&T to develop and deliver new innovations more effectively.

Some opponents of the mergers oppose them because they do not understand the true nature of market competition, Powell notes.

"Competition is not a static state of affairs where market share determines whether an industry is 'competitive.' Competition is a dynamic process where firms discover new ways to innovate and to compete for customers. Businesses merging in order to gain new competencies are a vital part of the competitive process. Consumers will benefit if we preserve the competitive process by allowing these two telecom mergers to proceed."

See "Telecom Mergers are Part of the Competitive Process," by Benjamin Powell (9/13/05)
http://www.independent.org/newsroom/article.asp?id=1568
SPANISH TRANSLATION:
"Las Fusiones de las Empresas de Telecomunicaciones son Parte del Proceso Competitivo"
http://www.elindependent.org/articulos/article.asp?id=1568

Center on Entrepreneurial Innovation (Benjamin Powell, director)
http://www.independent.org/research/coei/

Also see, WINNERS, LOSERS & MICROSOFT: Competition and Antitrust in High Technology, by Stan J. Liebowitz and Stephen Margolis
http://www.independent.org/publications/books/book_summary.asp?bookID=50

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2) The Foreign-Aid Diversion

Although the world's less-developed countries have received more than $2.3 trillion dollars in foreign aid over the past six decades, not one has experienced significantly reduced poverty as a result. (Extreme poverty in the second largest recipient of U.S. aid, Egypt, is just as common as it was before receiving U.S. aid.) Nevertheless, some poor countries have managed to reduce poverty -- by opening up their economies to allow entrepreneurs to develop them.

On average, countries that have moved toward open economies and secure property rights "reduced poverty from 60 to 19 percent of the population in the last three decades," while countries that have not done so have "managed only a twelve percent reduction" in poverty, writes Alvaro Vargas Llosa, director of the Independent Institute's Center on Global Prosperity.

Unfortunately, the recent United Nations' new progress report on foreign aid -- the Millennium Development Goals -- is obsessed with establishing the highly unrealistic goal of halving extreme poverty by the year 2015 -- by getting rich countries to pledge to donate 0.7 percent of their GDP to foreign aid. But perhaps reducing misery isn't the program's primary objective, Vargas Llosa suggests.

Foreign aid "does not have as much to do with alleviating poverty as with blaming rich countries for being rich," writes Vargas Llosa, who notes that the U.N. report lists the sums of money donated by each donor country but not the sum of aid received by each recipient country.

Concludes Vargas Llosa: "Precisely because getting rid of [poverty] is a very worthy goal, the U.N. should focus on reform and on those aspects of its report that are more relevant to development, such as the need to reduce protectionism. Currently, one third of the exports from developing nations are subjected to trade barriers in wealthy nations. Why not direct all that political energy to getting rid of commercial barriers rather than pushing rich nations to throw more capital into the bottomless pit?"

"Millennium Flop," by Alvaro Vargas Llosa (9/16/05)
http://www.independent.org/newsroom/article.asp?id=1571
SPANISH TRANSLATION:
"El Fracaso del Milenio"
http://www.elindependent.org/articulos/article.asp?id=1571

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

Center on Global Prosperity (Alvaro Vargas Llosa, director)
http://www.independent.org/research/cogp/

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3) Nuclear Non-Proliferation Begins at Home

A recent declaration by an anonymous North Korean official suggests that the United States would be wise to pursue other options than expecting North Korea to keep its promise to end its nuclear program. And the best option for promoting Americans' security is for U.S. leaders to recognize that some "rogue" states probably will develop nuclear weapons, according to Ivan Eland, director of the Independent Institute's Center on Peace & Liberty.

"The real threat is that some of these atomic states will sell nuclear technology or know-how to anti-U.S. terrorists, who are even more radical, have no home address, and thus cannot be easily deterred," writes Eland in his latest op-ed. "Better U.S. relations with these states would provide fewer political incentives for them to sell the technology to such terrorists and facilitate U.S. purchase of the technology before these sales occurred."

Eland argues that, recent rhetoric not withstanding, neither North Korea nor Iran, which apparently had also been secretly developing nuclear weapons, poses much of a direct threat to the United States, although they may threaten the U.S. Empire. "If the United States had not invaded Iraq, Iran's neighbor, and was not defending a South Korean nation that is wealthy enough to provide its own security, it would have little cause to come into conflict with either faraway nation."

American leaders, according to Eland, have failed to "realize that U.S. military interventions overseas are creating powerful incentives for countries to acquire such weapons to gain some respect from the superpower" -- i.e., the United States.

"If the United States meddles less into the affairs of other nations, those countries will have less incentive to develop nuclear weapons. Thus, U.S. nonproliferation policy should begin at home," Eland concludes.

See "U.S. Must Resign Itself to 'Rogue' State Nukes," by Ivan Eland (9/26/05)
http://www.independent.org/newsroom/article.asp?id=1576
SPANISH TRANSLATION:
"Los Estados Unidos Deben Resignarse a que los Estados 'Pícaros' Posean Armas Nucleares"
http://www.elindependent.org/articulos/article.asp?id=1576

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

Center on Peace & Liberty (Ivan Eland, director)
http://www.independent.org/research/copal/

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