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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 8, Issue 21: May 22, 2006

  1. Price Gouging Is Bad Medicine
  2. Government Secrets and Orwellian Farce
  3. Latino Assimilation Should Calm Immigration Fears
  4. Cashing-in on Stay-at-Home Mom's Paycheck

1) Price Gouging Is Bad Medicine

The U.S. Senate's rejection of medical malpractice reform last week left unanswered a question of utmost concern to everyone concerned with health care: Is the increase in medical malpractice premiums paid by doctors caused by escalating jury awards -- or by price-gouging insurance companies?

According to Independent Institute Research Director Alex Tabarrok, those who are quick to believe that insurer "greed" is the culprit must answer some troubling questions. If, for example, profits are easily earned by jacking up premiums, then why did a major medical malpractice insurer leave the market last year? And if doctors are being gouged by greedy insurers, what does one make of the rise of premiums of policies written by doctor-owned insurance companies? The reason behind these seeming anomalies is that premiums do in fact reflect awards -- albeit imperfectly, because insurers can't always tell quickly whether an increase in awards is a temporary blip or a permanent trend.

The latest study by Tabarrok, co-author of JUDGE AND JURY: American Tort Law on Trial, shows that "during the last 30 years every dollar increase in awards has led to a dollar increase in premiums." However, in the 1990s increases in malpractice insurance premiums apparently were not high enough to cover the increase in tort awards -- a mistake that insurers have been trying to rectify in recent years. Another complication: Awards have increased much more in states where judges are elected -- and therefore have incentives to cater to many voters' redistributionist leanings -- than in states where judges are appointed.

See "Price Gouging Is Bad Medicine," by Alex Tabarrok (WALL STREET JOURNAL, 5/20/06)
(Link is perishable.)
Alex Tabarrok's discussion of JUDGE AND JURY: American Tort Law on Trial (AEI, 5/12/06),filter.all/event_detail.asp

To purchase JUDGE AND JURY: American Tort Law on Trial, by Eric Helland and Alexander Tabarrok (The Independent Institute, 2006), see


2) Government Secrets and Orwellian Farce

Attorney General Alberto Gonzales's recent threat to prosecute journalists writing about the National Security Agency's illegal monitoring of U.S.-overseas phone calls "shows what an Orwellian farce the government's classified information system has become," according to Ivan Eland, director of the Independent Institute's Center on Peace & Liberty.

Although federal officials (and governments in general) like to keep under wraps information that might embarrass them, they find it useful to strategically leak classified information when doing so can help them win political points -- as the Valerie Plame case illustrates, Eland argues in his latest op-ed. "Yes, there is some information that should be classified -- for example, intelligence officers in the field (or their foreign sources and contacts) could be killed if their identities were revealed," writes Eland.

"Yet the same Bush administration that may well prosecute reporters for writing about its illegal warrantless spying program conspired at the highest levels to expose the identity of a CIA field officer for political gain.... But the over-classification of much government information makes officials cynical about keeping much smaller amounts of legitimately sensitive data under wraps. Thus, a massive declassification of government information would make the remaining secrets more secure and less open to political manipulation."

See "Government Secrecy Is a Farce," by Ivan Eland (5/22/06)
"El Secreto gubernamental es una farsa"

THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland

THE WAY OUT OF IRAQ: Decentralizing the Iraqi Government, by Ivan Eland

Center on Peace & Liberty (Ivan Eland, director)


3) Latino Assimilation Should Calm Immigration Fears

Foes of immigration to the United States typically assume that immigrants comprise a threat to U.S.-born citizens both economically and culturally. Over the years, THE LIGHTHOUSE has noted several works that have overturned the first assumption. The cultural assumption is also false, according to Alvaro Vargas Llosa, director of the Independent Institute's Center on Global Prosperity.

Hispanics in the United States are assimilating rapidly into American culture, Vargas Llosa argues. They are learning English faster than did Italian and Polish immigrants a century ago, according to Harvard's Marcelo Suarez-Orozco, an expert on immigration. In addition, about 30 percent of first-generation Hispanics are marrying non-Latinos.

"If [immigrants] are creating wealth, learning English, engaging in interethnic marriage, and practicing family values, how are they threateningly different from other humans?" asks Vargas Llosa. "The hostility toward immigration is fueled by post-9/11 national security considerations and economic insecurity arising from globalization. But that is all psychological. There is nothing to fear."

See "Immigration -- The Wages of Fear," by Alvaro Vargas Llosa (5/19/06)
"Inmigración: El salario del miedo"

Spanish-language Blog:
El Independent: El Blog del Centro Para la Prosperidad Global de The Independent Institute


LIBERTY FOR LATIN AMERICA: How to Undo Five-Hundred Years of State Oppression, by Alvaro Vargas Llosa

Center on Global Prosperity (Alvaro Vargas Llosa, director)


4) Cashing-in on Stay-at-Home Mom's Paycheck

A recent claim -- made by a salary consulting firm and released just before Mother's Day -- that today's stay-at-home mother would earn $134,121 a year if her homemaking services were fully paid at market rates is both insulting to mothers and ignorant of sound economics and sound social-science methodology, according Wendy McElroy, a research fellow with the Independent Institute.

"Although the figure is being touted as appreciation of stay-at-home mothers, it is actually both an insult and an absurdity," writes McElroy in a recent op-ed. "Stay at home mothers deserve better."

Although that claim may be good public relations for the consulting firm, it falls far short of objective, unbiased social science. Although the firm's claim was reported by more than 400 newspapers, TV, and radio stations from the U.S. to Australia, it was based on an informal Internet survey. About 400 survey respondents reported the length of time they allocated to various household tasks, numbers which were then assigned a monetary wage allegedly comparable to those paid for similar work in the marketplace, and added together to find the average stay-at-home mother's implied economic value to their household.

Concludes McElroy: "Stay at home mothers and working moms should print out the faux-paycheck that offers at its website Mom's Salary Wizard just for the pleasure of tearing it up."

"Mother's 'Work' Doesn't Warrant Paycheck," by Wendy McElroy (5/9/06)
"El 'trabajo' como madre no garantiza una remuneración"

LIBERTY FOR WOMEN: Freedom and Feminism in the Twenty-first Century

For more by Wendy McElroy, see


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