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Volume 8, Issue 49: December 4, 2006

  1. Russia's Dirty War
  2. Capital Flight
  3. Prelude to the Iraq Study Group
  4. Last Call: "Liberty and Leviathan"

1) Russia's Dirty War

In the 1990s, Vladimiro Montesinos, Peru's de facto spymaster, declared war against selected critics of Alberto Fujimori's authoritarian regime. Ultimately, the critics -- a small band of journalists, former government spies, and an exiled businessman -- prevailed: Fujimori fell from power and Montesinos was imprisoned.

This saga teaches key lessons that seem applicable to Putin's Russia -- if the murders of journalist Anna Politkovskaya and defecting spy Alexander Litvinenko are any indication, explains Independent Institute Senior Fellow Alvaro Vargas Llosa in his latest column for the Washington Post Writers Group.

"Few people inside or outside of Russia have paid much attention to these journalists and informants, or to Boris Berezovsky, the businessman who funds part of the effort to expose the autocratic regime from London," writes Vargas Llosa. "And yet Putin and his secret service clearly understand how dangerous these people are precisely because they possess those things I mentioned in relation to Peru’s secret war: a combination of inside information, journalistic zeal and funding; a sanctuary in London where most exiles can expect to endure for as long as necessary; and the moral ambiguity necessary to be effective. Many of Putin’s enemies, including Litvinenko and businessman Berezovsky, were once part of that system which they have spent so much energy fighting against."

Although Putin's regime has numerous advantages over its critics, including Europe's dependence on Russia's natural gas and the U.S. preoccupation with the war on terror, the Peruvian episode suggests that Putin's critics may well bring down a corrupt regime -- if they can keep from being silenced.

See "Russia's Dirty War," by Alvaro Vargas Llosa (11/30/06)
"La guerra sucia"

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

THE CHE GUEVARA MYTH, by Alvaro Vargas Llosa

Center on Global Prosperity (Alvaro Vargas Llosa, director)

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


2) Capital Flight

For at least six years, U.S. capital markets have been losing business to other countries. In 2000 about one third of the IPOs of corporations based in highly developed foreign countries were issued on an American stock exchange; by 2006, that share has fallen to 10 percent. The fall in U.S. market share is even more dramatic if one considers the value of those IPOs. Surprisingly, the trend is the same even if we exclude technology stocks.

In his latest FINANCIAL POST op-ed, "Capital Flight," Independent Institute Research Fellow Pierre Lemieux argues that overbearing securities regulations, such as Sarbanes-Oxley, are an important reason that U.S. exchanges are losing business to foreign exchanges. Worse, there's reason to believe the trend may spread elsewhere: "In London, some fear that the participation of Nasdaq in the London Stock Exchange could introduce detrimental U.S. regulations through the back door," writes Lemieux.

A regulatory contagion would be horrific for many reasons. Not only would capital-strapped firms have fewer attractive markets in which get investors, all of us would suffer because it would become more difficult to accurately diagnose the ills of over-regulated capital markets. As Lemieux explains, "Had it not been for less-regulated markets in the world, we would never have known for certain that investors think that American regulation is inefficient. In capital markets, as in other markets, market-sustained diversity is an advantage, not a cost."

"Capital Flight," by Pierre Lemieux (FINANCIAL POST, 11/30/06)

Also see, "Four Years After Enron: Assessing the Financial-Market Regulatory Cleanup," by Roy C. Smith and Ingo Walter (THE INDEPENDENT REVIEW, Summer 2006)


3) Prelude to the Iraq Study Group

Two new op-eds from the Independent Institute size up the likely recommendations of the Iraq Study Group to be released later this week. In "The Good, the Bad, and the Ugly," Charles Pena, the latest addition to the Center on Peace & Liberty, examines three options: "go home," "go big," and "go long" (i.e., first increase U.S. troop levels, then scale them back). Also, Pena argues that none of these options will significantly curb the sectarian violence pulling Iraq apart.

"The proposed 'go long' troop increase is insufficient to mount a serious counterinsurgency military effort," writes Pena. "But it is more than enough to give Iraqis greater reason to chafe under the yoke of foreign occupation to fuel, rather than dissipate, the insurgency and for Muslims to increase the call for jihad to expel the infidel. The result will be to make an already ugly situation even uglier."

In "The Coming Clash Over Iraq Policy," Ivan Eland, director of the Center on Peace & Liberty,examines a range of criticism of Bush's steadfastness. They range from that of outgoing Defense Secretary Donald Rumsfeld, who recommends that we lower our expectations for Iraq, to that of Sen. John McCain (R-AZ), who has said that if the U.S. doesn't send more troops, it would be immoral to continue to risk the lives of the troops currently stationed there. In addition, more criticism would likely come from politicians running for election in 2008.

"The Democrats are also rhetorically pressuring the president to leave," writes Eland, "but may secretly hope that he stays, thus insuring their electoral sweep in 2008. If they are smart, the Democrats will give the president just enough rope to figuratively hang himself. They will provide all the funding he wants so that he can't say that they 'lost Iraq' -- as Henry Kissinger and the Republicans did when the Democratic Congress cut off funding for the Vietnam War. But the Democrats will continue pushing to withdraw, thus highlighting an alternative to their Republican colleagues, who will be again tied to the cement overshoes of war."

"The Good, the Bad, and the Ugly," by Charles Pena (11/27/06)
"Lo bueno, lo malo, y lo feo"

"The Coming Clash Over Iraq Policy," by Ivan Eland (12/4/06)
"El enfrentamiento sobre la política de Irak que se viene"

THE EMPEROR 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)


4) Last Call: "Liberty and Leviathan"

Independent Institute Senior Fellow Robert Higgs will discuss his latest book, DEPRESSION, WAR, AND COLD WAR, at the Independent Institute conference center in Oakland, Calif., on the evening of Wednesday, December 6.

In his paradigm-launching book, CRISIS AND LEVIATHAN: Critical Episodes in the Growth of American Government (1987), Higgs explained why the proximate cause of big government in the United States has been military and economic crises. In AGAINST LEVIATHAN: Government and a Free Society (2004), he exposed the despotism and hypocrisy of the American regulatory-welfare state. Both books offered a plethora of insights and historical nuggets about liberty and its suppression by a government growing in size and scope, but Higgs's latest book digs even deeper into the belly of the beast.

In DEPRESSION, WAR, AND COLD WAR: Studies in Political Economy (2006), Higgs closely examines the pivotal events of the past century that have shaped the political and economic institutions of America today. In the process, he debunks popular myths about the Great Depression and the World War II economy, sheds light on the economic miracle that occurred during the postwar demobilization, and explains how petty politics transformed the U.S. defense industry -- often at the expense of the genuine defense of the American public. This is essential information you need to have if you want to understand at a deep level why liberty has given way to big government -- or to help reverse the trend!

Prior to his talk, the renowned scholar of psychiatric coercion and abuse Thomas Szasz will present Robert Higgs and Robert Spillane with the 2006 Szasz Awards for Outstanding Contributions to the Cause of Liberty.


Wednesday, December 6, 2006
Gala reception and book signing: 6:30 p.m.
Program: 7:00 p.m.


The Independent Institute Conference Center
100 Swan Way
Oakland, CA 94621-1428
For a map and directions, see


$15 per person ($10 for Independent Institute Members)

Reserve tickets by calling (510) 632-1366 or ordering online at

"DEPRESSION, WAR, AND COLD WAR presents very interesting and important reinterpretations of the role of government in the economy since 1930. All points along the political spectrum will find ideas of considerable value here."
--STANLEY L. ENGERMAN, Munroe Professor of Economics, University of Rochester

"DEPRESSION, WAR, AND COLD WAR is an important book. Those interested in the interaction between the domestic economy, war and heavily armed peace, will find it essential reading."
--PAUL JOHNSON, author, Modern Times and A History of the American People

"DEPRESSION, WAR, AND COLD WAR marks Higgs as one of the most important and original political analysts of our time. An intellectual tour de force!"
--JONATHAN BEAN, Professor of History, Southern Illinois University


For more information about this event, see


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