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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 16, Issue 31: August 5, 2014

  1. More on Children Crossing the Border
  2. Obamacare’s Bad Medicine for Jobs
  3. Presidents and Their Land-Grabs
  4. Common Core Reconsidered
  5. New Blog Posts
  6. Selected News Alerts

1) More on Children Crossing the Border

Last week, The Lighthouse emphasized the role of the U.S. War on Drugs in causing the influx of unaccompanied minors from Central America entering the United States via Mexico. This week, we look at other aspects of the recent border story brought to light by three Independent Institute Senior Fellows. According to Benjamin W. Powell, the wave of children entering the country illegally doesn’t pose a fiscal crisis for the United States; it’s an opportunity to help grow the U.S. economy by enlarging the labor force and deepening the division of labor. “The immigrant children would provide modest net economic gains to us once they are adults,” Powell writes in the Huffington Post.

Commentators from across the political spectrum have overlooked deep problems the recent border crossings have exposed. In an op-ed for the Daily Caller, Independent Institute Research Director William F. Shughart II highlights two: the failure to enforce property rights on both sides of the U.S. border, and the likely success of special-interest groups using the border issue as a wedge to insert their pet projects into the U.S. budget (including ambitions such as growing the welfare state and winning elections). He counsels Central American governments to hasten pro-liberty reforms and urges the U.S. government to avoid playing the role of the world’s policeman or its wet nurse.

Alvaro Vargas Llosa, whose 2013 book on immigration, Global Crossings: Immigration, Civilization, and America, racked up two prestigious awards at BookExpo America last May, explains in Investor’s Business Daily the importance of distinguishing refugees from ordinary immigrants. Children fleeing drug gangs and sex traffickers in Honduras, Guatemala, and El Salvador belong in the first group, whereas ordinary Mexican workers who entered the United States to pick crops before the Great Recession reduced illegal immigration belong to the latter group. It’s important to maintain the distinction, Vargas Llosa argues, lest the humanitarian crisis derail sensible efforts to reform immigration policy. Creating a flexible immigration system would serve urgent needs of the U.S. labor market. “Hopefully, successful immigration reform also will generate a more rational atmosphere in which to deal with humanitarian crises when they arise,” he concludes.

Kids Crossing Our Border: Refugees from Violence, by Alvaro Vargas Llosa (Investor’s Business Daily, 8/1/14)

Chaos and International Child Abuse on America’s Southern Border, by William F. Shughart II (The Daily Caller, 7/31/14)

Children at the Border Are Not a Crisis for Americans, by Benjamin W. Powell (The Huffington Post, 7/29/14)

Global Crossings: Immigration, Civilization, and America, by Alvaro Vargas Llosa


2) Obamacare’s Bad Medicine for Jobs

Why is the U.S. job market taking so long to recover from the Great Recession? Some of the blame rests with President Obama’s signature legislative accomplishment—Obamacare. Why? The 2010 healthcare reform law requires employers of a certain size to provide insurance coverage for their employers, but those mandates don’t kick in until January 2016. Nevertheless, they are already putting a crimp in hiring, according to Independent Institute Senior Fellow John C. Goodman, author of Priceless: Curing the Healthcare Crisis.

One reason has to do with expense-avoidance strategies, Goodman explains. Businesses have two ways to avoid the employer mandate. First, if they have less than 50 employees, they are exempt from the mandate; otherwise they must provide coverage or be subject to fines of $2000 per worker. The 50-employee provision therefore creates incentives for small companies to outsource certain jobs or to adopt labor-saving technology, rather than grow their workforce to that of a medium-sized company. Second, employers don’t have to provide coverage for employees who work less than 30 hours per week. And this exemption encourages companies to hire part-timers rather than full-time employees. Both the 50-employee provision and the 30-hour provision discourage robust job growth and generous worker earnings.

Obamacare’s premium-lowering tax credits also discourage some degree of working. The way they are structured means that low-wage earners face a huge implicit tax increase when household income rises to the level at which the tax credits drop off. “In fact, [University of Chicago economist] Casey Mulligan estimates that Obamacare imposes the third largest increase in marginal tax rates in the past 60 years, lowering the return from working by 10 percent,” Goodman writes. That disincentive to work reverberates throughout the economy. By discouraging working at a higher nominal wage, economic output is about 5 percent less than what it would otherwise be, according to Harvard economist Greg Mankiw. “This indirect cost to the economy equals more than $8,000 per household per year,” Goodman concludes.

Will Obamacare Cost You Your Job?, by John C. Goodman (Townhall, 7/28/2014)

What France Can Teach Us about Obamacare, by John C. Goodman (Forbes, 7/30/2014)

Priceless: Curing the Healthcare Crisis, by John C. Goodman


3) Presidents and Their Land-Grabs

In June, President Obama announced that he would use his authority to create a national monument in the Pacific Ocean that would put nearly 700,000 square miles off limits, or nearly off limits, to commercial activities. Land grabs by presidents are often controversial, and even before Obama spoke, the House of Representatives passed legislation that would remove such discretionary power from his hands. But it’s unlikely to get out of a Senate committee. In fact, eight similar bills failed to report out of the House during the 2011 to 2013 congressional term. In her latest op-ed in The Hill, Independent Institute Research Fellow Wendy McElroy explains the controversy.

To provide more historical context, McElroy notes that presidents have been unilaterally declaring national monuments ever since passage of the Antiquities Act of 1906. But there’s a problem. The U.S. Constitution expressly grants Congress, not the president, power to dispose of or regulate U.S. territory and property (see Article IV, Section 3).

In addition to the perennial conflict between Congress versus the Executive branch, McElroy also asks us to consider the divide between Democrats and Republicans. The former enjoy far stronger support from environmentalists, and Republican presidents sometimes reverse the land-use executive orders of Democratic predecessors. (Think of George W. Bush ending Clinton’s ban on road building in national forests.) Also, creating a national monument allows a president to reward supporters. As McElroy aptly writes, “National monuments are not just about preserving land. They are about preserving territory.”

National Monuments, About Land or Territory?, by Wendy McElroy (The Hill, 7/28/14)


4) Common Core Reconsidered

The U.S. Department of Education opened its doors in 1980, but federal involvement in K-12 schooling goes back much further. In 1958, Congress debated the National Defense Education Act, an aid program that Senator Barry Goldwater rightly predicted would enable the feds to begin exerting control over schooling. Thus the current debate over Common Core reflects many of the same concerns about the federal government’s role in education going back almost 60 years. Independent Institute Research Fellow Vicki Alger highlighted some of these problems recently in The Beacon.

Advocates of Common Core have called the program a voluntary, state-led program that will promote high standards and local accountability. In reality, the federal government rewards states that sign on to it and penalizes states that don’t. Even so, four of the 45 states that said they would adopt Common Core standards have reversed their position: Indiana, South Carolina, Missouri, and Oklahoma. Eleven additional states have pulled out of Common Core testing consortia or are considering doing so. Why are states representing millions of voters having second thoughts? One reason is the Common Core curriculum. Critics have rightly noted its politicized and dumbed-down aspects.

Another reason is personal privacy. The Common Core testing consortia are collecting information about family incomes, political and religious affiliations, and student disciplinary records—“all without parental consent,” Alger writes. Moreover, parents concerned with educational quality but worried about Common Core have another model that they can look to, a model that offers the potential of flexibility in education, rather than a one-size-fits-all approach: school choice. “Ultimately, Common Core rests on the faulty premise that a single, centralized entity knows what’s best for all 55 million students nationwide,” Alger writes. “Raising the education bar starts with putting the real experts in charge: students’ parents.”

More States Abandoning the Sinking Common Core Ship, by Vicki Alger (The Beacon, 7/28/14)

More on education policy


5) New Blog Posts

From The Beacon:

“Creepy Uncle Sam” Obamacare Care-nival
David J. Theroux (8/4/14)

Classifying America: Government’s Power to Define Is the Power to Discriminate
Jonathan Bean (8/3/14)

Gov. Brown Invokes Religion to Open the Border, but Path to Faith-based Schools Remains Closed
Vicki Alger (7/31/14)

Another Federal Mandate – Or, How I Misspent My Summer Vacation
Robert Whaples (7/31/14)

Gross Domestic Product: Is Health Spending Figured Out?
John R. Graham (7/31/14)

Technology Can Make the Regulatory State Obsolete
Lawrence J. McQuillan (7/30/14)

The War on Poverty and the War on Drugs
Randall Holcombe (7/29/14)

Muckraker or Special Pleader?
William Shughart (7/29/14)

Sweatshops: Misunderstood Paths Out of Poverty
Carl Close (7/29/14)

Ban Government—Not Sweets—in Schools to Combat Bureaucratic Obesity
Vicki Alger (7/28/14)

From MyGovCost News & Blog:

Will Criminal Investigation Make It Across the Bay Bridge?
K. Lloyd Billingsley (8/4/14)

Bureaucrats Behaving Badly
Craig Eyermann (8/4/14)

Science: Cutting Spending Better Than Raising Taxes
Craig Eyermann (7/31/14)

IRS-FEC Axis Abuses Taxpayers
K. Lloyd Billingsley (7/30/14)

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


6) Selected News Alerts


  • Catalyst
  • Beyond Homeless