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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 8, Issue 52: December 18, 2006

  1. What Not to Do in Iraq
  2. San Diego's Wal-Mart Ban
  3. Lessons from Pinochet
  4. Chavez and the Fascist Left in Latin America

1) What Not to Do in Iraq

The release of the Iraq Study Group's report, critiquing U.S. policy in Iraq and proposing new approaches, unfortunately fails to outline a qualitative shift in policy and only provides, much like the president's strategy, a "bridge to nowhere," according to Ivan Eland, Director of the Independent Institute's Center on Peace and Liberty.

In a new op-ed, Eland presents a list of the "Top Ten Things Not to Do in Iraq." His number one recommendation is not to send more U.S. troops to Iraq. "By pursuing this course," writes Eland, "neoconservative armchair generals--such as Frederick Kagan--who helped Bush get into this mess, want to help him dig the hole deeper." The reality, however, as Former Secretary of State and Chairman of the Joint Chiefs of Staff Colin Powell said, is that "there really are no additional troops." Furthermore, the American people appear fed up with the war and want the troops home.

Foreign policymakers need to face the grim truth, says Eland, reject half-way solutions that amount to continuing with current strategy, and relinquish their rhetorical devotion to "democracy" and "victory" in Iraq, as well as to the goal of keeping Iraq a unified country.

"Top Ten Things Not to Do in Iraq," by Ivan Eland (12/18/06)
Spanish translation:

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

PUTTING “DEFENSE” BACK INTO U.S. DEFENSE POLICY: Rethinking U.S. Security in the Post-Cold War World, by Ivan Eland

"The Way Out of Iraq: Decentralizing the Iraqi Government," by Ivan Eland

Center on Peace & Liberty (Ivan Eland, Director)


2) San Diego's Wal-Mart Ban

We often hear arguments that Wal-Mart hurts communities by driving small retailers out of business and leading to a homogenization of commercial society. In response to such concerns, the San Diego city council has voted 5-3 to prohibit stores larger than 90,000 square feet that devote 10 percent of their space to merchandise not subject to sales tax. The real target of the legislation is Wal-Mart, which has yet to open a store in San Diego.

Benjamin Powell, Director of the Independent Institute's Center on Entrepreneurial Innovation, challenges the rationale behind the ban in a new op-ed "Banning Wal-Mart is Bad for San Diego." According to Powell, the common claim that Wal-Mart is bad for local mom-and-pop businesses is questionable, given new academic research. "In 2001," writes Powell, "Michael Hicks and Kristy Wilburn published a study in the Review of Regional Studies that examined the effect of Wal-Mart stores in West Virginia. They found that contrary to popular belief, the entrance of Wal-Mart into a community actually led to an increase in the number of retail establishments and an increase in total retail employment. After taking into account other jobs lost because of Wal–Mart’s entry, they found that in the long run on net 54 jobs were added in counties where Wal-Mart opened a new store."

Powell explains that "[a]lthough competition from Wal-Mart may put some small retailers out of business, other businesses that complement rather than compete with Wal-Mart are sometimes better able to open shop." As for the city planners with their vision to maintain a quaint, "livable" community without large retailers, Powell asks, "what about other people’s visions and desires for products? Why should the council be able to impose their vision on others?" He points out that "the appropriate way to answer these questions is through the voluntary process of the market, where consumers are free to patronize or not patronize stores of their own choosing. In a free market, the stores that come into existence and survive are those that best correspond to consumers’ preferences: the diverse mix of stores by size, location, prices, and types of goods and services reflects the collective vision of countless consumers, who vote with their dollars. "

"Banning Wal-Mart is Bad for San Diego," by Benjamin Powell (12/7/06)
Spanish translation: "Prohibir a Wal-Mart es malo para San Diego"

“More Anti-Wal-Mart Hysteria,” by Benjamin Powell (4/26/06)

Center on Entrepreneurial Innovation (Benjamin Powell, director)


3) Lessons from Pinochet

In the wake of the recent death of Augusto Pinochet, it is worth reflecting on his dictatorial reign in Chile and what both friends and opponents of free markets can learn from it.

In “Lessons from Pinochet,” Alvaro Vargas Llosa, Director of the Independent Institute’s Center on Global Prosperity, reminds us of some core truths that Pinochet’s legacy should teach us about political economy. “The first lesson,” writes Vargas Llosa, “is that social utopias always end in tears. Chile had a democratic tradition when the Marxist left came to power in 1970, but that tradition was not strong enough to withstand the revolutionary path that President Salvador Allende chose to take. Scorning the institutions that had allowed it to gain power, the left pushed the system beyond its limits, thereby causing a brutal military reaction. Today’s Chilean Socialists have learned from that experience.”

Not only socialists, however, can learn a good deal from Chile’s experience, according to Vargas Llosa. It has also made clear “that free markets and dictatorial governments are ultimately incompatible because a free economy requires a dispersion of power that will eventually limit the capacity of those who control the government to perpetuate themselves. Yes, Chile’s economic reforms under Pinochet were very successful. But they generated a middle class that hated being ruled by soldiers. Ironically, Pinochet’s successors proved to be better guarantors of the open economy than the general himself. Since 1973, annual economic growth has been four times bigger, on average, than between 1810 and the day of the military coup.”

One crucial truth that Vargas Llosa stresses when considering Pinochet’s policies “is that human rights are not an invention of human rights groups. . . . Nothing justified killing 3,197 people, torturing more than 29,000, and sending thousands into exile, as reported by the National Commission for Truth and Reconciliation in 1991. That cruel toll was not the price paid for stability—which really came with the end of the military regime—but the inevitable consequence of rule by men in uniform.” Furthermore, the Nixon administration’s failure to grasp the intolerable excesses of Pinochet’s regime “helped fuel anti-American sentiment in the Western Hemisphere.”

“Lessons from Pinochet,” by Alvaro Vargas Llosa (12-13-06)
Spanish translation: “Lecciones de Pinochet”

“Pinochet,” by Alvaro Vargas Llosa (The Wall Street Journal, 12-12-06)


4) Chavez and the Fascist Left in Latin America

With Hugo Chavez’s reelection as president of Venezuela this month, we are hearing talk about the rise of the left with a new socialism for a 21st-century Latin America. However, according to William Ratliff, Adjunct Fellow at the Independent Institute, such terms as “leftist” and “socialism” have limited value in assessing the political reality of the region.

“For some,” writes Ratliff in a new Institute op-ed, “‘left’ mainly means anti-American, and certainly Chavez and his acolytes in at least half a dozen countries are that.” While some of this anti-American sentiment is a reaction to U.S. drug and foreign policies, it is mostly misguided. Moreover, Ratliff questions why this should be associated with the “left,” given that “the ‘right’ in Latin America is often as hostile toward America as the ‘left.’”

Concerning economic policy, commentators “point to the presidents of Brazil, Chile, Peru and Uruguay, all members of long-recognized socialist-oriented parties and fronts.” Ratliff contends that these leaders, while perhaps “more overtly communitarian than candidates they beat at the polls,” have “basic economic perspectives, however unevenly applied, [that] are far more indebted to Milton Friedman, with their emphasis on monetary stability and markets, than to Karl Marx.”

Chavez, in contrast, “ceaselessly spouts phrases from Fidel, Mao Zedong and Simon Bolivar.” Nevertheless, Ratliff notes that Chavez is not the archetypal leftist, considering “his international orientation and the fact that his arrogance is funded by multi-billions of dollars pouring in from oil sales to energy addicts worldwide, much of which he passes out to supporters at home and abroad.” Ultimately, Chavez’s policies, such as his coercive treatment of the energy companies, are a throwback to a failed past of corrupt “strongman” leaders and paternalistic governance, and follow a legacy “of leaders and governments of the ‘right,’ ‘center’ and ‘left,’ of pre-colonial Indians, Spaniards, Portuguese and post-independence Latins, of authoritarian, democratic, civilian and military regimes. Almost none have permanently improved access to food, good jobs, serious education, equality before the law or personal opportunities for the people as a whole.”

In light of Chavez’s governing style, Ratliff invokes British historian Hugh Thomas, who “described Fidel Castro’s regime as ‘fascist left,’ meaning ‘a regime with totalitarian leftwing goals established and sustained by methods of fascism.’ But true socialist goals,” continues Ratliff, “are seldom realized anywhere, so what emerged in Cuba was the state fascism.”

“Chavez and the Fascist Left in Latin America,” by William Ratliff (12-18-06)
Spanish translation:


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