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Volume 10, Issue 22: June 2, 2008

  1. New Book Examines Entrepreneurs in Africa and Latin America
  2. Let Oil Markets Work, Urges Shughart
  3. Political Costs to Climb as U.S. Digs Heels in Deeper in Iraq
  4. Eminent Domain Reform in California and Beyond

1) New Book Examines Entrepreneurs in Africa and Latin America

Successful entrepreneurship is by no means unique to the developed economies—far from it. The new book Lessons from the Poor: Triumph of the Entrepreneurial Spirit, edited by Independent Institute Senior Fellow Alvaro Vargas Llosa, presents case studies of entrepreneurs in the developing economies of Africa and Latin America, some starting from abject poverty, who have started some of the most remarkable enterprises on the planet—such as soft-drink maker Kola Real, textile firm Topy Top, supermarket chain Nakumatt, Nigeria’s adire clothing industry, and barter clubs in Argentina.

“Clearly our past solutions and foreign aid policies have not worked and new ideas and directions are needed,” writes Vargas Llosa. “The industrialized and developed countries must find ways to support this drive to innovate and create new products and markets.”

Together, the stories in Lessons from the Poor show how entrepreneurship sometimes thrives despite major obstacles, how entrepreneurship in the developing world has alleviated poverty more effectively than has foreign aid, how obstacles to entrepreneurship create hardship for countless people, and how eliminating international trade barriers allows entrepreneurs in developing countries to leverage their successes by reaching millions more customers.

A project of the Independent Institute’s Center on Global Prosperity, Lessons from the Poor will be of special interest to academics, the business community, relief organizations, policymakers, travelers, and anyone interested in learning how individuals with little capital but tremendous vision and persistence have improved the standard of living for themselves, their workers, and their customers.

Purchase Lessons from the Poor: Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa.

Read a detailed summary.

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa


2) Let Oil Markets Work, Urges Shughart

Oil and gasoline prices climb higher and higher. What’s news is the rapidity of their climb to historically high levels. What’s not news is the operative principle: prices rise when demand grows faster than supply. What should we do about it? Examples of historic cases of run-ups in commodity prices give us a general idea of how the market responds, according to Independent Institute Research Fellow William F. Shughart II.

Among the hundreds of examples worth mentioning, Shughart mentions the following:

* The transition from the Bronze Age to the Iron Age, precipitated by a scarcity of tin,

* The shortage of whale oil used for illumination overcome in the mid 1800s by the development of processes for refining kerosene, later perfected by the Standard Oil Company,

* The turn-of-the-20th-century timber “crisis”, which nearly bankrupted the railroads until they adapted by substituting coal for wood to power their engines,

* The great British-Dutch natural rubber conspiracy of 1922–1925 that tripled prices and was broken by the invention of synthetic fibers.

Market prices encourage consumers to conserve increasingly scarce resources. They also create incentives for suppliers to develop substitute products, Shughart explains. Problems arise and/or persist when governments erect barriers to the delivery of new supplies, such as excessive regulatory barriers to the expansion of oil refineries, or impose price controls.

Regarding today’s high oil prices, Shughart concludes, “If the profit motive is allowed to animate entrepreneurial creativity, this too shall pass.”

“Let the Market Manage the Oil Crisis,” by William F. Shughart II (5/27/08)

Purchase Taxing Choice: The Political Economy of Fiscal Discrimination, edited by William F. Shughart II.

Read the summary.


3) Political Costs to Climb as U.S. Digs Heels in Deeper in Iraq

The U.S. government is quietly negotiating with its counterpart in Baghdad to establish a long-term military presence in Iraq after the U.N.-authorized U.S. occupation expires in December.� These closed-door discussions have provoked criticism among Iraq’s Shi’ia leadership—firebrand leader Moktada al-Sadr and moderate cleric Ayatollah Ali al-Sistani are calling, respectively, for protests and a countrywide referendum. Greater civil unrest may ensue, according to Independent Institute Senior Fellow Ivan Eland.

“If the prospect of such an agreement causes al-Sadr to abandon his cease-fire, this development could cause retaliation by now dormant Sunni fighters, as well as his Shi’i opponents in the Supreme Islamic Iraqi Council’s Badr Brigades,” writes Eland in a new op-ed.

The Bush administration has told Congress that any agreement will not bind the next American president, but this claim offers little comfort to opponents the plan. Not only do treaties tend to create change-resistant inertia, but the administration has said that it would not submit this U.S.-Iraq treaty to the U.S. Senate for ratification.

“Ominous Opposition to a Long-Term U.S. Military Presence in Iraq,” by Ivan Eland (6/2/08)

Pre-order The Empire Has No Clothes: U. S. Foreign Policy Exposed (Updated Edition), by Ivan Eland

Read the summary.


4) Eminent Domain Reform in California and Beyond

On June 3, California voters will weigh in on two initiatives to strengthen private-property rights from eminent domain. If neither measure passes, as poll results from May indicated was likely, foes of government land grabs will need to go back to the drawing board.

One strategy these activists should consider, according to economist Edward Lopez, is to emulate successful reforms enacted in other states since the Supreme Court’s controversial decision in Kelo vs. New London (2005), which upheld the involuntary governmental transfer of private property from homeowner Suzette Kelo to a business developer that promised to enlarge the city’s tax base.

“South Dakota’s new statute runs all of 12 lines long, banning Kelo-style transfers with no exemptions or loopholes,” writes Lopez in a new op-ed. “Florida restricted development takings even for blight. And next door in Nevada, not only are private-to-private takings banned, but the government must show proof of public use for any proposed taking.”

“Will the Real Eminent Domain Reform Please Stand Up,” by Edward J. Lopez (5/29/08)

Also see:

Kelo and Its Discontents: The Worst (or Best?) Thing to Happen to Property Rights,” by Edward J. Lopez and Sasha M. Totah (The Independent Review, Winter 2007)

“Below-Market Housing Mandates as Takings: Measuring their Impact,” by Edward J. Lopez, Edward P. Stringham, and Tom Means


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