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The Lighthouse®

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Volume 11, Issue 14: April 6, 2009

  1. A Radical Approach to Ending Drug Crime
  2. German Chancellor Counsels Fiscal Restraint
  3. The Road Ahead Should Not Be Paved with Pork
  4. Obama Retracts “Win-Win” Offer to Russia
  5. This Week in The Beacon

1) A Radical Approach to Ending Drug Crime

Efforts by the United States government to interdict the supply of drugs coming into the country have failed. According to the U.S. Department of Justice, Mexican drug cartels operate in 230 cities in the United States. And last year the feds were able to seize less than $1 billion from the estimated $18 billion to $39 billion in illegal drug revenue bound for Mexico. The Obama administration has distinguished itself from its predecessor by acknowledging that U.S. demand has long been the crucial driver of the drug problem, but its proposal to send anti-drug troops and technology to the Mexican government will also fail, according to Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty.

The failed drug war should prompt U.S. policymakers to consider undermining the profitability of the illicit drug trade by legalizing drugs for adults 21 and over, Eland argues in his latest op-ed.

“Legalizing drugs for adults would turn it into a mainstream business and prices and profits would dramatically drop, thus resulting in far less crime among producers, traffickers, and users,” Eland writes. “If the price dropped, more people might try drugs, but money can better be spent on education campaigns and treatment than on stricter drug laws and penalties and government agents, gizmos, and improved border fences in what has been a multi-decade futile effort to stanch the flow of drugs into the United States.”

“How to Combat Mexican Drug Cartels,” by Ivan Eland (4/6/09)

Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

Ivan Eland on C-SPAN2. Interview by Rep. Ron Paul.

EVENT: “What President Obama Should Learn from His Predecessors,” featuring Ivan Eland and Andrew Rutten (Oakland, Calif., 4/7/09)


2) German Chancellor Counsels Fiscal Restraint

German Chancellor Angela Merkel offered the wisest words during last week’s G-20 summit: noting that the current economic malaise occurred “because we were living beyond our means,” she urged governments to adopt cautious fiscal policies. Hence her crucial vote against the European Union’s proposed $229 billion “rescue package” for Eastern Europe.

Merkel’s opposition to profligate government spending may come from seeing the Japanese government waste $2 trillion by trying to spend its economy back to health during the lost decade of the 1990s, or it may come from historical knowledge of the dangers posed by the serious inflation that large government deficits can create. Regardless, it took political courage for Merkel to voice her opposition to shortsighted fiscal measures only a few months before she is up for re-election, as Independent Institute Senior Fellow Alvaro Vargas Llosa notes in his latest column.

“Promisingly, Merkel’s message seems to have been heard at the grass roots on both sides of the Atlantic,” writes Vargas Llosa. “Figures released in Britain this week show that, much like in the United States, the savings rate tripled in the last quarter. Despite monetary and fiscal efforts to the contrary, people are relearning to live within their means.”

“Angela Merkel, Voice of Reason,” by Alvaro Vargas Llosa (4/1/09) Spanish Translation

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

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


3) The Road Ahead Should Not Be Paved with Pork

America’s highways need work—not only in terms of their physical improvement, but also, and more fundamentally, in terms of the way their construction and maintenance are financed. Most proposals, unfortunately, are at best a mixed bag. A report released in February by the National Surface Transportation Infrastructure Financing Commission illustrates the problem. On the one hand, it proposes the replacement of one type of fuel tax with a user fee based on the number of miles driven. (Total fees assessed would be based on data collected from a signal emanating from a driver’s automobile, similar to E-Z pass systems used today.) This reform alone could greatly reduce waste in road financing.

On the other hand, the report also recommends that all revenues from the fee go straight to Washington, D.C., and be allocated by Congress. As Independent Institute Research Fellow Gabriel Roth suggests, however, that diversion of funds would re-politicize the user-fee revenues, resulting in more waste, fraud, and abuse. A better option would be for states, not the feds, to collect the funds. But not even this is not ideal, according to Roth.

Major reform in transportation funding, Roth writes, “cannot be expected until roads, which are too important to be left to the vicissitudes of politics, are brought into the market economy, and treated like food, water, telecommunications and other necessities.”

“Some Good—and Bad—Ideas for Funding Roads,” by Gabriel Roth (3/30/09)

Street Smart: Competition, Entrepreneurship, and the Future of Roads, edited by Gabriel Roth


4) Obama Retracts “Win-Win” Offer to Russia

On Sunday, President Barack Obama reaffirmed his commitment to missile defense in Poland and the Czech Republic, apparently retracting the secret offer he made earlier to Russian President Dmitry Medvedev. Obama had pledged to abandon U.S. missile defense plans in Poland and the Czech Republic if Russia would cooperate more in halting Iran’s nuclear program.

Such a trade would have come at little cost to the United States, according to Charles Peña, Senior Fellow at the Independent Institute’s Center on Peace & Liberty. The U.S. has publicized missile defense in eastern Europe as a way to counter a potential threat from Iran, but the Islamic Republic’s long-range ballistic missile, the Shahab 3, was never well-suited for targets beyond the Middle East. Moreover, U.S. missile defense in eastern Europe has famously strained U.S.-Russian relations. Thus, tying Russian cooperation on Iran with scrapping missile defense in eastern Europe would have resulted in a net gain for the United States and for Russia.

“Given the potential payoff, employing missile defense as a bargaining chip may be the most cost-effective use of the more than $120 billion that has been unwisely expended [for U.S. missile defense],” concludes Peña.

“Missile Defense as Bargaining Chip,” by Charles Peña (3/23/09)

More by Charles Peña

Twilight War: The Folly of U.S. Space Dominance, by Mike Moore


5) This Week in The Beacon

Below are the past week’s offerings from The Beacon, the web log of the Independent Institute. Your comments are greatly appreciated.


  • Catalyst
  • Beyond Homeless