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Volume 11, Issue 40: October 5, 2009

  1. Institute Announces Winners of the 2009 Templeton Fellowships Essay Contest
  2. The Bank Bailout Abomination
  3. Empathy for ‘Adversaries’
  4. The Case for Credit-Based Scoring in Insurance Markets
  5. This Week in The Beacon

1) Institute Announces Winners of the 2009 Templeton Fellowships Essay Contest

The Independent Institute is pleased to announce the winners of the 2009 Sir John M. Templeton Fellowships Essay Contest. This year’s contest required applicants to address the following question: Which virtues contribute the most toward achieving freedom, and how can the institutions of civil society encourage the exercise of those virtues?

In the junior faculty division, Ben O’Neill (University of South Wales, Australia) won $10,000 in first place for “The Threat of Virtue: Why Independence and Integrity Threaten the State.” In second place, Ross Corbett (Northern Illinois University) won $5,000 for “Liberal Education for Liberal Democracy.” In third place, Claudia Williamson (Appalachian State University and New York University) received $1,500 for “Civilizing Society: Virtues, Freedom, and Development.”

In the college student division, Brad Taylor’s (University of Canterbury, New Zealand) “Virtue and the Voluntary” received $2,500 in first place. Second place went to Jordan Paul Smith (Cornell University), along with $1,500, for “Principled Independence.” Lastly, Antonio Zanella (Universidad Rey Juan Carlos, Spain) secured third place—and $1,000—for “Libertarian Entrepreneurs: Lives of Virtuosity and Generosity.” Along with the winners, Honorable Mentions in both divisions will receive a two-year subscription to The Independent Review.

The Independent Institute gratefully acknowledges the generosity of the John Templeton Foundation for funding the contest and contest judges Jonathan Bean (Southern Illinois University), Roderick Long (Auburn University), and Benjamin Powell (Suffolk University) for evaluating the essays.

Read the press release.

Read winning essays.

The 2010 Sir John M. Templeton Fellowships Essay Contest is now open!


2) The Bank Bailout Abomination

One year after former Treasury Secretary Henry Paulson announced the $700 billion Troubled Assets Relief Program two facts are clear: TARP was unnecessary and ineffective.

That TARP was not needed is clear because the program didn’t purchase toxic assets on bank balance sheets, as proposed, according to Randall Holcombe, Research Fellow for the Independent Institute. Instead, TARP funds were used to buy preferred stock in banks, giving the federal government part ownership in them. That it was ineffective should be clear from the economy’s performance.

“Ultimately, what TARP did was provide funds for the government to take an ownership interest in private firms,” writes Holcombe in the San Francisco Examiner. “Nationalizing our financial and industrial firms is not in the public interest. The financial government now owns 80 percent of AIG and 61 percent of GM. TARP was not necessary. It didn’t work. And what it did was undesirable.”

“Year after TARP: $700 Billion Down the Drain,” by Randall G. Holcombe (San Francisco Examiner, 10/2/09)

Housing America: Building Out of a Crisis, edited by Randall G. Holcombe and Benjamin Powell


3) Empathy for ‘Adversaries’

The ability to empathize with one’s adversaries is a valuable asset. Its absence has often undermined U.S. foreign policy. For example, because President Lyndon Johnson did not clearly grasp the desire of the North Vietnamese and the Viet Cong to reunite their country, he underestimated their determination.

Something similar may be happening with respect to Iran, North Korea, Afghanistan and elsewhere, according to Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty. An inability to think the way the leaders and people of those countries think—to understand their full motives, and not just the “motives” we find easiest to understand—is prompting the United States to pursue a faulty course. This type of mistake contributed to the 9/11 terrorist attacks, Eland argues.

“There are notorious dictatorships and terrorists in the world, but their threat to the United States has been exaggerated as an excuse to fulfill the foreign policy agendas of certain politicians, bureaucracies, or interest groups,” writes Eland in his latest op-ed. “Instead, the U.S. should realize that even these outlaws have security fears and are not just hostile to the United States because it is a relatively free country.”

“Empathy for ‘Adversaries,’” by Ivan Eland (9/30/09)

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

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

The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland


4) The Case for Credit-Based Scoring in Insurance Markets

With unemployment and high prices plaguing the economy, many are looking for ways to reduce costs as they struggle to cover everyday expenses. While cutting back is never easy to do, it’s impossible when the expense is mandatory. Unlike health insurance (at least for now), car insurance isn’t optional. If you don’t have it, it is illegal to drive. Traditionally, age, gender, driving history, and geography have been used to determine premiums, but credit scores are gaining recognition as one of the most reliable indicators of a person’s potential insured losses. Although this practice is disputed, a new Independent Policy Report clarifies both sides of the debate and provides an intriguing analysis of what it could mean for the future of insurance markets.

In “Credit-Based Scoring in Insurance Markets,” Independent Institute Research Fellow Lawrence S. Powell responds to the controversy surrounding the use of credit histories in insurance price determination. In his study, Powell (University of Arkansas at Little Rock) discusses the accuracy and appropriateness of credit-based scoring—also known as insurance scoring—and its effect on insurance markets, focusing on its value in the automobile insurance industry.

“When insurers use insurance scores to improve the accuracy of predicted losses, it benefits individuals and society,” writes Powell. “It increases the equity or fairness in insurance pricing outcomes because, on average, premiums are more closely related to consumers’ risk of loss.... It reduces the overall cost of providing insurance because insurance scores are accurate and inexpensive rating variables.”

“Credit-Based Scoring in Insurance Markets,” by Lars Powell


5) This Week in The Beacon

Here are the past week’s offers from our blog, The Beacon.


  • Catalyst
  • Beyond Homeless