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Volume 6, Issue 33: August 16, 2004

  1. How Not To Make Housing More “Affordable”
  2. In Defense of Off-Label Drug Treatments
  3. Bad Incentives Weaken American Security
  4. Ivan Eland on the Airwaves
  5. New Independent Institute Website!

1) How Not To Make Housing More “Affordable”
In the name of making housing more affordable, communities across the country have made it less affordable, according to economist Ben Powell, director of the Independent Institute’s Center on Entrepreneurial Innovation.

So-called affordable housing mandates (a.k.a. “inclusionary zoning”)—which require homebuilders to set aside a portion of their developments for “affordable” units—have been especially counterproductive. In effect, such mandates act as a tax on developers, greatly discouraging them from building both market-rate and sub-market-rate housing, Powell argues.

“In the first year after affordable housing mandates were adopted throughout the San Francisco Bay Area, new home production fell more than 30 percent and the price of a new home increased by up to $44,000 in the typical city,” writes Powell in a new op-ed. “Because these mandates push builders away, few ‘affordable’ units even get built: fewer than 15 units per year have been built in the typical Bay Area city. In short, affordable housing mandates help few while making homes more expensive for the vast majority of homebuyers.”

Powell also argues that local governments should avoid trying to preserve their community’s existing mix of jobs and businesses and should look to the market for the provision of “street construction and maintenance, water and sewer provision, and even security and fire protection.”

See “How to Make Monterey County More Affordable,” by Benjamin Powell (8/13/04)

Also see:

“Is Urban Planning ‘Creeping Socialism’?” by Randal O’Toole (THE INDEPENDENT REVIEW, Spring 2000)

To learn more about market alternatives to urban planning and to government provision of “municipal” services, order THE VOLUNTARY CITY: Choice, Community, and Civil Society, edited by David Beito, Peter Gordon, and Alexander Tabarrok


2) In Defense of Off-Label Drug Treatments
Progress in medicine requires fortuitous discoveries, which in turn depend upon experimentation. One of the most important sources of medical knowledge is the “off-label” use of drugs approved by the FDA for other uses, as Alexander Tabarrok, research director at the Independent Institute, explained in the summer 2000 issue of THE INDEPENDENT REVIEW. Many off-label treatments, in fact, have been successful for so long that calling that use “experimental” is misleading.

Viagra, for example, was first approved to treat angina before its efficacy in treating erectile dysfunction was discovered. Viagra also has been found useful in the treatment of pulmonary hypertension and has been used to help premature babies breathe—all discoveries that originated from off-label clinical use.

Unsurprisingly, medical doctors are well aware of the beneficial role of off-label drug treatments—after all, they’re the ones who discover and administer the alternative treatments, as Tabarrok and his colleague Daniel B. Klein explain in a recent article in REGULATION.

“In an online survey, we asked nearly 500 doctors whether the FDA should hold off-label uses to proof-of-efficacy requirements; the doctors responded with a resounding no,” Klein and Tabarrok write. “Fully 94 percent opposed the requirements, and many wrote strongly worded objections that described the requirements as ‘clearly naive,’ ‘stupid and unethical,’ ‘dangerous,’ ‘disastrous,’ and claimed ‘medicine would grind to a halt.’”

Curiously, although nearly all doctors surveyed opposed efficacy requirements for drugs used for off-label prices, most doctors favored the FDA’s efficacy requirement for a drug’s initial, “on-label” use. Klein and Tabarrok show, however, that many of the reasons the doctors offered for this position don’t hold up to scrutiny. Some doctors, for example, replied that initial efficacy requirements enhance the knowledge of safety—to which Klein and Tabarrok answered, “if stronger safety testing is the goal, it ought to be pursued and justified in those terms.”

“The experience with off-label prescribing and the experience of pre-1962 America suggest that initial efficacy requirements may do more harm than good. Dropping efficacy requirements is a proposal that should be taken seriously,” Klein and Tabarrok conclude.

See “Who Certifies Off-Label?” by Daniel B. Klein and Alexander Tabarrok (REGULATION, Summer 2004), at (PDF requires Adobe Acrobat)

Also see:

“Assessing the FDA via the Anomaly of Off-Label Drug Prescribing” by Alexander Tabarrok (THE INDEPENDENT REVIEW, Summer 2000)

For a comprehensive critique of the U.S. Food and Drug Administration, see

To order AMERICAN HEALTH CARE: Government, Market Processes, and the Public Interest, edited by Roger D. Feldman, see


3) Bad Incentives Weaken American Security
Why have Americans stayed away from the Athens Olympic games in droves? Why are American athletes and spectators encouraged to hide their national identity at the Olympic games?

“The answer is simple,” writes Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty. “Although the U.S. government repeatedly warns its citizens of imminent terrorist attacks and takes draconian measures—both at home and abroad—in the name of ‘national security,’ it really does not have many incentives to actually make those citizens safer.”

Instead of improving security for Americans, the U.S. government has pursued foreign policies that have fueled anti-U.S. sentiment in the Middle East and the Islamic world—and has done so because it faces incentives to cater to special-interest groups, according to Eland. It is U.S. foreign policy and not, as President Bush has said, America’s wealth, culture and freedom that has made Americans the targets of enraged Islamists.

“The president’s statements fly in the face of opinions of experts on Osama bin Laden’s motivations—such as [“Mike”—the anonymous intelligence official who authored IMPERIAL HUBRIS] and Peter Bergen, one of the few Western reporters who has interviewed the head of al Qaeda. President Bush’s rhetoric also contradicts poll after poll in Islamic countries (and much of the world), which indicate that those populations don’t hate U.S. culture, freedoms, wealth, or technology, but U.S. foreign policy,” writes Eland.

“American citizens—including U.S. athletes and spectators at future Olympics—could be made much safer by rapidly making a meddling U.S. foreign policy overseas more ‘humble.’ But then the latter change would be a new form of terror—striking fear into the hearts of the U.S. foreign policy elite and the interests they represent,” Eland concludes.

See “Does Your Government Really Have an Interest in Protecting You from Terrorism?” by Ivan Eland (8/17/04)


4) Ivan Eland on the Airwaves
Tune in to hear Ivan Eland discuss the 9/11 Commission Report:
August 20th (noon, Pacific Time) on KALX 90.7 FM, Berkeley, Calif. Webcast at
August 24th (7:45 a.m., Central Time) on KFYO 790 AM, Lubbock, Texas, “The Jane Prince-Jones Show” (


5) New Independent Institute Website!
If you haven’t yet visited the Independent Institute’s website ( recently, we think you’ll be pleased with its new look and functionality. The website has a new Newsroom page (, to keep you abreast of upcoming media appearances of Independent Institute scholars, as well as an improved Issues index (, a more functional Membership page (, and new, advanced search engine (

To enjoy 651 documents of insightful Independent Institute commentary, 316 documents of THE INDEPENDENT REVIEW, 67 documents of research articles, 52 documents of working papers, 70 documents about Independent Institute events, 32 documents of event transcripts, 33 documents of past issues of THE LIGHTHOUSE, 33 documents of press releases, and 120 Spanish-language documents, please visit We will be adding additional content in the coming weeks.


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