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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 18, Issue 34: August 23, 2016

  1. Golden Fleece Award for California’s Highway Robbery
  2. For Airbnb, Home Is Not ‘Sweet Home’
  3. Congress Can Roll Back the Supreme Court
  4. Worse than Obamacare?
  5. New Blog Posts
  6. Selected News Alerts

1) Golden Fleece Award for California’s Highway Robbery

For readers of The Lighthouse, here’s an exclusive scoop: Caltrans—the Golden State’s $10 billion-per-year Department of Transportation—has just won the California Golden Fleece Award, an “honor” given quarterly by Independent Institute in recognition for government agencies or projects that rip off taxpayers and violate the public trust. The Summer 2016 Golden Fleece Award calls out Caltrans for its history of high maintenance costs, huge backlog of unfulfilled service requests, bloated administrative workforce, famous inadequacy in reducing traffic congestion, and even a seven-year streak of lying to state legislators.

Fortunately, Californians don’t have to be struck with this agency: A smarter approach to transportation infrastructure is available if taxpayers and policymakers decide to break with the bureaucratic status quo. As Independent Institute Senior Fellow Lawrence J. McQuillan, the policy expert who oversees the awards, explains: “Private ownership, competitive bids on repair contracts, and road-usage fees would revolutionize the state’s transportation network and fix its crumbling highways and bridges.”

Whether or not such reforms would improve California’s highways and bridges is hardly an open question: Similar measures have already been successfully implemented elsewhere. Ontario’s Highway 407, for example, was sold to a consortium of Canadian and Spanish companies. Competitive bidding is what enabled the rapid repair of I-580’s “MacArthur Maze” in Oakland. And mileage-based fees are now undergoing testing in Oregon and other locales concerned that more electric cars and hybrids on the roads will mean less gasoline-tax revenue for funding the highways. Writes McQuillan: “Without intention, Caltrans’ incompetence is helping drive a needed conversation about California’s highways of tomorrow.”

Caltrans Wins Golden Fleece Award for Its $10 Billion Highway Robbery, by Lawrence J. McQuillan and Hayeon Carol Park (The Beacon, 8/22/16)

California Golden Fleece Awards

Submit your nomination for the California Golden Fleece Award

California Dreaming: Lessons on How to Resolve America's Public Pension Crisis, by Lawrence J. McQuillan


2) For Airbnb, Home Is Not ‘Sweet Home’

Airbnb may call San Francisco home, but the rental-housing platform isn’t happy with the folks who run the place. So it’s filed a lawsuit. The charge? Airbnb claims that the City by the Bay is in violation of a 1996 federal law—and the First Amendment—with its requirement that the firm pay a $1,000 fine for every day that a homeowner on its website fails to register with a city agency and abide by sundry municipal regulations. According to Independent Institute Senior Fellow Benjamin W. Powell, if city government really wants to create value for society, then it should drop this and other restrictions of online marketplaces that help employ otherwise idle resources.

“These websites essentially mobilize intermittently ‘dead capital’ and put it to use by creating value for others,” Powell writes in Newsday. “Owners, renters and society as a whole are all richer as a result.”

The claim that San Francisco’s regulators are somehow merely trying to loosen up a tight housing market is especially misguided, according to Powell. That’s because local regulations are the main reason for high rents and home prices. One well-respected study by economists at the University of Pennsylvania, for example, found that 90 percent of the mark-up on new home prices resulted from government restrictions on development. Hence, Powell writes, “curing the costly maladies of our housing markets will require citizens to force local governments to roll back the many regulations that prevent homeowners and developers from fully serving the needs of renters and would-be homebuyers.”

Will Airbnb’s Lawsuit Help Open the Door for Renters and Homeowners?, by Benjamin W. Powell (Newsday, 8/16/16)

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


3) Congress Can Roll Back the Supreme Court

Supreme Court justices are often criticized from letting their political biases override their oath to uphold the U.S. Constitution and the rule of law. Conservatives, in particular, have decried the Court for “activist” decisions, based on the majority’s policy preferences, most recently in cases related to abortion, college admissions, and same-sex marriage. According to Independent Institute Research Fellow William J. Watkins Jr., author of the forthcoming book Crossroads for Liberty, such cases show that Congress should consider exercising one of its least-known powers: its constitutional authority to remove selected court cases from the docket of the Supreme Court,

“Unbeknownst to many,” Watkins writes, “the Constitution gives Congress the authority to prohibit the court from deciding numerous matters, including abortion and marriage. The germane passages appear in Article III, Section 2.” The Exceptions Clause, as it’s called, allows Congress to strip the Supreme Court of its jurisdiction over any topic save these: “cases affecting ambassadors, other public ministers and consuls, and those in which a state shall be a party.”

The public may be unaware of Congress’s jurisdiction-stripping authority, but members of Congress shouldn’t be: In between 1943 and 2004, they invoked it in cases involving 248 public laws. “It is time to call upon Congress to exercise its power under the Exceptions Clause,” Watkins writes. “Policy decisions should be left with elected branches of government.”

Congress: Do Your Job and Restrain SCOTUS, by William J. Watkins Jr. (World Net Daily, 8/10/16)

Forthcoming: Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution, by William J. Watkins Jr.


4) Worse than Obamacare?

With Aetna pulling out of eleven state health-insurance exchanges, the future of Obamacare looks increasingly precarious. Pundits and politicians may begin to chatter more loudly about creating a “public option”—meaning taxpayers would pick up the tab for “free” healthcare coverage from the nation’s private insurers. Hillary Clinton, for example, has endorsed the public option, although when Barack Obama endorsed it in 2008 she dismissed it as unworkable, as Independent Institute Senior Fellow John R. Graham reminds us in an op-ed for Real Clear Markets.

The creation of a public option would likely accelerate the collapse of the Obamacare exchanges—though it would probably be good for insurers’ bottom lines. Politicians may even call it a win-win solution. But the fiscal damage to the nation’s balance sheet would prove disastrous.

“Like Medicare’s Hospital ‘trust fund,’ which is on track for bankruptcy in 2028, any public option’s future costs would be far greater than our ability to pay for them,” Graham writes. “However, both Obama and Clinton will have departed by then.”

Can the Public Option Rescue Viable Obamacare?, by John R. Graham (Real Clear Health, 8/8/16)

Priceless: Curing the Healthcare Crisis, by John C. Goodman

A Better Choice: Healthcare Solutions for America, by John C. Goodman

Paul Ryan’s Health Plan, a New Alternative to Obamacare, Draws from Independent Institute Book (Independent Institute, 6/27/16)


6) Selected News Alerts

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