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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 12, Issue 50: December 14, 2010

  1. The Tax Compromise
  2. Spy Chips Coming to a Recycling Bin Near You?
  3. WikiLeaks and Latin America
  4. Climate Change Policy: Up in the Air?
  5. Newsletter and New Blog Posts

1) The Tax Compromise

Independent Institute Senior Fellow William Shughart doesn’t think too highly of President Obama’s tax compromise with congressional Republicans. For starters, a two-year extension of the so-called Bush income-tax cuts of 2001 and 2003 would be too short to promote economic growth. “As Nobel laureate Milton Freidman observed long ago, the spending plans of consumers and, what is more important, the investment decisions of business firms, hinge on expectations of permanent after-tax incomes, not year-to-year fluctuations in them,” Shughart writes. “At best, therefore, the pending congressional compromise will shift some spending initiatives forward in time, but chill them again as yet another expiration date looms two years hence.”

Research Fellow Craig Eyermann, co-creator of the Government Cost Calculator at, notes that the extension of tax cuts would at least prevent a drop in consumer discretionary spending, as would the extension of unemployment benefits, although neither would spur job growth. Also, Eyermann worries that the unemployment extension would create strong disincentives for the long-term unemployed.

Here’s how Shughart assesses the extension of unemployment insurance: “It is well-established in the economics literature that acceptance of offers of employment increase significantly after unemployment benefits end.... Rather than continuing to pay jobless people to take vacations from the workforce and to prop up other prices, it would be far better to allow market forces to operate. If government gets out of the way by, for example, restoring predictability to the income tax code, the U.S. economy will recover and prosperity will resume.”

“What Costs $919 Billion But Isn’t Likely to Create Many Jobs?” by Craig Eyermann (MyGovCost Blog, 12/8/10)

“The Proposed New ‘Tax Deal’ Is More of the Same Washington Bait and Switch,” by William Shughart (The Beacon, 12/7/10)

Audio Interview: “ Director Emily Skarbek Talks Tax Cuts and the Government Cost Calculator,” by Lindsay Boyd (The Beacon, 12/7/10)


2) Spy Chips Coming to a Recycling Bin Near You?

Next year, Cleveland, Ohio, will require 25,000 households to use recycling bins equipped with radio-frequency identification tags (RFIDs), computer chips that will help the city find out whether a household is in compliance with waste-disposal regulations. The fine for non-compliance: $100. This year alone Cleveland expects to issue 4,000 citations, according to a spokesman for the city’s Division of Waste Collection. No special skills in mindreading are needed to determine how the municipal authorities feel about the prospects for revenue enhancement when, six years from now, all Cleveland households are scheduled to be using electronically monitored recycling bins.

As Orwellian as the predicament of Cleveland residents sounds, the Brits already have it much worse, Independent Institute Research Fellow Wendy McElroy reports in the December issue of The Freeman. An estimated 2.6 million of Her Majesty’s subjects use recycling bins equipped with spy chips. Fines for violations can reach £1,000 (more than $1,500). Just as Cleveland’s officials can look across the Atlantic for ideas on enhanced revenue via enhanced surveillance, so cash-strapped city managers across the United States will be watching Cleveland to see how its experiment pans out. Will American households put up with this rubbish?

“Perhaps, unlike the British, Americans will object to an RFID chip monitoring their garbage on privacy grounds,” McElroy writes. “This objection may well be valid, but it does not touch on the motives of local governments that consider mandatory recycling schemes. Nevertheless, it may well be the strongest defense that can be mounted.”

“Big Brother Is Watching You Recycle,” by Wendy McElroy (12/1/10, The Freeman)

Rethinking Green: Alternatives to Environmental Bureaucracy, edited by Robert Higgs and Carl P. Close


3) WikiLeaks and Latin America

“What official U.S. documents divulged so far by WikiLeaks reveal concerning Latin America is actually somewhat comforting,” writes Independent Institute Senior Fellow Alvaro Vargas Llosa. “It turns out that Washington along with many center-left governments in the region and Spain’s ruling socialists were not naïve in expressing their concerns about the nature of authoritarian populism in the Western Hemisphere.”

For example, in cable 51158, dated January 2006, a diplomat reveals that Cuban intelligence gave clandestine reports directly to Hugo Chavez, bypassing even the Venezuelan president’s own intelligence officials. Another cable, from earlier this year, shows that Cubans control Bolivia’s intelligence service. Also highly illuminating are cables pertaining to Argentina. One, written in 2008 by the secretary-general of the Spanish presidency, decried the threat that Cristina Kirchner of Argentina posed to foreign investment in her country. Even former Chilean President Michelle Bachelet, in cable 243823, expressed a deep mistrust of Kirchner.

“This is quite reassuring,” Vargas Llosa continues. “But it also highlights the inability of the region to make effective use of the valuable information and the insightful perceptions many of these foreign ministries, including those under left-wing governments, have developed regarding the threat of authoritarian populism.”

“Latin America: Wikileaks Relief,” by Alvaro Vargas Llosa (12/8/10) Spanish Translation

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

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

The Che Guevara Myth and the Future of Liberty, by Alvaro Vargas Llosa


4) Climate Change Policy: Up in the Air?

Will the Environmental Protection Agency succeed in regulating greenhouse gas emissions via the Clean Air Act? Given the make up of the new Congress, the House of Representatives will likely pass legislation that will delay or block the EPA. But what about the Senate?

“There is certainly a majority in the Senate for blocking EPA, but sixty votes will be needed,” writes atmospheric scientist S. Fred Singer, author of the Independent Institute book Hot Talk, Cold Science: Global Warming’s Unfinished Debate. “My guess is that there will be more than sixty votes. As EPA regulations start to bite next year, Senators will start to hear complaints from their constituents. And a large number of Democratic Senators are up for re-election in 2012 and will want to avoid the fate of so many of their colleagues this year.”

Singer also weighs in on efforts by Kenneth Cuccinelli II, Attorney General of Virginia, to obtain climate change data and emails by Michael Mann, a climate researcher formerly at the University of Virginia, whose statistical trick to “hide the decline” of temperatures was lauded in the Climategate emails. “Is Mann guilty of fraud?” Singer writes. “I don’t know; much depends on what Cuccinelli uncovers. But I am of the opinion that Mann should formally withdraw his flawed papers and no longer refer to them in his bibliography or in grant applications without at least a footnote.”

“The Global Warming Court Battle,” by S. Fred Singer (11/14/10)

“Climate Alarmism at The New York Times,” by S. Fred Singer (American Thinker, 11/7/10)

Hot Talk, Cold Science: Global Warming’s Unfinished Debate, by S. Fred Singer


5) Newsletter and New Blog Posts

The winter issue of the Independent Institute’s quarterly newsletter, The Independent, is now available here.

From The Beacon:

From MyGovCost Blog:


  • Catalyst
  • Beyond Homeless