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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 16: April 18, 2017

  1. Visualize Free-Market Health Care
  2. Waiting Out North Korea
  3. Economists Take a Stand on Immigration
  4. Federal Ethanol Policies Make Prairies Go to Seed
  5. Independent Updates

1) Visualize Free-Market Health Care

Many years ago, anti-war activists offered a slogan that found its way to automobile bumpers across the nation: “Visualize World Peace.” Today, just a few weeks after House Speaker Paul Ryan hastily withdrew his beleaguered healthcare legislation, Americans eager for better healthcare at lower prices might consider adapting that idea and rallying around a bumper-sticker slogan to help crystallize and popularize a common-sense replacement for Obamacare: “Visualize Free-Market Health Care.” Doing so would help policymakers identify the healthcare reforms that Indepenent Institute Senior Fellow John C. Goodman considers “necessary if we want to liberate the market and allow it to work.”

Such a slogan would remind people that American healthcare is anything but a free market—which is why doctors never advertise their services as other professionals, such as trial lawyers. Such a slogan would also encourage people to contrast this bureaucratic, costly, and inadequate mess with the pro-consumer innovation that is routine in markets unburdened by decades of increasingly invasive government intervention. Among other benefits, according to Goodman, the adoption of free-market reforms would enable health insurers to better meet their customers’ needs, such as by offering plans that cater to unhealthy patients, that offer risk-adjusted premiums, that protect against premium increases caused by changes in health status, and more.

“If Republicans followed all of the recommendations made here, their proposal would be very different from previously proposed reforms that had no purpose other than to make Obamacare work better,” Goodman writes. “They would be paving the way—first in the individual market and eventually in the group market—for a radically reformed health care system.”

What Would a Free Market for Health Care Look Like?, by John C. Goodman (Forbes, 4/10/17)

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

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

The Sessions-Cassidy Health Plan, by John C. Goodman


2) Waiting Out North Korea

North Korea’s recent failed missile launch may allow the world to breathe a sigh of relief. Unfortunately, the respite won’t endure. Kim Jong-un’s belligerent tone and actions require a carefully planned response. According to Independent Institute Senior Fellow Ivan Eland, “the way to best deal with him may be like a child having a tantrum—ignoring him denies him the notice he desperately seeks.”

The quiet approach of Secretary of State Rex Tillerson, in other words, works better than the bluster of President Donald Trump. One reason is that the United States can expect little assistance from China. Beijing is concerned that exerting too much pressure on Pyongyang could bring down the Kim dynasty and precipitate a flood of refugees from across the Yalu River.

Kim’s nuclear saber-rattling also should make Washington reflect on the unintended consequences of U.S. military interventions since the first Iraq War. The lesson: such adventurism often hastens rather than discourages a race for nuclear weapons. Fortunately for the United States, the possession of its vast arsenal works in favor of a policy of nuclear deterrence. It worked against the Soviet Union and Communist China, and according to Eland it can work just as effectively against North Korea, provided that the United States doesn’t give Kim Jong-un the attention he so desperately craves.

What to Do About North Korea? Less Is More, by Ivan Eland (The Washington Examiner, 4/14/17)

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


3) Economists Take a Stand on Immigration

It’s hard to get a roomful of social scientists to agree on much, but a recent open letter on immigration, addressed to President Trump and congressional leaders of both major parties, has garnered signatures from 1,470 economists of various political affiliations, ideological stripes, and stances toward the free market. When such a diverse group finds agreement on an issue of such complexity and importance, although it’s not a slam-dunk that their consensus establishes validity, the public should nevertheless take note, according to Independent Institute Senior Fellow Benjamin Powell, editor of The Economics of Immigration and one of the letter’s signatories.

The economists, the letter notes, don’t agree on every aspect of immigration, such as its impact on the wages of low-skilled, native-born workers. But they do share the belief that immigration brings a net benefit to people born in the United States. This belief undergirds their general approach to immigration reform. “We urge Congress to modernize our immigration system in a way that maximizes the opportunity immigration can bring, and reaffirms continuing the rich history of welcoming immigrants to the United States,” the letter concludes.
It’s with this agreement in mind that the public should understand where the economists stand on President Trump’s immigration proposals as well as on the status quo: The economists disagree with both. None would have recommended February’s deportation of Indiana steak-house owner Roberto Beristain, who stayed in the country longer than his paperwork allowed but who provided jobs that supported 20 families. Such an enterprising person is the type who built the United States. “As this open letter indicates, politicians would be wise to give the arguments of economists, from all political persuasions, a better hearing if they want to create an immigration policy that would ‘make America great.’”

Economics of Immigration Are at Odds with Politics, by Benjamin Powell (The Hill, 4/13/17)

The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, edited by Benjamin Powell


4) Federal Ethanol Policies Make Prairies Go to Seed

The prairies of the American Midwest are a vanishing “species” of ecological habitat. Although many blame its demise on the rise of industrial civilization, some of the worst culprits are products of the modern state: ethanol subsidies and mandates. As Independent Institute Senior Fellow William F. Shughart II explains in an op-ed for Investor’s Business Daily, the prairie has fallen victim to massive cultivation of corn for ethanol, fueled by federal policies such as the renewable fuel standard, “a congressional mandate requiring refiners to mix renewable fuel (mostly corn-based ethanol) with U.S. gasoline, diesel, jet fuel and heating oil products.”

The renewable fuel mandate—and the federal subsidy to corn farmers—arose from two concerns: fear of fossil fuels and fear of energy scarcity. The latter arose during the Arab oil embargo of 1973-74—long before the shale revolution that has unlocked vast reserves of shale oil and natural gas. The former is a by-product of environmentalism, most recently of climate alarmism. Ironically, it has also taken a toll on the environment, including its destruction of prairieland for the sake of corn ethanol.

“Currently, roughly half of the entire U.S. corn crop—which topped more than 15 billion bushels last year, according to the U.S. Department of Agriculture—winds up in biofuels,” Shughart writes. Partly as a result, the vanishing prairie now covers only about 5 percent of the land area it once inhabited. “The ethanol mandate has triggered an environmental disaster,” Shughart continues. “Kicking the ethanol habit should be as much of a no-brainer as buckling up before starting the car.”

How the Ethanol Mandate Is Killing the American Prairie, by William F. Shughart II (Investor’s Business Daily, 4/13/17)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II


5) Independent Updates
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