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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 25: June 20, 2017

  1. Immigration and Economic Freedom
  2. Medicaid for Anyone?
  3. How to Make Nuclear Energy Safer and Cheaper
  4. Does Trump’s Saudi Gambit Fail America?
  5. Independent Updates

1) Immigration and Economic Freedom

Immigration critics have claimed that newcomers to the United States have increased crime and on balance have taken away jobs from the native population. Readers of The Lighthouse may recall our work refuting these claims. Now we turn to another mistaken belief about immigration—the idea that it has reduced economic freedom in the United States—and elsewhere. Writing in Reason, Independent Institute Senior Fellow Benjamin Powell argues that the claim flies in the face of scholarly research.

Powell, who edited The Economics of Immigration, backs up his argument by drawing on several recent studies. The first, which he co-authored in 2015, looked at 110 countries from 1990 to 2011 and found not a single instance in which there was a statistically significant inverse correlation between immigration and economic freedom (as measured nationally by the size of government, property-rights protections, the integrity of the monetary system, free trade, and government controls). Another study, by economists at Metropolitan State University of Denver, which focused on economic freedom at the state level, also found that immigration levels were not significantly associated with state government spending, taxation, and labor-market restrictions.

But what about after rapid mass immigration? Don’t host countries undergo decreases of economic freedom after being inundated with migrants of any educational background or level of job skills? The evidence indicates otherwise, according to Powell. In the case of Israel, which took in great numbers of Russian emigres in the years following the Soviet collapse, the nation actually experienced greater security of property rights, an easing of trade controls, less regulation, and sounder monetary policies as its immigrant population increased. Although the size of government increased due to spending on social services for newcomers, Powell’s research found that this was temporary; it fell after the immigrants were integrated into the economy. “To be sure, these new studies are preliminary and don’t decisively settle the issue,” Powell writes. “However, they should make us more skeptical of those who fear that increased, or even unrestricted, migration would necessarily erode the economic freedom that makes destination countries prosperous.”

More Immigration Does Not Mean Less Economic Freedom, by Benjamin Powell (Reason, 6/13/17)

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

Global Crossings: Immigration, Civilization, and America, by Alvaro Vargas Llosa


2) Medicaid for Anyone?

Medicaid reform may become one of the most controversial aspects of the Obamacare-replacement bill soon to emerge from the U.S. Senate. Will the Republican leadership design a plan that avoids the kind of intense opposition that killed the House GOP plan? Independent Institute Senior Fellow John C. Goodman argues in Forbes that including one “simple” reform could make all the difference: Let anyone enroll in Medicaid.

This provision, which must be only part a larger healthcare reform package, would give many on the left what they’ve always wanted—a public option. At the same time, the right kind of “Medicaid for anyone” proposal would be a great improvement over the status quo and satisfy many conservatives, too. What would be the right kind “Medicaid for anyone”? For starters, it would be a system in which all plans are privately managed, just as two-thirds of Medicaid plans are currently. In addition, public policies must be designed to ensure that the plans compete on a level playing field with non-Medicaid plans eligible for tax credits. For example, “Medicaid grants to the states should grow at the same rate as the tax credits that subsidize private insurance,” Goodman writes. Another example: The non-poor would undergo medical underwriting—their health-plan premiums would not be government subsidized.

“Medicaid for anyone” would make sense for the non-group market both economically and politically, according to Goodman. “This proposal gives people the opportunity to escape what most Republicans view as inferior coverage and join better private plans instead,” he writes. “It also rescues the individual market and ends the race to the bottom.”

Should Everyone Be Able to Join Medicaid? Why Not?, by John C. Goodman (Forbes, 7/7/17)

To Replace Obamacare, Don’t Overlook the Role of the States, by John C. Goodman (Forbes, 5/15/17)

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

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


3) How to Make Nuclear Energy Safer and Cheaper

Nuclear energy provides about one-fifth of America’s power supply. Does it have a future? The question will take on increasing urgency as the U.S. demand for sours in the coming decade. (A federal agency estimates that if current trends continue, then by 2050 the demand for energy will be almost double current levels, but nuclear power will account for only 11 percent of energy production.) If nuclear energy is to play a greater role, government policymakers will have to remedy the problem of excessive regulation, according to Independent Institute Senior Fellow William F. Shughart II.

In an op-ed for the Morning Consult, Shughart and Strata Policy Analyst Brian Isom explain that although nuclear power has become safer (and emits no carbon dioxide), it is burdened with regulations that drive up costs and help lobbyists to secure huge taxpayer subsidies for the industry. Costly, outdated regulations have been particularly detrimental to new technologies that would make nuclear power cheaper and safer. For example, TerraPower—started by Microsoft founder Bill Gates—makes an innovative traveling-wave reactor that can run without interruption for 40 years—but government controls make the reactor cost-prohibitive in America; consequently, Gates’s company has contracted with a Chinese firm to introduce its technology overseas.

If the U.S. wants a future of diversified, clean energy, the [Nuclear Regulatory Commission] needs to reform the way it permits and licenses nuclear technologies,” Isom and Shughart write. “The current framework effectively stymies innovation and forces nuclear companies to rely heavily on government support. Heavy government involvement in energy production does not make for a healthy, competitive energy market.”

Does Nuclear Energy Have a Future in the United States?, by Brian Isom and William F. Shughart II (Morning Consult, 6/12/17)

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


4) Does Trump’s Saudi Gambit Fail America?

President Trump’s visit to the Middle East last month was a victory for Saudi Arabia and a setback for Iran. It was also setback for human rights and U.S. national security, according to Independent Institute Senior Fellow Eland.

In a piece for InsideSources, Eland argues that Trump’s reaffirmation of the U.S.-Saudi “friendship” avoided mention of the two elephants in the room. The first is the kingdom’s human-rights abuses—which according to Freedom House surpass those of Iran. The second is the country’s support for Sunni terrorist groups, most notably al-Qaeda and Islamic State.

Eager to undo much of his predecessor’s accomplishments, President Trump would likely confront Iran—in words if not in deeds—except that the Shi’ite government appears to be holding up its end of the nuclear deal it struck with the Obama administration. Unfortunately, favoring the Riyadh at the expense of Tehran is short-sighted on the president’s part. Saudi oil provides neither a moral nor an economic justification; market incentives make the world energy supply economically robust. The United States can easily afford to be more even-handed in the Middle East, even if that means “offending” the Saudi government in the name of truth and justice.

Tr(i)ump(h) in Saudi Arabia?, by Ivan Eland (InsideSources, 5/31/17)

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


5) Independent Updates
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