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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 29: July 18, 2017

  1. Unlocking Democracy in Chains
  2. Fixing Ted Cruz’s Health Plan
  3. Trump and Afghanistan
  4. Capitalism and the Beatles
  5. Independent Updates

1) Unlocking Democracy in Chains

Is the academic study of democracy—an approach that strives to understand how western political systems operate in the real world, rather than how we might wish they worked—inherently subversive? And are those who spearheaded that study necessarily scoundrels who deserve to be demonized—rather than, say, intellectual pioneers and innovators who have done society a great service by taking the romance out of politics? To both questions, Duke University history professor Nancy MacLean seems to shout “Yes!” The key takeaway of her new book, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America, is that the late economist James M. Buchanan, co-founder of Public Choice and a decades-long leader of the school of thought that applies economic analysis to the study of politics, was carrying out a Grand Plan to undermine democracy, for the sake of securing the wealth and status of society’s ruling elites. What, Nobel award-winner Buchanan, a Bond villain out to destroy America? Hardly. In fact, MacLean’s book is so misguided that her Duke colleague Michael C. Munger, in a vigorous takedown in The Independent Review, calls Democracy in Chains “a work of speculative historical fiction.”

The problem isn’t that MacLean’s book is completely untethered from reality—in fact, some of it sheds valuable light on its subject (although you may not be able to discern this unless you already have a good sense of what you’re looking at). Rather, it’s that the book avoids “careful sifting of evidence and respectful encounters with opposing points of view.” (The phrase in quotes, by the way, is a guideline for history students that MacLean offered in an earlier book.) Instead of taking Buchanan’s words at face value in the absence of contrary evidence, for example, she concocts far-reaching explanations and unlikely interpretations of her subject, in violation of the history profession’s venerable principle of charity. Along with such errors of commission, MacLean makes egregious errors of omission, including a failure to consult the vast archives related to the founding of Public Choice, or even to consult with those well-versed in them (such as her Duke colleague Munger, himself a leading practitioner of Public Choice who also knew Buchanan).

Reason magazine calls Munger’s article “the most exhaustive and harshly critical review of Democracy in Chains to date.” (It’s also one of the most talked about, with 12,800 shares on social media at the time of this writing.) Yet Munger at times may be overly charitable toward his opponent: “As I hope has been clear, as a book Democracy in Chains is well-written, and the research it contains is both interesting and in many cases illuminating,” he writes before landing his final punch. “But as an actual history, as a reliable account of the centrality of the work of James Buchanan in a gigantic conspiracy designed to end democracy in America, it turns far away from its mark. It is the story of an alternative past that never actually happened.”

On the Origins and Goals of Public Choice: Constitutional Conspiracy?, by Michael C. Munger (The Independent Review, Winter 2018)

Subscribe now to The Independent Review and select your free book!

Beyond Politics: The Roots of Government Failure, by Randy T Simmons


2) Fixing Ted Cruz’s Health Plan

Texas Senator Ted Cruz hopes to shape the healthcare bill still under construction in Congress’s upper chamber. The former presidential hopeful is firm about enabling consumers to choose plans without the essential benefits that Obamacare mandated. Without countervailing provisions, such freedom would likely divide the risk pool so much that coverage would be unaffordable for many unhealthy people. Although Cruz proposes a solution to this problem—the creation of government-subsidized risk pools—Independent Institute Senior Fellow John C. Goodman notes some of the plan’s shortcomings—and offers ways to make it better.

A major flaw of the Cruz proposal—although not a fatal one—is its failure to offer a revenue source to fund the risk pools. The problem, according to Goodman, can be contained with measures to discourage group insurance plans from dumping high-cost enrollees into the non-group insurance market. Allowing states to levy a small tax on group insurance would also create a funding source to help people transitioning from the group to the individual market. Goodman also calls for measures to prevent health plans from shifting costs onto each other, and to prevent individuals from dumping costs on each other. As the author of Priceless: Curing the Healthcare Crisis, Goodman emphasizes the need to restore free-market pricing in the market for health care—including medical underwriting.

“If health plans get actuarially fair compensation for their enrollees, they will specialize and get very good at cancer care, heart care, diabetic care, etc.,” Goodman writes. “They will advertise and seek out patients with problems because by lowering costs and raising quality they can profit from solving those problems. Once people enter the system, they should pay the full actuarial cost and reap the full actuarial benefits of any further changes in coverage. In this way, they will pay the full costs and reap the full benefits of every decision they make.”

Can Ted Cruz Save Republican Health Reform?, by John C. Goodman (Forbes, 7/14/17)

Republicans Are in a Health Care Trap. Here’s What They Can Do about It, by John C. Goodman (Forbes, 7/5/17)

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

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


3) Trump and Afghanistan

During the race for the White House, Donald Trump famously criticized President George W. Bush’s nation-building crusades. Now president, Trump has authorized Secretary of Defense James “Mad Dog” Mattis to send up to 5,000 U.S. troops to Afghanistan, for a total of 12,000 to 15,000. Judging by our experience with 100,000 U.S. servicemen and women in that ravaged country, there’s little reason to believe that far fewer could end its internal conflict and ensure stability, according to Independent Institute Senior Fellow Ivan Eland.

But nor is there good reason to believe that such a futile crusade should be shouldered by the United States, Eland argues in the Huffington Post. India has begun assisting the Afghan government and has strong incentives to continue doing so. (The incentive? Keeping Pakistan’s influence from expanding.) Yet Trump seems determined to strengthen the U.S. military presence in Afghanistan and Syria, too.

“In the Afghan civil war, the United States should accept defeat, withdraw its forces—instead of re-escalating the war—and let India fully take over assisting the Afghan military in its fight against the Taliban and ISIS,” Eland writes. “In sum, Trump should avoid getting co-opted by the U.S. military and honor his campaign rhetoric, which implied staying out of non-strategic brushfire wars.”

What about Trump’s Campaign Promise of ‘America First’?, by Ivan Eland (Huffington Post, 7/5/17)

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


4) Capitalism and the Beatles

“It was 20 years ago today, Sgt. Pepper taught the band to play.” No, wait—add another 50 years to that number. It was June 1967 when four lads from Liverpool released what Rolling Stone magazine later deemed to be the No. 1 album of all time. It was a great creative achievement by most counts. But Independent Institute Research Fellow Samuel R. Staley notes that one of the most fundamental reasons for its success is one rarely given its due: capitalism.

Sgt. Pepper’s Lonely Hearts Club Band would have remained just a glimmer in the eye of John, Paul, George, and Ringo—and let us not forget, record producer George Martin and studio engineer Geoff Emerick—had the Beatles and their record labels not possessed the financial resources needed to pull it off. Those resources came together only because the private-property, free-market system—capitalism—enabled such an investment, based on the substantial savings and profit from past record sales (and the expectation of future earnings).

“Critics consistently and unrelentingly knock capitalism, arguing that it produces inequality and concentrates wealth,” Staley writes. “But the wealth it creates also produces freedom and opportunity, benefits that are not discussed nearly enough.... Without capitalism, the Beatles might not have gone much further than playing club dates in Liverpool and Hamburg, Germany.”

‘Sgt. Pepper,’ the Creative Capitalist, by Samuel R. Staley (Charleston Gazette-Mail, 7/14/17)


5) Independent Updates
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