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Volume 6, Issue 39: September 27, 2004

  1. THE INDEPENDENT REVIEW -- Fall 2004 Issue Now Available
  2. White House's Intelligence Czar Would Lessen National Security
  3. The SEC: Making Markets Less Efficient
  4. Affordable Housing Debate Featuring Ben Powell -- Long Beach, CA, 9/28/04
  5. Independent Institute on the Airwaves

1) THE INDEPENDENT REVIEW -- Fall 2004 Issue Now Available

We are pleased to announce the publication of the Fall 2004 issue of THE INDEPENDENT REVIEW: A Journal of Political Economy (edited by Senior Fellow Robert Higgs), the peer-reviewed, 160-page quarterly from The Independent Institute.

The Fall 2004 issue addresses such questions as:
* How does globalization promote international security?
* How have "pro-business" boosters undermined free-market competition?
* Why do rising incomes tend to produce improvements in environmental quality?
* What can Lucian's critique of the philosophers of his day teach us about contemporary intellectual life?
* What political system best characterizes the career of New York urban planner Robert Moses?
* How can pre-Socratic Greek thought illuminate current debates about nature and freedom?
* What new insights about the social sciences can we learn from the writings of Nobel laureate economist Friedrich A. Hayek?
* If the 20th century was less violent than the distant past, what accounts for the common perception that the world has become more violent?
* What are the prospects for peace for the next century if the United States remains the world's sole "superpower"?
* What can academic social theory tell us about what we think of terrorism?
* How did Europe's tariff wars of the 1930s contribute to Nazi Germany's territorial ambitions?
* Why are "veto players" so crucial in shaping the way political institutions operate?
* How do principal-agent problems affect the outcome of foreign-aid programs?
* What can history tell us about the reform of public welfare and private charity?

Books Reviewed:
* HAYEK'S CHALLENGE: An Intellectual Biography of F. A. Hayek, by Bruce Caldwell
* A HISTORY OF FORCE: Exploring the Worldwide Movement Against the Habits of Coercion, Bloodshed, and Mayhem, by James L. Payne
* ANOTHER CENTURY OF WAR?, by Gabriel Kolko
* IMAGES OF TERROR: What We Can and Can't Know about Terrorism, by Philip Jenkins
* A LOW DISHONEST DECADE: The Great Powers, Eastern Europe, and the Economic Origins of World War II, 1930-1941, by Paul N. Hehn
* VETO PLAYERS: How Political Institutions Work, by George Tsebelis
* THE INSTITUTIONAL ECONOMICS OF FOREIGN AID, by Bertin Martens, Uwe Mummert, Peter Murrell, and Paul Seabright
* THE POVERTY OF WELFARE: Helping Others in Civil Society, by Michael Tanner

Erich Weede, Richard W. Wilcke, Bruce Yandle, George Bragues, Gene Callahan, Sanford Ikeda, Louis E. Wolcher, Gerald P. O'Driscoll Jr., Butler Shaffer, Michael T. Hayes, Daniel McCarthy, T. Hunt Tooley, Michael C. Munger, Mary M. Shirley, D. Eric Schansberg

For a summary and links to selected articles and to all book reviews, see

For back issues (entire contents posted after two issues), see

For subscription information, see

For our Library Subscription Recommendation Form, see


2) White House's Intelligence Czar Would Lessen National Security

Under political pressure to adopt the 9/11 commission's recommendations, the Bush administration has proposed a half-measure likely to reduce the effectiveness of the intelligence community, argues Ivan Eland, senior fellow and director of the Center on Peace & Liberty at the Independent Institute, in a new op-ed.

Whereas the commission urged that the Director of Central Intelligence (DCI) be given budgetary and personnel authority over the entire intelligence community, the White House cynically proposes that the new position include overseeing all 15 agencies in the intelligence community, but that the new position not have new budgetary and personal authority.

"While adding another layer of bureaucracy to exacerbate the original coordination problem, the administration essentially supports replacing one bureaucratic eunuch with another," writes Eland. "This result seems like crossing a donkey with a horse to come up with a sterile mule.

Understandably, the cause of the administration's position is the result of an unfortunate political calculation. Just as the White House resisted the creation of a new Department of Homeland Security -- but ultimately caved in to pressure to support the new agency -- so it has caved in to the creation of a new national intelligence head -- but one without any real power.

The administration's hybrid solution -- giving us more bureaucracy without much more coordination -- is the worst of all worlds and will decrease America's security rather than increasing it," concludes Eland. "If the Congress can't come up with a better formula in an election year, it should do no harm and decline to act at all.

Eland believes that the best solution would be simply to give the DCI the budgetary and personnel authority to do his job properly and to streamline and consolidate the intelligence community as a whole.

See "More Bureaucracy, Less National Security," by Ivan Eland (9/28/04)

For information on Ivan Eland's forthcoming book, THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, see

Center on Peace & Liberty

To order a copy of the video, UNDERSTANDING AMERICA'S TERRORIST CRISIS: What Should be Done?, see


3) The SEC: Making Markets Less Efficient

The Securities and Exchange Commission was founded in 1934, ostensibly to thwart fraud, bolster investor confidence, and thereby make financial markets more efficient.

According to Independent Institute Research Fellow Pierre Lemieux, however, the SEC's broad regulatory powers -- which include regulating securities, requiring corporations to register and send periodic updates about their finances, and enforcing insider-trading prohibitions -- have harmed the economy by making financial markets less efficient.

The SEC's restrictions on corporate communications just prior to the launch of an initial public offering are a case in point. "During SEC-imposed 'quiet periods' around IPOs, information revealed through news articles or interviews [with corporate officers] is deemed to be 'written offers' to purchase shares," writes Lemieux in Canada's FINANICAL POST. "At a recent technology conference, a Google executive wore a T-shirt saying 'Quiet period. Can't Answer Any Questions.'"

Such prohibitions on free speech impede the efficient operation of markets by preventing investors from acquiring information that might be useful in determining the health of a firm -- information that would become reflected in a stock price. Insider trading restrictions are another restriction that prevents share prices from reflecting all of the relevant information about a stock.

"Theory and evidence point to the conclusion that state regulation of financial information is economically inefficient," Lemieux continues. "The prohibition of insider trading, the regulation of disclosure and the concentration of information in government-determined channels reduce the flow of information to the market. Far from improving market integrity, these regulations have generated an artificial and misleading sense of confidence."

See "The SEC Doesn't Want the Truth to Get Out," by Pierre Lemieux (9/22/04)

Spanish translation:

Also see:

"New Regulations May Have Driven Recent Recession," by Manuel C. Cosme (10/13/03)

"The Stakeholder Concept of Corporate Control Is Illogical and Impractical," by Norman Barry (THE INDEPENDENT REVIEW, Spring 2002)

For an alternative to the Securities and Exchange Commission, see "Empowering Investors: A Market Approach to Securities Regulation," by Roberta Romano, chapter 12 in ENTREPRENEURIAL ECONOMICS: Bright Ideas from the Dismal Science, edited by Alexander Tabarrok. To order this book, see


4) Affordable Housing Debate Featuring Ben Powell -- Long Beach, CA, 9/28/04
Ben Powell (director of the Independent Institute's Center on Entrepreneurial Innovation), along with economist Edward Stringham (San Jose State University), will debate the wisdom of "inclusionary zoning" with Nico Calavita (Professor of City Planning, San Diego State University) and Doug Shoemaker (Deputy Director, Non-Profit Housing Association of Northern California).

The debate, part of the California Housing Consortium's Public Policy Forum (Southern California), will be held Tuesday, September 28, 2004, on board the Queen Mary in Long Beach, California at 10:15 a.m. The Forum starts at 10 a.m. with the debate beginning at 10:15 a.m. For registration information, see


5) Independent Institute on the Airwaves
Independent Institute President David Theroux will discuss U.S. drug policy on Dan Viets's radio program, "Sex, Lies, and Civil Liberties," on KOPN-FM 89.5 (Columbia, MO), September 28 at 7 p.m. (Central Time).

To purchase DRUG WAR CRIMES: The Consequences of Prohibition, by Jeffrey A. Miron, see


  • Catalyst
  • Beyond Homeless