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Volume 7, Issue 36: September 6, 2005

  1. Hurricane Katrina and the Feds
  2. The Drug War and the Sausage Effect
  3. CAFTA Trade Treaty a Sweet Deal for Special Interests

1) Hurricane Katrina and the Feds

The federal government's much-criticized slow response to the devastation wrought by Hurricane Katrina suggests that state and local governments "have become too dependent on the federal government for help in such emergencies," according to Ivan Eland, senior fellow and director of the Independent Institute's Center on Peace & Liberty.

If state and local government planners expect FEMA (the Federal Emergency Management Agency) to intervene quickly and effectively after a natural or manmade disaster, they will have weaker incentives to plan for such disasters, Eland argues in his latest op-ed. Louisiana planners, for example, appear to have relied too much on federal funds to reinforce the levees of Lake Pontchartrain, whose failure was responsible for the massive flooding of New Orleans.

"The same state and local slothfulness is being encouraged in homeland security efforts against terrorist attacks," writes Eland. "Federal efforts are displacing and distorting what could be more effective state and local actions."

What lesson might we draw from the response to Hurricane Katrina, according to Eland?

"If federal efforts in both disaster relief and homeland security are creating an unhealthy dependency by states and localities and distorting the priorities of those on the frontline of disaster response, then, although counterintuitive, cutting the budget for such federal activities might actually improve results."

See "Will the Government's Abysmal Response to Katrina Recur During a Terrorist Attack?" by Ivan Eland (9/2/05)
"¿Se Repetirá Durante un Ataque Terrorista la Pésima Respuesta Gubernamental ante el Huracán Katrina?"

To purchase THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland, see

To purchase PUTTING "DEFENSE" BACK IN U.S. DEFENSE POLICY, by Ivan Eland, see

Center on Peace & Liberty (Ivan Eland, director)


2) The Drug War and the Sausage Effect

Squeeze one end of a sausage and the other end expands. The same has been true of U.S efforts to eradicate cocaine production in South America, according to Alvaro Vargas Llosa, senior fellow and director of the Independent Institute's Center on Global Prosperity.

"While cultivation and production have diminished in Colombia, they have substantially increased in Peru and Bolivia," writes Vargas Llosa in a new op-ed. "There is no evidence yet that the flow of cocaine into the U.S. has been reduced, as U.S. drug Czar John Walters admitted when I asked him about it this week."

In the late 1990s, Vargas Llosa explains, the U.S. supported eradication programs in Peru and Bolivia. This dramatically cut the cocaine production in those two countries. But then cultivation and production moved to Colombia. And when the U.S. focused on Colombia -- guess which two countries saw a huge increase in coca growing and cocaine production?

"In the last four years cocaine has almost doubled in Bolivia and risen by 25 percent in Peru, while decreasing by 60 percent in Colombia. Billions of dollars worth of U.S. training, military equipment, surveillance, and alternative development programs have produced zero progress in the overall war against cocaine-related market forces in the Andes."

There's an important new unintended consequence to this phenomenon, Vargas Llosa explains. Politicians in both Bolivia (Evo Morales) and Peru (Carlos Cuaresma) are now positioning themselves as opponents of U.S.-backed eradication efforts in order to win stronger political support from local coca farmers.

"Government officials in the U.S. have not recognized the failure of this repressive approach," concludes Vargas Llosa. "They are confusing Colombian President Alvaro Uribe's considerable success in other fronts with success on the drug front and losing sight of the whole Andean picture. If the U.S. does not want to encourage more Chávez and Morales types, it needs to urgently rethink this 21st century remake of the Prohibition fiasco."

See "Drugs in the Andes -- The Sausage Effect," by Alvaro Vargas Llosa (9/2/05)
"Drogas en los Andes -- El Efecto Salchicha"

Also see:


"People and Ecosystems in Colombia: Casualties of the Drug War," by Sarah Peterson (THE INDEPENDENT REVIEW, Winter 2002)


3) CAFTA Trade Treaty a Sweet Deal for Special Interests

Although it will lower or eliminate tariffs on many U.S. goods bound for Central America, CAFTA -- the recently passed Central American Free Trade Agreement -- is a disappointment for advocates of genuine free trade. Rather than simply rescind all existing tariffs, import quotas, and regulatory restrictions, CAFTA grants plenty of favors to entrenched special interests -- at the expense of consumers -- according to economist Benjamin Powell (director of the Independent Institute's Center on Entrepreneurial Innovation) and intern Nicolas Rotsko.

"CAFTA does ensure that import quotas are eased over several years, but this reduction is too small for U.S. sugar consumers to celebrate," Powell and Rotsko write in a new op-ed.

"Fifteen years after CAFTA goes into effect, sugar imports can rise to only 1.7 percent of the 10 million tons we consume. CAFTA doesn't introduce free trade in sugar. It makes a trivial improvement while retaining sugar's traditional protection."

The U.S. textile industry also won special favors in CAFTA -- mainly with long tariff phase-outs and the perpetuation of import quotas -- as did U.S. producers of cotton, tobacco, wool, cashmere, and even hairnets!

See "CAFTA 'Free Trade' Agreement Is a Sweet Deal for Special Interests," by Benjamin Powell and Nicolas Rotsko (8/31/2005)
"El Tratado de 'Libre Comercio' del CAFTA es un Dulce Reparto para los Intereses Especiales"


See Benjamin Powell and Peter Laufer at the upcoming Independent Policy Forum, "IMMIGRATION WARS: Open or Closed Borders for America?", on Wednesday, September 21, 2005, at the Independent Institute's conference center in Oakland, Calif.

Admission: $15 ($10 for Institute Members) OR $35 Special Admission includes one copy of WETBACK NATION, by Peter Laufer ($30 for Members).

Note: Last week's LIGHTHOUSE mistakenly announced the wrong price for the price of the Special Admission with book. The correct price of $35 ($30 for Members), we are pleased to announce, reflects a 23 percent discount on the price of the book.

For more information about this event, see


  • Catalyst
  • Beyond Homeless