The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 13, Issue 52: December 27, 2011

1. Payroll Tax Showdown
2. A Better Immigration Policy for America
3. The Independent Review—Winter Issue Now Available
4. How to Advance Liberty and Lower Your Tax Bill
5. New Blog Posts

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The political showdown about whether to extend the payroll tax cut for two more months (as a bipartisan majority in the U.S. Senate voted) or whether to negotiate a one-year extension (as advocated by Republican House Speaker John Boehner) has been marred by false economic assumptions. In his latest op-ed, Independent Institute Senior Fellow Benjamin Powell argues that either version would do little to grow the economy because private spending and investment decisions are based on long-term expectations, not short-term changes in take-home pay that would result from a temporary tax cut. Moreover, because the payroll tax funds Social Security, reductions in the payroll tax would worsen the estimated $46 billion Social Security deficit.

“All the squabbling makes for amusing political theater but distracts from the real problems America faces,” Powell writes. “Nothing in any of the proposals for extending the tax ‘holiday’ addresses America’s fundamental economic problems, nor will any of the proposals do much to speed the economic recovery.”

Whether temporary or permanent, cuts in the payroll tax would simply enlarge the Social Security deficit and raise the probability of future tax increases, Powell argues. If members of Congress wish to promote economic growth they must therefore focus on cutting federal spending and on making a credible commitment to fiscal responsibility.

Payroll Tax Political Theater, by Benjamin Powell (The Daily Caller, 12/15/11)

Extending the Payroll Tax Cut: A Vote to Eliminate Social Security As We Know It, by Randall Holcombe (The Beacon, 12/22/11)

Video: Benjamin Powell on Expiring Unemployment Benefits & Congressional Insider Trading (FoxBusiness Freedom Watch with Judge Napolitano, 12/13/11)

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Each year, the United States turns away thousands and thousands of highly skilled immigrants who want to join the U.S. labor force. It does this by setting aside more work visas for people chosen randomly by a lottery than for those who possess demonstrably greater abilities, by sending home many of the foreign graduates it has helped to educate, and by admitting an absurdly low number of immigrants for the size of the U.S. economy. As a result, the United States squanders a fantastic opportunity to foster innovation and accelerate economic progress, according to Independent Institute Research Director Alex Tabarrok.

“A rational immigration policy would open the United States to many more high-skill immigrants,” Tabarrok writes in The Atlantic. “Increasing high-skill immigration is such a win-win policy for increasing innovation that it’s tempting to call it a no-brainer. Instead, ‘no-brainer’ turns out to be a better description of our current policy.”

How might we improve U.S. immigration policy? Tabarrok proposes that we “create a straightforward route to permanent residency for foreign-born students who graduate with advanced degrees from American universities, particularly in the fields of science, technology, engineering, and mathematics.” At minimum, he argues, the United States could adopt a point system for work skills, such as used by Canada, Australia, and Hong Kong. Fortunately, although immigration reform is unlikely to become an election-year issue, few politicians defend the current system. In November, the House overwhelmingly passed a bill to lift the country cap on employment visas. This bill was blocked in the Senate, but other bills have been proposed in the Senate that would provide green cards to foreign graduates from American universities who have obtained advanced degrees in science, technology, engineering, and mathematics. The general idea has been endorsed by prominent Democrats and Republicans alike.

The No-Brainer Issue of the Year: Let High-Skill Immigrants Stay, by Alex Tabarrok (The Atlantic, 12/20/11)

Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast, by Alex Tabarrok; a TED Kindle book

Entrepreneurial Economics: Bright Ideas from the Dismal Science, edited by Alex Tabarrok

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We are delighted to announce the publication of the Winter 2012 issue of The Independent Review: A Journal of Political Economy. To demonstrate our pride in the journal, we’ve posted selected articles for free.

Articles:

• Portugal’s Plight: The Role of Social Democracy
• Sex and the Problem of Human Rights
• Is There a Health-Care Problem in Western Societies? (Summary)
• Mechanisms of Liberal Bias in the News Media versus the Academy (Summary)
• The Provision of Naval Defense in the Early American Republic: A Comparison of the U.S. Navy and Privateers, 1789–1815 (Summary)
• Alchemy Leveraged: The Federal Reserve and Modern Finance
• The Freedom to Cross a Border

Book Reviews:

• Bourgeois Dignity: Why Economics Can’t Explain the Modern World
• Last Exit: Privatization and Deregulation of the U.S. Transportation System
• The Origin of Political Order: From Prehuman Times to the French Revolution
• Rehabilitating Lochner: Defending Individual Rights Against Progressive Reform
• Back to the Land: Arthurdale, FDR’s New Deal, and the Costs of Economic Planning
• The Conscience of an Anarchist: Why It’s Time to Say Good-Bye to the State and Build a Free Society

The Independent Review (Winter 2012)

Subscribe now and get two free issues!

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In the past twelve months, the Independent Institute has published the books No War for Oil, Beyond Politics, Good Money (Paperback Edition), and The Enterprise of Law, as well as four issues of the acclaimed quarterly, The Independent Review. So far this year, articles by our research fellows have appeared 1,047 times in newspapers and other publications across the United States. Overall, our internet circulation has more that tripled over the past year! At the same time, we continue to make a huge impact in traditional print and broadcast media outlets, with broadcast appearances continuing to increase and viewership having reached more than 550 million!

The number of attendees to our Challenge of Liberty Summer Seminars topped our previous record, and our college session was our best student seminar yet. Our Gala for Liberty, honoring Lech Walesa, Robert Higgs, and Mario Vargas Llosa with the Alexis de Tocqueville Award, exceeded the high expectations we had set for our 25th anniversary celebration. And perhaps most encouraging, our popularity on Facebook has soared. In our fall newsletter, The Independent, we reported that our Facebook fan base had doubled to 60,000 in just six weeks, but as of this writing the number has grown to over 91,000. MyGovCost, which focuses on federal spending, has over 54,000 fans! The Independent Institute also has one of the highest Facebook activity quality scores among the 40 organizations we follow. We are outperforming almost all other think tanks that utilize Facebook!

For 2012, the Independent Institute will publish a string of timely policy books, including Financing Failure: A Century of Bailouts, Aquanomics, and Delusions of Power. We are encouraged by the rapid growth of our social media presence, but be assured: we won’t be resting on our laurels! Instead, we are gearing up for major publicity campaigns to help spread the message of our esteemed research fellows. And we welcome your support. A donation of a mere $100 enables us to bring an estimated 2,000 new visitors to our websites—visitors eager to learn about the Independent Institute’s innovative proposals for addressing a vast range of current issues. Contribute before the end of the year, and your gift will be matched by generous donors!

Please donate to the Independent Institute’s Fund for the Future!

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From The Beacon:

From MyGovCost News & Blog:

The Independent Institute’s Spanish-language blog has surpassed 3 million page views! You can find it here.

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