The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 14, Issue 1: January 4, 2012

1. Elizabeth Warren and the ‘New’ Redistributionism
2. Congress Should Bypass Federal Highway Pork
3. Oil Boom Raises Questions for U.S. Policymakers
4. The Tipping Point of Climate Policy
5. New Blog Posts

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U.S. Senate candidate Elizabeth Warren rattled conservatives and libertarians in September when she appeared in a widely viewed video in which she scolded wealthy Americans who believe they are morally entitled to enjoy all the fruits of their labor. “There is nobody in this country who got rich on his own,” the Massachusetts politician exclaimed. “Part of the underlying social contract is you take a hunk of [your fortune] and pay forward for the next kid who comes along.” Warren, however, conceded that the proverbial rich factory owner is entitled to keep a “big hunk” of the wealth generated by the factory, and her critics should not discount the importance of that concession, according to Independent Institute Senior Fellow Robert Higgs.

Warren’s stance represents a break with the radical collectivism that was more common to the political discourse of an earlier era, Higgs suggests. For example, the congressional debate that led to the passage of the 1943 legislation that established income-tax withholding was rife with rhetoric that denied that the rich—or the middle class, for that matter—had a moral right to keep their income. The taxpayer, the redistributionists argued, was rightfully entitled to keep only what the government determined they could keep. “The government always has a moral if not actual lien on all our incomes,” said Rep. Emanuel Celler (D-NY). “The government can take everything we have if the government needs it,” said Sen. Happy Chandler (D-KY). “We must direct our tax policy toward diverting an ever larger part of the funds of persons above subsistence levels into the Public Treasury,” said Rep. Wilbur Mills (D-AR). By contrast, Elizabeth Warren’s rhetoric almost sounds individualistic!

“So, lighten up, small-government friends,” Higgs writes. “Be grateful that you must contend only with Warren, and not with the likes of Celler, Chandler, and Mills. Maybe there is progress after all.”

Government Officials Want You to Know that Your Earnings Belong to Them, by Robert Higgs (Also posted at BigGoverment.com, 12/30/11)

Wartime Origins of Modern Income-Tax Withholding, by Robert Higgs (The Freeman, November, 2007)

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This year Congress will consider legislation that would make federal highway spending more politicized and wasteful than ever. It would do so by scrapping the long-standing principle that road users should fund highway improvements and instead require general taxpayers to pick up the tab, regardless of how little they use highways or public transportation. The change would be a major departure from the way that the Highway Trust Fund has financed the Interstate Highway System since 1956, according to transportation economist and Independent Institute Research Fellow Gabriel Roth.

Congress would do better by leaving transportation planning and funding to state and local authorities and private entities, Roth argues in an op-ed for the Sacramento Bee. Turning off the federal spigot would mean that transportation planners would no longer be able to count on revenue collected from, say, Ohio farmers to help pay for mass transit in Chicago. It would also enable local voters to have greater influence over which transportation projects would be undertaken.

“Restoring highway financing to the states would not only resolve Congress’s dilemma, it would improve transportation decision-making, better align funding and demand, and meet the objectives of the original legislation,” Roth writes. “Food, water, electricity, and telecommunications are all paid for directly by customers; we can pay for highways and other transportation infrastructure the same way.”

Who Should Pay for Highways?, by Gabriel Roth (The Sacramento Bee, 12/28/11)

Street Smart: Competition, Entrepreneurship, and the Future of Roads, edited by Gabriel Roth

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The United States is undergoing an oil boom—a small surge in production that has cut the nation’s dependence on oil imports from 60 percent of U.S. consumption in 2005 to less than 50 percent. Yet, although the United States is heading in the direction of becoming a net exporter of petroleum products—a goal embraced by Republican and Democratic politicians alike—that goal is not all it’s cracked up to be, according to Independent Institute Senior Fellow Ivan Eland, author of No War for Oil: U.S. Dependence and the Middle East.

Consumers may not even notice the effect of increased domestic oil production on prices at the gas pump, prices that are determined by the worldwide oil market. Nor would Iran and Saudi Arabia feel a financial pinch if the United States were to meet its own energy needs. One reason is that China and India are eager to buy more and more oil from the Persian Gulf, and they care little about the policies of oil-exporting countries just so long as they can continue to buy petroleum from them.

If ending what George W. Bush called the U.S. “addiction” to oil imports wouldn’t translate into lower gas prices or a significant improvement in the policies of odious foreign governments, why all the fuss about “energy independence”? And why are U.S. presidents willing to risk starting wars for oil even though securing foreign oil supplies with military power results in no cost savings to American consumers and no extra security for the economic system? In his latest op-ed, Eland adds a query of his own: “Could it be that the U.S. is not aggressively employing military power to ensure that it has oil supplies—as the Imperial Japanese did before and during World War II—but is instead using the threat of armed force to keep a thumb on the oil lifelines of other nations (for example, China)?”

No War for Oil: US Dependence and the Middle East, by Ivan Eland (12/21/11)

No War for Oil: U.S. Dependence and the Middle East, by Ivan Eland. Available in paperback, cloth, or ebook.

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Climate alarmists speak about a “tipping point”—beyond which many ecosystems could not adapt to the effects of increasing levels of greenhouse gases trapped in the earth’s atmosphere. The evidentiary basis of their worries may be weak—the Berkeley Earth Surface Temperature (BEST) project, for example, discovered no warming trend after 2000. But the basis for something akin to a point of no return in the realm of what might be called “climate-policy finance” is increasingly evident, according to atmospheric physicist and Independent Institute Research Fellow S. Fred Singer.

“We’re reaching a tipping point—not of the earth’s climate, but of the financial schemes that permanently divert funds from productive activities into wasteful ones, all in the name of ‘saving the climate,’” Singer writes in his latest op-ed. “The results are evident: higher levels of spending, deficits, or taxes; higher prices for energy and electricity and therefore for all manufactured goods; less productive activity; less employment; and more misery.”

Policymakers seem less willing to commit their countries to emission targets like those spelled out in the Kyoto Protocol, which was extended at last month’s Durban Climate Summit until 2015. Russia, Japan, and Canada, for example, have indicated that they will stop playing the Kyoto charade, and even the White House has refused to forward the Kyoto treaty to the Democratic-controlled Senate for ratification. Climate researchers could mitigate the growing public cynicism toward their discipline, but doing so would require that they investigate the huge gulf between temperature data collected on land and temperature data collected in the atmosphere (and from non-temperature proxy sources). Until scientists do this, public cynicism toward climate research will get closer and closer to the point of no return.

Fake! Fake! Fake! Fake!, by S. Fred Singer (American Thinker, 1/2/12)

Hot Talk, Cold Science: Global Warming’s Unfinished Business, by S. Fred Singer

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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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