The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 14, Issue 9: February 28, 2012

1. The Politics of Unemployment
2. How the White House Is Driving Up Energy Costs
3. Mission Creep and Uncle Sam’s Payroll Costs
4. 2012 Challenge of Liberty Summer Seminars
5. New Blog Posts

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The labor market has improved somewhat since 2010, but not enough to quell valid concerns about the slowness of the economic recovery. News about recent decreases in the unemployment rate—a topic that pundits continue to politicize—should be put into proper perspective. The economy has added about three million workers to private, non-farm payrolls since hitting its bottom, but employment would need to increase by about five million jobs to reach its pre-recession peak in 2008, according to Independent Institute Senior Fellow Robert Higgs.

“Moreover, such private employment is currently more than a million persons less than it was in December 2000, more than eleven years ago, on the eve of the dot-com bust,” Higgs writes in The Beacon. “So, at this point, we have suffered more than the proverbial ‘lost decade’ in the private labor market.” From 2000 to 2010 the U.S. population grew by 9.7 percent, Higgs notes.

One key bottleneck in hiring is the small-business sector. Why aren’t small businesses hiring more workers? Evidence from recent surveys suggests that uncertainties about the costs of healthcare reform and other regulations have played a significant role. Writes Higgs: “Note, too, that when businesses are not hiring because they do not foresee sufficient demand to justify expanding their payroll, this reason may also reflect indirectly the effect of regime uncertainty, which may depress demands by the surveyed small business’ potential customers.”

Private Employment Has Recouped Only Three-Eights of Its Recent Loss, by Robert Higgs (The Beacon, 2/19/12)

A Revealing Window on the U.S. Economy in Depression and War: Hours Worked, 1929–1950, by Robert Higgs (The Independent Review, Summer 2009)

Depression, War, and Cold War: Challenging the Myths of Conflict and Prosperity, by Robert Higgs

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Although the U.S. Senate refused to vote on legislation to restrict carbon dioxide emissions in 2009, the Environmental Protection Agency is pursuing climate-change regulations in piecemeal fashion on several fronts. It has issued an “Endangerment Finding” that classifies CO2 as a dangerous pollutant subject to the Clean Air Act (the matter will be taken up by a federal court this month). It has pushed for a doubling of automobile mileage standards by 2025 (an activity traditionally the province of a different agency). And it has stiffened restrictions on coal-fired power stations (even though coal is the cheapest energy source in the United States). These and other measures constitute the White House’s stealth strategy to reduce carbon dioxide emissions—i.e., the other ways to “skin the cat,” in President Obama’s words, according to atmospheric physicist S. Fred Singer.

Moreover, these measures are adding up to higher energy costs and thereby fulfilling one of Obama’s presidential campaign pledges. “In his 2008 election campaign, Obama promised to make electricity prices ‘skyrocket,’” Singer writes in American Thinker.

“He seems to be succeeding beyond all expectations, as a combination of White House policies is raising fuel prices,” Singer continues. “But as the cost of essential energy jumps upward, households are sliding into poverty.... ‘Skinning the cat’ may be a neat way of getting around the express wishes of the Congress and the public, but it is sure to backfire against the Obama White House in the November elections.”

Obama Skins the Cat, by S. Fred Singer (American Thinker, 2/25/12)

The Heartland Institute Flap, by S. Fred Singer (American Thinker, 2/20/12)

Climate Science Is Not ‘Settled’ Despite Arrogance and Smears by Alarmists, by David J. Theroux (The Beacon, 2/21/12)

Video: S. Fred Singer Interviewed on KUSI San Diego on Global Warming (2/15/12)

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

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Would Uncle Sam save money by using fewer private contractors and reassigning their tasks to regular government employees? An independent watchdog organization called the Project on Government Oversight says “yes”: the group released a study that argues that the government could save money by employing, for example, a typical government engineer earning $136,456, instead of a comparable contractor that typically bills the feds $268,653. The idea sounds plausible on the surface, but cutting back on private contractors is no panacea, according to Independent Institute Senior Fellow Charles V. Peña.

One reason that the analysis above is superficial, according to Peña, is that federal employees come with hidden costs, including overhead and long-term federal benefits that don’t show up in salary-to-salary comparisons. Consequently, when the Pentagon decided to cut back on contractors and hire more federal employees in their place, its own analysis, flawed though it was, revealed that the cost savings was far less than expected. “It’s also important to remember that federal government jobs are relatively ‘permanent,’ while service contracts can be terminated or not renewed,” Peña writes in the Washington Times.

More important, to reduce personnel costs the federal government must get realistic about a problem it has been unwilling to acknowledge: mission creep. When the government takes on more and more projects it ends up spending more money no matter whether it uses private contractors or federal employees to undertake those tasks. “Unfortunately, the last thing Washington is likely to do is rein itself in—because that means giving up power,” Peña continues. “Far better to come up with an imaginary solution to a nonexistent problem than actually act on the real problem.”

Overspending Due to Mission Creep, by Charles V. Peña (The Washington Times, 2/20/12)

MyGovCost.org—Home of the Government Cost Calculator

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We are pleased to announce the dates for the Independent Institute’s 2012 Challenge of Liberty Summer Seminars! The high-school student seminar will be held at our headquarters in Oakland, California, June 18–22, and the college student seminar will be held at Notre Dame de Namur University in Belmont, California, July 30–August 3.

Last year’s seminars were a smashing success! Our high-school seminar hosted a record number of students from all over California. Our college seminar attracted students from six different countries and 16 different universities, including University of Prague in the Czech Republic, University of Francisco Marroquín in Guatemala, and Roosevelt Academy in The Netherlands.

Our five-day seminars feature an integrated program of presentations by Independent Institute fellows and key university professors on a wide variety of topics:

• Foundations of Western Civilization and Natural Rights
• Free Markets, Property Rights, and Entrepreneurship
• Money and Banking and Economic Crises
• War and Economic and Civil Liberties
• The Great Depression, New Deal, and Government Failure
• The Austrian School of Economics and History

Speakers include (partial list): Robert Higgs (The Independent Institute), José Yulo (Academy of Art University), James C. W. Ahiakpor (California State University, East Bay), Anthony Gregory (The Independent Institute), and Randy T. Simmons (Utah State University).

Reserve your space today!

The Challenge of Liberty Summer Seminars
High-school Students: June 18–22
College Students: July 30–August 3

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From The Beacon:

From MyGovCost News & Blog:

You can find the Independent Institute’s Spanish-language blog here.

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