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THE LIGHTHOUSE
"Enlightening Ideas for Public Policy..." VOL. 2, ISSUE 40 October 17, 2000 Welcome to The Lighthouse, the e-mail newsletter of The Independent Institute, the non-partisan, public policy research organization <http://www.independent.org<;. We provide you with updates of the Institute's current research publications, events and media programs. ------------------------------------------------------------- IN THIS WEEK'S ISSUE: 1. Defective Tires, Defective Bureaucracy 2. Paul Craig Roberts on the War on Crime 3. Medicare Reform: Economics versus Politics ------------------------------------------------------------- DEFECTIVE TIRES, DEFECTIVE BUREAUCRACY Some fans of the regulatory state believe that NHTSA, the National Highway Traffic Safety Administration, deserves much credit -- and, in reward, expanded powers -- for its role in exposing the Firestone tire/ Ford Explorer fiasco. But although NHTSA received early reports of fatalities caused by the separation of Firestone tires, its investigation began very recently -- last May -- long after investigations by State Farm Insurance, the Center for Auto Safety, and Safety Forum brought the problem to light. This isn't the first time that NHTSA has failed its mission, argues Michael I. Krauss, law professor at George Mason University and author of the recent Independent Institute book FIRE AND SMOKE: Government, Lawsuits and the Rule of Law. "NHTSA, the agency responsible for minimum fuel economy standards (found by a court to have likely cost many lives by forcing manufacturers to produce light, dangerous cars) and for illegal-to-disable, baby-killing airbags, does not deserve to be rewarded for its asleep-at-the-switch approach to the tire problem," Krauss wrote recently. It would be absurd to reward Firestone for selling defective tires. However, when NHTSA fails, self-proclaimed "consumer advocates" call for a parallel absurdity: lavishing the agency with more regulatory authority and taxpayer funds. But NHTSA's pattern of failure indicates a systemic problem -- a design flaw -- that cannot be easily repaired. In contrast, as the Firestone episode demonstrates, the watchful eyes of the American economic and legal systems have enormous incentives to detect and report product defects. In this light, perhaps what most needs to be recalled and held accountable for sloppy workmanship and false advertising is: the defective regulatory state. For more information, see "The Feds Eye Firestone," by Michael Krauss (The Washington Times, 9/22/00), at http://www.independent.org/tii/lighthouse/LHLink2-40-1.html. For Michael Krauss's book, FIRE AND SMOKE: Government, Lawsuits and the Rule of Law (The Independent Institute, 2000), see http://www.independent.org/tii/lighthouse/LHLink2-40-2.html. ------------------------------------------------------------- PAUL CRAIG ROBERTS ON THE WAR ON CRIME Election-year promises always renew the risk that peaceful Americans will see their rights sacrificed for the sake of political expediency. This is especially true when politicians promise to "get tough on crime," as syndicated columnist and Independent Institute research fellow Paul Craig Roberts pointed out recently. Although one "anti-crime" bill (or "anti-privacy" according to its critics) was recently defeated, another "anti-crime" bill -- this one strengthening asset forfeiture laws -- has just been introduced. Unfortunately, says Roberts, asset forfeiture laws violate due process and are any easy way for politicians to look "tough on crime" even though such laws harm innocent Americans far more than criminals. "The House Judiciary Committee led by Henry Hyde, R-Ill., has documented the most extraordinary abuses of the asset forfeiture laws," writes Roberts. "The Banking Committee and [the bill's author] should sit down with Hyde and listen carefully before they create any more Gestapo powers for law-enforcement officers." For more information, see "Dangers lurk in war on crime," by Paul Craig Roberts, at http://www.independent.org/tii/lighthouse/LHLink2-40-3.html. For more on civil forfeiture laws, see CIVIL FORFEITURE AS A "SIN TAX" by Donald J. Boudreaux and Adam Pritchard, at http://www.independent.org/tii/lighthouse/LHLink2-40-4.html. Also see the Independent Institute book, TO SERVE AND PROTECT: Privatization and Community in Criminal Justice, by Bruce Benson, at http://www.independent.org/tii/lighthouse/LHLink2-40-5.html. ------------------------------------------------------------- MEDICARE REFORM: Economics versus Politics Debates over Medicare reform didn't start with Al Gore and George W. Bush. In fact, legislation similar to Medicare had been intensely debated since the mid-1940s. However, its advocates found no way to overcome opposition until 1965, when Medicare's staunchest advocate on the House Ways and Means Committee found the opportunity to smuggle Medicare legislation into another bill at the last minute. Yet as vocal as debates over Medicare have been, very little of that debate has been informed by sound economic principles. This omission, which has stalled any genuine reform of Medicare, is largely the fault of economists, says economist Robert B. Helms in the new issue of THE INDEPENDENT REVIEW. "My criticism is not directed to the economists who have attempted for many years to apply market principles to health-care issues, but to the larger number of economists who have not," Helms writes. "Moreover, my criticism pertains to the failure of economists to teach the fundamental principles of economics to educated Americans, rather than to the failure of 'economics.'" To improve the quality of the debate over Medicare, Helms recommends three measures. First, more economists must explain to policymakers and the public that that market competition in health care, as in other markets, would improve quality of health care. Second, they must explain that competition would also make health care more efficient by allocating scarce resources to higher-valued uses. Finally, they must explain that price controls and destructive of these desirable ends. Without a concerted effort to impart these principles to a wider audience, Helms argues, Medicare reform -- and other necessary health-policy reforms -- will become victim of political maneuvering, much to the detriment of the lives and well-being of the American public. "This lack of education in economics is appallingly evident in Washington, D.C., especially on Capitol Hill," says Helms. For more information, see "Medicare Reform: Economics versus Politics" by Richard B. Helms (THE INDEPENDENT REVIEW, Fall 2000), at http://www.independent.org/tii/lighthouse/LHLink2-40-6.html. For more on Medicare, see "Medicare's Progeny: The 1996 Health Care Legislation" by Charlotte Twight (THE INDEPENDENT REVIEW, Winter 1998), at http://www.independent.org/tii/lighthouse/LHLink2-40-7.html. Also see the Independent Institute book, AMERICAN HEALTH CARE: Government, Market Processes and the Public Interest, edited by Roger D. Feldman, at http://www.independent.org/tii/lighthouse/LHLink2-40-8.html. For the Independent Institute's "Guide to Resources on Price Controls in Health Care," see http://www.independent.org/tii/lighthouse/LHLink2-40-9.html. ------------------------------------------------------------- If you enjoy receiving THE LIGHTHOUSE ... please help us support it. Your supporting Independent Associate Membership enables us to reach thousands of other people. So, please make a contribution to The Independent Institute. See http://www.independent.org/tii/lighthouse/LHLink2-40-10.html to donate, or contact Ms. Priscilla Busch by phone at 510-632-1366 x105, fax to 510-568-6040, email to <PBusch@independent.org<, or snail mail to The Independent Institute, 100 Swan Way, Oakland, CA 94621-1428. All contributions are tax-deductible. Thank you! ------------------------------------------------------------- For previous issues of THE LIGHTHOUSE, see http://www.independent.org/tii/lighthouse/LHLink2-40-11.html. ------------------------------------------------------------- For information on books and other publications from The Independent Institute, see http://www.independent.org/tii/lighthouse/LHLink2-40-12.html. ------------------------------------------------------------- For information on The Independent Institute's upcoming Independent Policy Forums, see http://www.independent.org/tii/lighthouse/LHLink2-40-13.html. ----------------------------------------------------------------- To subscribe (or unsubscribe) to The Lighthouse, please go to http://www.independent.org/subscribe.html, choose "subscribe" (or "unsubscribe"), enter your e-mail address and select The Lighthouse. Or, either send an e-mail message to independent-list-request@free-market.net with the words "unsubscribe" in the body of the message, or e-mail independent@free-market.net and ask to be unsubscribed. Copyright , 2000 The Independent Institute 100 Swan Way Oakland, CA 94621-1428 (510) 632-1366 phone (510) 568-6040 fax info@independent.org http://www.independent.org
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