Monday, December 31, 2001
THE LIGHTHOUSE
THE LIGHTHOUSE
"Enlightening Ideas for Public Policy..."
Vol. 3, Issue 52
December 31, 2001
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IN THIS WEEK'S ISSUE:
1. The Colombian Drug-War Quagmire
2. States' Persecution of Microsoft: Throwing Bad Money after Good
3. Freedom Matters More Than Ever, Economist David R. Henderson Explains
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THE COLOMBIAN DRUG-WAR QUAGMIRE
In the early days of the war against terrorism in Afghanistan, many
pundits tossed around the word "quagmire" to indicate the risk that
the U.S. would have no more luck with al-Qaeda and the Taliban than
did the Soviets and British during their Afghan escapades. Although
the term "quagmire" in retrospect hardly applies (at least not with
regard to the "hot" war that has all but officially concluded), the
term most certainly seems to fit the case of the U.S. drug war in
Colombia.
The United States has spent nearly $1 billion to fight drugs in
Colombia, but the country's cocaine production has more than doubled
in the past five years. And neither the drug trade nor the drug war
in Colombia show any sign of slowing down.
"This is a tragic mistake," writes Ron Gurantz, public affairs intern
at The Independent Institute, in a recent op-ed. "Counter-narcotics
efforts in Colombia have been ineffective, and additional U.S.
intervention will only worsen a desperate situation."
U.S. attempts to thwart the South American drug trade, through
fumigation and military action, have proven futile, according to
Gurantz. Fumigation efforts have shifted coca growing from Bolivia to
Peru to central Colombia to southern Colombia, but total cocaine
production has actually increased.
And military aid to Colombia has done little more than embolden
right-wing paramilitary groups and escalate the country's 37-year-old
civil war. The Cali and Medellin drug cartels were brought down in
the mid-1990s only to be replaced by smaller and harder-to-track drug
trafficking groups and left-wing guerillas. (Trust government to
create competition and greater output in one of the few industries
where cartels and lower output are desirable!)
"While America's cocaine habit is fueling a $6 billion industry in
Colombia, the American government is spending hundreds of millions to
wage a violent and ineffective war on cocaine production. It is also
contributing to the escalation of a long and bloody conflict. Plan
Colombia must end before more of that country's innocent civilians
are forced to pay for America's irresponsible and reckless behavior,
and the U.S. increases the ranks of its enemies abroad," concludes
Gurantz.
See "A Losing Battle in Colombia," by Ron Gurantz (OAKLAND TRIBUNE,
12/15/01), at http://www.independent.org/tii/news/011215Gurantz.html
Also see:
Transcript of the Independent Policy Forum, "The War on Drugs: Who is
Winning? Who is Losing?" with Alexander Cockburn, Jonathan Marshall,
and Peter Dale Scott, at
http://www.independent.org/tii/forums/000621ipfTrans.html
"Predatory Public Finance and the Origins of the War on Drugs,
1984-1989" by Bruce L. Benson and David W. Rasmussen (THE INDEPENDENT
REVIEW, Fall 1996), at
http://www.independent.org/tii/content/pubs/review/TIR12_Benson.html
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STATES' PERSECUTION OF MICROSOFT: Throwing Bad Money after Good
Because government bureaucrats don't bear the costs of their actions
directly, governments are especially bad at not knowing when to stop
throwing bad money after good. The Microsoft antitrust case clearly
illustrates this truism of government pathology.
Although the U.S. Court of Appeals discarded the guts of the
government's antitrust suit against Microsoft last June, nine states
-- led by California and Connecticut-- have chosen to keep fighting
Microsoft. And although the federal antitrust trial uncovered no
proof that consumer welfare was harmed by Microsoft's fiercely
competitive behavior, the nine states perpetuate the pretense that
they are pursuing Microsoft for the sake of consumers rather than
Microsoft's rivals.
As Dominick Armentano put it in a recent op-ed:
"The first trial produced not one shred of evidence Microsoft's
software licensing or browser integration resulted in any consumer
injury; the new trial will be similarly cursed. Instead, the
testimony will confirm Microsoft plays competitive hardball (who
doesn't?) and intends to take market share from competitors with new
innovation, savvy marketing and low prices."
"But that kind of behavior (engaged in by all free market firms) is
the very nature of the competitive process and should be applauded,
not condemned. Yet the holdout states and their politically ambitious
attorneys general falsely believe antitrust laws exist to preserve
specific competitors or specific products and that government must
constantly level the playing field or micro-manage inter-firm
business dealings with antitrust litigation. So the states will put
the competitors on the stand and let them whine.
"Consumers (and businesses) in all states require government
protection from force and fraud but they don't require decade-long
antitrust assaults on firms that innovate and lower prices to
consumers. Such assaults are economically inefficient, create
incentives for additional litigation, perpetuate business uncertainty
and harm society's long-term welfare. Enough already."
The British legal system requires that the loser pay all court costs;
this helps discourage frivolous lawsuits. If American antitrust law
imposed a similar penalty, perhaps business rivals would spend more
time competing and less time in antitrust litigation. And perhaps
government antitrust bureaucrats would also curb their costly
excesses.
See "It's Time to Quit," by Dominick Armentano (NATIONAL POST, 12/21/01), at
http://www.independent.org/tii/news/011221Armentano.html
Also see:
ANTITRUST AND MONOPOLY: Anatomy of a Public Policy Failure, by
Dominick Armentano (Second Edition, The Independent Institute), at
http://www.independent.org/tii/content/briefs/b_antitru.html
"The Attack on Concentration" by Yale Brozen (THE FREEMAN, January
1979), at http://independent.org/tii/news/790100Brozen.html
WINNERS, LOSERS, & MICROSOFT: Competition and Antitrust in High
Technology, by Stan Liebowitz and Stephen Margolis, at
http://www.independent.org/tii/content/briefs/BriefWLMS.html
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FREEDOM MATTERS MORE THAN EVER, ECONOMIST DAVID R. HENDERSON EXPLAINS
Lovers of liberty should not rest on their laurels but should
continue to fight for economic and civil liberties, according to
economist David R. Henderson, at the recent Independent Policy Forum,
"Why Freedom Matters More Than Ever."
"Let's stop settling; let's speak out when our freedom is violated,"
Dr. Henderson implored the audience. "Even better: Let's do the same
when the freedom of others is violated. It's not too late to seek a
freer world."
Dr. Henderson -- whose recent book, THE JOY OF FREEDOM: An
Economist's Odyssey, is an inspiring blend of memoir and policy
analysis -- recapped some of the most inspiring reasons to fighting
for freedom that many people overlook.
Recounting his experience at the Council of Economic Advisers, Dr.
Henderson explained how government regulations, such as gasoline fuel
economy standards, often backfire.
Dr. Henderson also explained the importance of keeping government
power in check during time of emergency, when opposing parties stop
bickering and agree to enlarge the scope of government power, much to
the detriment of liberty.
Dr. Henderson also explained the importance of some of the "Ten
Pillars of Economic Wisdom," found in chapter 2 of his book:
1. TANSTAAFL: There ain't no such thing as a free lunch.
2. Incentives matter.
3. Economic thinking is thinking on the margin.
4. The only way to create wealth is to move it from a lower valued
to a higher valued use. Corollary: Both sides gain from exchange.
5. Information is valuable and costly.
6. Every action has unintended consequences.
7. The value of a good or service is subjective.
8. Costs are a bad, not a good.
9. The only way to increase a nation's real income is to increase
its real output.
10. Competition is a hardy weed, not a delicate flower.
C-SPAN was also on hand, taping Dr. Henderson's talk for future
cablecast. To view the show, please stay tuned for a future
LIGHTHOUSE announcement.
For the transcript of David R. Henderson's presentation, "Why Freedom
Matters More Than Ever," see
http://www.independent.org/tii/forums/011204ipfTrans.html
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