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Tuesday, January 29, 2002

THE LIGHTHOUSE

THE LIGHTHOUSE
"Enlightening Ideas for Public Policy..."
VOL. 4, ISSUE 4
January 29, 2002

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IN THIS WEEK'S ISSUE:
1. Enron and the Influence Peddlers
2. Farmers and Pork
3. The Legacy of Robert Nozick

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ENRON AND THE INFLUENCE PEDDLERS

Enron's bankruptcy, say campaign-finance reformers, underscores the need to limit private money donations to political campaigns. With Enron having contributed to most members of the U.S. Senate, investigations into the energy giant's influence-buying are easily justified.

Enron, for example, stood to gain from the Kyoto Accord on global warming and heavily lobbied the Clinton administration to authorize the Environmental Protection Agency to regulate carbon dioxide emissions, which would have brought us one step closer to adopting the accord. Did lobbying by Enron result in a stronger EPA?

Campaign-finance reformers err, however, by focusing on the tree of special-interesting politicking while overlooking the forest of political influence peddling. Lobbying happens only because politicians have favors to sell; reduce their favor-selling power and you reduce the incentive to lobby.

President Clinton's 1996 campaign, for example, received $100,000 from Enron after he helped the company secure more than $600 million in financing from the Export-Import Bank and $1 billion from the Overseas Private Investment Corporation to subsidize such disasters as Enron's ill-fated power plant in India. However, without agencies such as the Ex-Im Bank and the OPIC to provide corporate welfare, campaign contributions would not prompt such controversy.

Moreover, much of what looks like favor-seeking by private interests is actually tribute-seeking by politicians, explains economist Fred S. McChesney in the current issue of The Independent Review.

"Even when rent extraction is recognized as part of a politician's arsenal [e.g., via implicit threats of new taxes or regulations], the standard arguments against campaign-finance reform still apply," writes McChesney.

Campaign-finance reformers, and others taken aback by Enron's political contributions, should therefore focus on curtailing the power of government officials to sell favors. This would limit both demand-driven favor seeking and supply-driven favor selling.

See 'Pay to Play' Politics Examined, with Lessons for Campaign-Finance Reform" by Fred S. McChesney


Also see:

"After Kyoto: A Global Scramble for Advantage" by Bruce Yandle (THE INDEPENDENT REVIEW, Summer 1999)

"Even After Enron, Energy Markets Thrive" by Robert J. Michaels (USA TODAY, 12/10/01)


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FARMERS AND PORK

As further evidence that politicians have too much power to sell, consider the Daschle-Harkin farm bill. Most of its $73.5 billion in new farm subsidies go to only the wealthiest 10 percent of farmers. The problem, however, is not that the bill favors rich farmers rather than all farmers equally; it's that it favors farmers at the expense of consumers and taxpayers. Add $73.5 billion to the $98.5 billion the bill earmarks for current farm programs, and you get a sum that approaches the scandalous savings and loan bailout of the late 1980s. Farm subsidies have become so entrenched that even alternative farm bills that are intended to roll back "farm subsidies as usual," such as Sen. Richard Lugar's, must offer sizable farm subsidies to be politically viable. Politicians should never have been given the power to subsidize farms in the first place, as this problem was easily anticipated. Earlier generations of policymakers could have expected the farm price supports, and other subsidies, they planted to grow into the dense thicket that today's reformers have little hope of pruning. And yet these programs began long before the era of huge "soft money" campaign contributions. As the farm fiasco illustrates, politicians don't need special contributions to rationalize the robbing of City Slicker Peter to pay Farmer Paul. They just need the power to grant special favors to reward their constituents for returning them to office.

For more on farm policy, see AGRICULTURE AND THE STATE: Market Processes and Bureaucracy, by Ernest C. Pasour, Jr. (The Independent Institute)

Also see Also see: Randal Rucker's review of PLOWING THE GROUND IN WASHINGTON: The Political Economy of U.S. Agriculture, by B. Delworth Gardner (THE INDEPENDENT REVIEW, Summer 1997)

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THE LEGACY OF ROBERT NOZICK

The death of Harvard University philosopher Robert Nozick last week is a sad occasion but an appropriate one for recalling the major positive impact of his 1974 book, ANARCHY, STATE AND UTOPIA.

It is impossible to appreciate the importance of Nozick's National Book Award-winner without understanding the extent to which collectivist assumptions had drowned out the voices of individualism and liberty in college philosophy departments. In short, Nozick's treatise made academicians take rights and liberty seriously. As Charles Rowley wrote in THE INDEPENDENT REVIEW:

"In 1974, Robert Nozick challenged the most commonly held political and social positions of that time -- liberal democrat, socialist, and conservative -- by reasserting that individuals have rights and that there are things no person or group may do to them without violating their rights. So strong and far-reaching are these rights that they raise the question of what, if anything, the state and its officials may do.

"Nozick's main conclusions were that a minimal state, limited to the narrow functions of protection against force, theft, and fraud, and concerned with the enforcement of contracts, is justified; that a more extensive state must violate individuals' rights to do certain things, and is unjustified; and that the minimal state is *inspiring* as well as right. Two implications are that the state may not use its coercive apparatus to (1) require some citizens to aid others or (2) prohibit individuals from certain activities for their *own* good or protection."

The academic uproar of Nozick's pro-liberty treatise was followed years later by an uproar of many of Nozick's supporters, who believed their silver-haired knight had abandoned the cause. Exhibit A was Nozick's legal action in the mid 1980s against his landlord (Erich Segal of LOVE STORY fame) in rent-controlled Cambridge, Mass., interpreted by some as opposition to private property rights. Exhibit B was Nozick's declaration of support (in his 1989 book, THE EXAMINED LIFE) for the "zigzag" of democratic politics over political principles.

Nozick himself, however, said in a 2001 interview that he had never left the pro-freedom camp. "What I was really saying in THE EXAMINED LIFE was that I was no longer as hardcore a libertarian as I had been before. But the rumors of my deviation (or apostasy!) from libertarianism were much exaggerated."

Regardless, any late-term deviation, softening or zigzagging would likely have been irrelevant to Nozick's long-run influence. Keynes, for example, is alleged to have repudiated parts of Keynesianism before his death, but it was full-bodied Keynesianism and not a brief, whispered repudiation that spread to the world's economics classrooms and government treasury departments. Similarly, it is Nozick's ANARCHY, STATE AND UTOPIA and not his later work that is widely read. Already, a generation of pro-freedom philosophers has passed through the academic door opened by Nozick. His legacy is already being felt.

See "Harvard Philosopher Robert Nozick Dies at 63" (Harvard University Press Release)

Robert Nozick's work is discussed in:
"What is Living and What is Dead in Classical Liberalism?" by Charles K. Rowley (THE INDEPENDENT REVIEW, Summer 1996)

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THE LIGHTHOUSE, edited by Carl P. Close, is made possible by the generous contributions of supporters of The Independent Institute. If you enjoy THE LIGHTHOUSE, please consider making a donation to The Independent Institute. For details on the Independent Associate Membership program, see http://www.independent.org/tii/tii_info/associat.html or contact Mr. Rod Martin by phone at 510-632-1366 x114, fax to 510-568-6040, email to , or snail mail to The Independent Institute, 100 Swan Way, Oakland, CA 94621-1428. All contributions are tax-deductible. Thank you!

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For previous issues of THE LIGHTHOUSE, see http://www.independent.org/tii/lighthouse/Lighthouse.html

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For information on books and other publications from The Independent Institute, see http://www.independent.org/tii/pubs.html


 
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