Archive for the ‘Trade and Immigration’ Category
Freedom for Thee, But Not for We
I expected and got some pushback about my post comparing the Berlin Wall to the wall along our southern border. Happily, it was more civil than the reactions I often get when I talk about immigration and free movement of people.
One fair comment focused on the key distinction between the Berlin Wall and our border wall: the direction the guards were facing.
From the perspective of the state, it’s easy to conceive of border guards facing “in” or “out”—and those facing in suggest much worse than those facing out. But from the perspective of the individual, what matters is whether or not the border guards are facing you. Our border wall keeps Mexicans and Central Americans from freedom and a better life precisely the way the Berlin Wall did East Germans.
Another pointed out the inconsistency between liberal immigration policies and the welfare state. But the solution is not to wall off the country; it’s to wall off the welfare state. David Friedman has pointed out that liberal immigration policies can create political incentives to hold down welfare benefits.
Twenty years ago, West Germany took into its fold an impoverished population whose capacity for self-governance had surely been eroded by years of totalitarian rule. Today, one of that population is its center-right chancellor. Liberalizing immigration would be a project far smaller for the United States, it would bring overall economic benefits, and it would help restore our country’s status as a beacon of freedom.
The Americans who wish to immigrate to the United States did not create the political or economic conditions in their birth countries. Yet many treat their desire for a life like ours as blameworthy. It’s incoherent for individualists to think that way about immigrants to the United States while treating the reunification of Germany as something to celebrate. Such incoherence is reflected in our ’wall’ policies, which indeed boil down to “freedom for thee (Europeans), but not for we (Americans).”
Imports Wrongly Blamed for Unemployment
Import competition can throw Americans out of work. Even advocates of free trade like me will readily acknowledge that fact. And nobody needs to remind the people of Hickory, North Carolina.
On the front page of the Washington Post this morning, under the headline, “In N.C., damage not easily mended: Globalization drives unemployment to 15% in one corner of state,” the paper reports in detail how the people of that community are struggling to adjust to a more open U.S. economy:
The region has lost more of its jobs to international competition than just about anywhere else in the nation, according to federal trade-assistance statistics, as textile mills have closed, furniture factories have dwindled and even the fiber-optic plants have undergone mass layoffs. The unemployment rate is one of the highest in the nation–about 15 percent.
Nobody wants to lose their job involuntarily, but a story like this needs to be read in perspective. As I document in my new Cato book Mad about Trade, the large majority of Americans who lose their jobs each year are not displaced by trade. Technology is the great job disruptor, but Americans also lose their jobs because of domestic competition, changing consumer tastes, and recessions.
For every person who loses their job because of globalization, I estimate there are 30 who have lost their jobs for other reasons. I’m waiting for a front-page story on all the newspaper workers who have lost their jobs because of the Internet, or the 30,000 workers laid off by Kodak in the past 5 years because of the spread of digital cameras and plunging film sales, or the book stores and record stores that have shut down and laid off workers because of Amazon.com and iTunes.
Trade is not a cause of higher unemployment nationwide, either, as the Post story seems to imply. Imports have fallen sharply during the latest recession along with the trade deficit. In contrast, imports were rising at double-digit rates when the unemployment rate was below 5 percent. Like technology, trade can put people out of work, but it also creates new and generally better paying opportunities for employment, while raising our overall standard of living.
Mr. Obama, Tear Down This Wall
On his personal blog, Bottom-Up, Cato adjunct scholar Timothy B. Lee compares the Berlin Wall to the wall along the southern border of the United States. There are differences, of course, but important similarities too.
[I]t’s jarring that less than 20 years after one Republican president gave a stirring speech about the barbarity of erecting a wall to trap millions of people in a country they wanted to leave, another Republican president signed legislation to do just that. Conservatives, of course, bristle at analogies between East Germany’s wall and our own, but they seem unable to explain how they actually differ.
Judging by its ‘wall’ policies, the United States appears to value the freedom of Europeans more than Americans.
Filed under: Foreign Policy and National Security; Trade and Immigration
Give Us Your Tired, Your Energetic, Your Poor, Your Rich — Pretty Much Anyone Who’s Not a Criminal or Terrorist
On Wednesday I blogged about how, for the first time in many years — since the last recession — H-1B skilled worker visas remain available despite the hard cap on their number. In other words, even foreigners respond to market incentives: when there are no jobs, there are fewer immigrants.
I’ve gotten some interesting email in response to that little notice, one of which I post below, along with my paragraph-by-paragraph responses.
Just read your blog entry on the H-1b visa. The problem is that this visa has been misused by sponsoring companies, suffering from high rates of fraud. I find it strange that Cato supports (or appears to support) a labor tool that is anything but free market. The H-1b visa is more of an indentured servant visa program than anything else – where employees must be sponsored by an employer. Since employees aren’t free to find new jobs or start their own business, it results in a captive workforce who will do whatever the employee asks, even beyond reason. They won’t bargain for higher wages, quit if mistreated, join unions, or do anything that might result in their immigration status being jeopardized.
Having myself been on H-1Bs with several employers, including Cato, I agree that the program is seriously flawed, in the ways this correpondent describes and in others. Ideally, people would be able to apply for a work permit — their application gaining more “points,” say, for language, youth, skills, the needs of the economy, or whatever other criteria the political process determines are important — and then not be tied to an employer and have an opportunity to receive permanent residence and eventual naturalization if they pay their taxes, stay out of jail, etc. Or, indeed, we could admit all people who want to come here (after screening for security, criminal, and health concerns), and give them the same opportunity. But until we get to that more perfect world, I see no conflict in advocating for a repeal of the H-1B cap or pointing out how this recession shows that immigrants come for jobs, not to leech off our welfare state (if that’s the concern, then wall off the welfare state, not the country) or commit crimes.
One thing not correct in your blog is that H-1b visa holders cannot get a green-card. They can, unfortunately most of the workers are from India so it is difficult for those workers to get the green-card because of how, numerically, green-cards are issued. The H-1b visa is a “dual intent” visa meaning there is a path to permanent residence and after 6 years on the visa holders can extend 1 year until their green-card is processed. Indian workers call it the “green carrot” and relate it to the picture of where the mule driver holds a carrot on a stick in front of the mule to keep him moving. No matter how hard the mule tries, the carrot gets no closer.
The H-1B’s “dual intent” provision is categorically not a path to a green card. All it does is, as the correspondent points out, allow the worker to stay in the country during the green card application process. That process, however, and the substantive requirements for obtaining a green card, is no different for H-1B holders than it is for anyone else. Indeed, spending five or six years on an H-1B with one employer can be a detriment, inasmuch as that employer’s sponsorship application cannot take into account the skills gained during that time of employment. And yes, the nationality-based restrictions are also obnoxious.
Filed under: Government and Politics; Law and Civil Liberties; Trade and Immigration
Correction: The CoC Does Not Endorse Carbon Tariffs
Following on from my earlier post, I was delighted to receive a call from Bradley Peck at the U.S. Chamber of Commerce just now, clarifying that they do not in fact endorse the idea of carbon tariffs. Here’s a blog entry, posted a few minutes ago on the Chamber’s blog, clarifying their position.
Filed under: Energy and Environment; Trade and Immigration
Chamber of Commerce Endorses Carbon Tariffs?
Even though the climate change summit in Copenhagen next month is likely to yield very little, domestic shenanigans continue. The Senate Committee on Environment and Public Works passed a bill on Thursday amid controversy, and the farmers’ friends in the Senate (notably Sen. Debbie Stabenow, D. Mich) are looking to send goodies their way by filing an amendment that would pay farmers for not cutting down trees, not farming, and will likely see states such as — well, how about that! — Michigan “cashing in” (see here).
Meanwhile, those concerned about the cost of climate change regulations may have lost an ally. Often, but not always, one can depend on the U.S. Chamber of Commerce to defend free enterprise, or at least free trade. On climate change, however, they are a little more ambiguous. If anything, they appear to be getting more sympathetic to climate change legislation. Nothing to do with membership defections, they assure us, just good business practice. Maybe it is. I’m not a member of the Chamber so their strategy is not really any of my business.
What concerns me is the apparent shift in their position toward so-called carbon tariffs (also called “border adjustment measures,” and often spoken of in terms of “international competitiveness,” “negotiating leverage” and other terms that should raise the alarm). My friend, and former Catoite, Scott Lincicome does an excellent job here of parsing through the Chamber’s recent public letter in support of the Kerry-Graham “framework” (outlined in this New York Times op-ed) and their strange silence on the framework’s inclusion of the need for carbon tariffs, so I won’t repeat his analysis here. Suffice to say, their non-comment on the issue of carbon tariffs is worrying. As Scott points out, they appear to endorse the concept, if in a coded manner.
Back in June, the Chamber explicitly opposed Waxman-Markey, in part because “It would also impose carbon tariffs on goods imported into the U.S., a move that would almost certainly spur retaliation from global trading partners.” (See here.) I would feel a lot more comfortable if a similarly explicit statement had been repeated in their letter.
Filed under: Energy and Environment; Trade and Immigration
Cato Podcast Exposes Anti-Poor Bias of U.S. Tariffs
The dirty secret of the U.S. tariff code is that it is not only insanely complex but that it is biased against the poor. Our highest remaining trade barriers are imposed on goods that loom the largest in the budgets of poor and middle-income families — such as food, shoes, and clothing.
Politicians and interest groups that fight any reduction of U.S. tariffs are unwittingly picking the pockets of the poor every day. I discuss how President Obama supports this unfair status quo in a new Cato podcast, in an earlier newspaper column, and in Chapter 9 of Mad about Trade.
And you can bet your imported t-shirt that I will highlight this inconvenient truth during my presentation at today’s Cato book forum. You can watch it live online beginning at noon, eastern time. Commenting on Mad about Trade will be Steven Pearlstein, business columnist for the Washington Post.
Immigrants Respond to Economic Incentives
As I blogged here, I got my green card in April — and am now counting down the days till I can naturalize (five years from the green card, though you can apply three months before that and processing takes a year or so). Because of my various travails over the years that led to that fortunate day this spring, I’ve learned quite a bit about immigration, both as a matter of policy and as a matter of law. Indeed, both before joining Cato and ever since, it’s been an area in which I’ve been writing and speaking — and I appreciate very much the synergy this work has had with my colleagues in the trade and immigration shop.
One oped I had in National Review Online dealt with H-1Bs, the temporary visas for highly skilled workers to work in the United States. One of the problems with H-1Bs is that they provide no path to a green card (meaning permanent residence) or citizenship — so just as hard-working, tax-paying professionals gain expertise in a particular American company or industry, just as they grow roots in an American community, they have to leave. Nevertheless, there have long been more H-1B applicants than available visas. The last few years, the annual 65,000 quota has been oversubscribed on the very first day of eligibility for each fiscal year!
Well, not any more. As this recent article points out, the recession has impacted our immigration system as well: “A coveted visa program that feeds skilled workers to top-tier U.S. technology companies and universities [the H-1B program] is on track to leave thousands of spots unfilled for the first time since 2003, a sign of how the weak economy has eroded employment even among highly trained professionals.”
This is just another indication that the free movement of goods, money, and people, will regulate even such perceived social ills as “foreigners taking American jobs.” There’s simply no need for “U.S. citizen only” provisions in (so-called) stimulus bills, or (further) immigration restrictions during bad economic times.
In other words, even foreigners respond to market incentives.
For more on Cato’s work on immigration policy, go here.
Filed under: Law and Civil Liberties; Trade and Immigration
If At First You Don’t Succeed
Mexican sugar growers want “in” on the cozy little arrangement that domestic sugar growers have here in the United States. They have formed an alliance with the U.S sugar lobby to recommend that the U.S. and Mexican governments work to “avoid importing sugar from other countries to help boost the market between the neighbours” (full article here [$]).
This proposal is not new, of course, having previously been suggested to lawmakers’ during the 2008 farm bill debate (see here). The “recommendation” was rebuffed at that time, but these people are nothing if not tenacious.
In what surely must be a contender for the “Understatement of the Year” award, the article ends with this: ” Sweetener users and free trade advocates are likely to find the recommendations controversial”. Someone at CongressDaily has a sense of humor.
Ask Consumers if They Like a Weak Dollar
According to a Washington Post story today, “the weak dollar is one problem the United States loves to have.” The story reports how the fall of the dollar against the euro and other currencies in the past year has boosted U.S. exports and discouraged imports, cutting the trade deficit and allegedly boosting the U.S. economy. A weaker dollar has spurred complaints in Europe and elsewhere, but here at home the Post story leaves the impression the approval is practically unanimous.
Nowhere in the 1,058-word story is the impact on consumers ever mentioned. But it is American consumers who pay the biggest price when the dollars we earn buy less on global markets. We are paying more for oil, which not coincidentally has zoomed toward $80 as the dollar flounders. A weaker dollar means higher prices than we would pay otherwise for a range of goods, from imported shoes and clothing to food, that loom large in the budgets of American families struggling to make ends meet in this difficult economy.
Ignoring consumer interests is widespread in reporting about trade. It reflects the strong bias of elected officials to see trade issues strictly through the lens of producers and never consumers. After all, it is producers who form trade groups and hire lobbyists to promote their exports or protect themselves from imports. Nobody in Washington represents the diffused, disorganized but much more numerous 100 million American households.
The dollar’s value should be set by markets, and I have no reason to believe the dollar is over- or undervalued. But pardon me if I dissent from the consensus that a falling dollar is unambiguously good news.
Filed under: International Economics and Development; Trade and Immigration
Studying Confirmation Bias Tends to Convince People of the Existence of Confirmation Bias
If you were a federal contractor with millions of dollars in federal business, would you ever say that federal regulations are too burdensome? Would you tell a newspaper that you violated federal rules by turning away workers because a federal database reported a discrepancy between the information you submitted and the information the government holds?
I don’t think so.
But on National Review’s “The Corner” blog, Mark Krikorian of the Center for Immigration Studies takes a federal contractor’s self-serving statements about E-Verify as evidence that it’s “working fine.”
Of course it is! If you carefully consider the evidence you want to!
Filed under: Telecom, Internet & Information Policy; Trade and Immigration
Spectator.org Readers Getting “Mad about Trade”
My new Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization, has sparked a lively exchange this morning over at the American Spectator’s popular web site.
Contributing Editor Shawn Macomber introduces a Q&A with me by telling his readers:
Daniel Griswold is not shy about sharing the high aspirations he harbors for his superlative new book Mad about Trade. Griswold has managed to compose a volume as accessible and persuasive as it is indispensable, as fresh and uplifting as it is firmly grounded in accumulated wisdom–a rare bird, indeed.
The Real Story Behind the Chrysler Bankruptcy
If you worry about the abuse of executive power and declining respect among elected officials for the rule of law, you should watch this eloquent illumination of what really went down in the Chrysler bankruptcy earlier this year. The speaker is Richard Mourdock, Treasurer of the state of Indiana. The setting is a Cato Institute policy forum on October 15 about the “sordid details of the Bush/Obama auto industry intervention.”
As state treasurer, Mourdock is the person responsible for investment decisions concerning Indiana’s state employee pension funds, some of which owned a small share of Chrysler’s $6.9 billion in secured debt and some of which opposed the administration’s offer of $.29 on the dollar for that debt. Though these small secured holders were publicly castigated by President Obama as “unpatriotic” and unwilling to sacrifice for the greater good, Mourdock led the effort to stop the “sale” of Chrysler all the way to the U.S. Supreme Court.
Mourdock’s presentation gives a flavor for the tactics employed by the Obama administration to “encourage” senior, priority creditors to back off their claims so that chosen parties could take priority—tactics that included backroom reminders that some of those creditors had received and might seek more TARP funding, threats of bringing the full weight and measure of the White House press office to bear down on dissenters, public condemnation, and other forms of arm-twisting most Americans would find unseemly for a U.S. presidential administration.
Filed under: General; Government and Politics; Regulatory Studies; Tax and Budget Policy; Trade and Immigration
More Dairy Shenanigans — and It’s Not Over Yet
Dairy farmers were allocated $350 million in extra assistance recently (as if the billions we artificially funnel to them every year are not enough) because of plummeting prices. The assistance will come mostly in the form of cash, although the federal government will also buy more dairy products for nutrition programs, and at increased prices. (Not to be outdone, hog farmers are asking for the same.) An article from Wednesday’s edition of the Wall Street Journal Online has the details.
In a rare fit of candor, one dairy farmer group admits that the emergency money, and the decades-old programs, are not enough:
The National Family Farm Coalition, a Washington-based farm-advocacy group, is asking for an overhaul of the milk-pricing system, which is based on a complex Depression-era regime administered by the federal government.
So far I’m with them, but then they lose me with this:
The coalition supports an idea that would keep prices stable by creating an oversight entity to manage the amount of milk a farmer can produce.
“While we appreciate this money, it won’t be enough though to keep farms from going broke,” the coalition said in a statement.
Ah, milk quotas. Good idea. And we can learn from the Europeans about how to pull that trick off.
Seriously? We need a new “oversight entity” to actually “manage the amount of milk a farmer can produce”? Talk about fatal conceit. That’s fatal insanity to think that a centralized agency can manage milk production on a farm-level basis.
A Globalized Reading List
If you are looking for a good book on globalization and trade, an excellent source of ideas is the book review section of the Yale Center for the Study of Globalization. The site features excerpts and reviews of the latest books covering all aspects of the subject.
I have an understandable soft spot for the latest posting, on my new Cato book titled Mad about Trade: Why Main Street America Should Embrace Globalization.
Filed under: International Economics and Development; Trade and Immigration
Bernanke Criticizes Trade Deficit, but Not Trade
In a speech on the West Coast this morning, Fed chairman Ben Bernanke at first glance appears to be agreeing with the critics of trade who blame the trade deficit for much of our economic ills. “Bernanke Calls for Action on Trade Gap,” according to the Wall Street Journal. “Bernanke warns against trade imbalances,” chimes in the French news agency, AFP.
Underneath the headlines, however, Bernanke’s comments offer no comfort for the critics. The real culprit is not “unfair trade” or “currency manipulation,” but misguided tax and spending policies in the United States and other major trading countries.
That is a point I hammer home in Chapter 5 of the new Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization:
If our politicians are determined to do something about the trade deficit, the most constructive step they could take would be to promote a higher level of national savings. More domestic savings would reduce the need for foreign funds to finance domestic investment. … The most direct approach would be to reduce or eliminate the federal budget deficit. If the federal government were to borrow a few hundred billion dollars less each year, the pool of domestic savings would rise and more domestic funds would be available for investment. …Ironically, many members of Congress who complain loudest about the trade deficit have voted in the name of economic “stimulus” to plunge us ever deeper in debt.
Chairman Bernanke agrees. His policy prescription was not to raise barriers against imports, but to cut the federal government’s appetite for debt.
Are Industrialized Countries Responsible for Reducing the Well Being of Developing Countries?
A basic contention of developing countries (DCs) and various UN bureaucracies and multilateral groups during the course of International negotiations on climate change is that industrialized countries (ICs) have a historical responsibility for global warming. This contention underlies much of the justification for insisting not only that industrialized countries reduce their greenhouse gas emissions even as developing countries are given a bye on emission reductions, but that they also subsidize clean energy development and adaptation in developing countries. [It is also part of the rationale that industrialized countries should pay reparations for presumed damages from climate change.]
Based on the above contention, the Kyoto Protocol imposes no direct costs on developing countries and holds out the prospect of large amounts of transfer payments from industrialized to developing countries via the Clean Development Mechanism or an Adaptation Fund. Not surprisingly, virtually every developing country has ratified the Protocol and is adamant that these features be retained in any son-of-Kyoto.
For their part, UN and other multilateral agencies favor this approach because lacking any taxing authority or other ready mechanism for raising revenues, they see revenues in helping manage, facilitate or distribute the enormous amounts of money that, in theory, should be available from ICs to fund mitigation and adaptation in the DCs.
Continue reading here.
Filed under: Energy and Environment; Health, Welfare & Entitlements; International Economics and Development; Trade and Immigration
An Omen in the Cash for Clunkers Results
Chris Edwards is right. Tad DeHaven is right. Cash for Clunkers was a shell game and an utter waste of taxpayer money. But C4C offers another teachable lesson, which is that the 35.5 mile per gallon by 2016 fuel efficiency standard will kill General Motors.
In just the latest example of government policies working at cross-purposes, the president buys a 60 percent stake in GM at a cost to taxpayers of $50 billion (conservatively), and simultaneously supports a mandate—in the rigid CAFE standard—that will severely handicap GM, while assisting the competition.
C4C gave consumers the opportunity to express their preferences in the high mileage vehicle market, and GM failed miserably. Consumers of high mileage vehicles prefer Toyotas, Hondas, Fords, Nissans and Hyundais, whose offerings comprise the top ten best sellers list under the program. Not a single GM (or Chrysler) product made the top ten under C4C.
GM’s competitive strength is in the luxury car, muscle car, SUV, and pick-up truck categories. But to sell those cars in 2016, GM will need to sell many, many more small cars than it does now to achieve an average fleet fuel efficiency of 35.5 mpg. So, while GM’s competitors are free to target the gas-guzzling market because there is already plenty of demand for their high-mileage vehicles, GM’s capacity to compete where it is strongest will be conditioned on its ability to cultivate an obviously very skeptical market for its small cars. And that bodes very poorly for GM’s future.
For more on GM’s future and the damage done to important U.S. institutions, like private property rights, the rule of law, the free enterprise system, and the proper separation of economy and state as a result of the Bush/Obama auto intervention, you are welcome to join us for a policy forum at Cato on October 15 at noon.
Filed under: Energy and Environment; Trade and Immigration
A Novel Interpretation of “Green Tariffs”
Here’s a nice follow up to my blog post on Tuesday: firms importing solar panels to the United States face a $70 million bill because of unpaid duties.
It seems to me that a government truly concerned about global warming–putting aside the merits of that position–would want to encourage the adoption of solar panels, including by keeping them as cheap as possible. Nor, I would have thought, is this the time to add more fuel to the fire that is starting to characterize the U.S. trade relationship with China. There’s plenty enough fuel for that already.
Filed under: Energy and Environment; General; Trade and Immigration
Reflections on China’s 1949 “Liberation”
During a speaking trip to China three years ago, the young tour guide in Beijing kept referring to “the liberation.” I soon realized that she meant the October Revolution of 1949, in which Mao Tse Tung and the communists seized power and began their rule 60 years ago today.
Far from liberating China, the reign of Mao represents one of the worst tyrannies in the history of mankind. Opposition parties, free speech and freedom of religion were quickly eliminated. The Great Leap Forward of 1958-61 forced the collectivization of agriculture, resulting in a famine that killed tens of millions. The Cultural Revolution of 1966-76, while not as deadly, unleashed chaos that crippled the economy and scarred a generation. As Gordon Chang writes in a Wall Street Journal op-ed this morning, the celebration by the Chinese people will be understandably muted.
China’s real liberation began not 60 years ago, but 30 years ago, with the reforms of Deng Xiaoping. While China remains an oppressive, one-party state politically, its economy has taken a true great leap forward in the past three decades because of market reforms in agriculture, industry, and trade. China’s liberation has far to go, but the Chinese people today are much more free of government interference in their personal, daily lives than they were in the time of Mao.
When I point to China’s economic progress as an example of what trade liberalization can deliver, my debate opponents will sometimes counter that China is a communist country. But China’s dramatic growth has not occurred because of its residual communism. For 30 years now, its government has been in the process of abandoning the communist economic policies of Mao and his fellow “liberators,” much to the benefit of the Chinese people and the world.
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