Facebook and Immigration

December 3rs’s WSJ started an article on immigration as follows:

“The Trump administration has sued Facebook Inc., accusing the social-media company of illegally reserving high-paying jobs for immigrant workers it was sponsoring for permanent residence, rather than searching adequately for available U.S. workers who could fill the positions.

The lawsuit reflects a continuing Trump administration push to crack down on alleged displacement of American workers.”  “Trump administration claims Facebook improperly reserved jobs for H1-b workers”

Immigration policy is a complex issue with many aspects. The economic aspects, however, should be straight forward and simple. https://wcoats.blog/2018/03/03/econ-101-trade-in-very-simple-terms/  https://wcoats.blog/2018/03/24/econ-101-trade-deficits-another-bite/  https://wcoats.blog/2018/09/28/trade-protection-and-corruption/ A free market in goods and labor increases productivity and output making the world wealthier. The cost for this extraordinary benefit is that some firms may go out of business and some workers may lose their existing jobs when someone else does better what the firm or worker were doing. They will need to move on to other activities or jobs.  It is wise and appropriate social policy to help those displaced by competition find alternative uses of their resources and skills.

It might seem rather harmless to protect existing firms and jobs from competition (aside from its afront to our individual freedom) but overtime the cost in reduced income growth will become greater and greater. What if such policies had been imposed a hundred years ago? Where would we be now?

If there are American workers who can perform the same job for the same wage Facebook needs, it has every financial incentive to hire them over sponsoring foreign workers. They don’t need laws to push them to do so. The good old profit incentive works just fine. It is fortunate that the exercise of our individual freedom to invent, invest, and work where we please also produces the most efficient (i.e. productive, thus profitable) use of our talents and resources. Talk about win-win. Those displaced when I come up with a better idea (i.e., something the rest of you like better) should be discouraged from stopping such progress with an effective economic safety net. “Replacing Social Security with a Universal Basic Income”

Saving the American Dream

The American Dream is under attack.

“The American Dream is the belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. The American Dream is achieved through sacrifice, risk-taking, and hard work….” “The American Dream is to succeed by work, rather than by birth”. The Dream has attracted the world’s best and brightest to our shores making America the world’s leading economic powerhouse and enabling us to live freely as we each determine what we are willing to work for, for ourselves and our families.

Historically, individuals have been limited in what they could achieve by where they were born in society, by their parent’s position in life, and by who they knew. Companies of individuals were limited by the restrictions placed on them by their governments, often by the protections from competition government granted their friends (crony capitalism). Such traditional societies limited the freedom and ambitions of its citizens and limited the productivity of its human and physical resources. In short, traditional societies were keep poorer than they would have been if their citizens had been freer to innovate and compete.

The American Dream is now under attack by Donald Trump’s trade protectionism, crony capitalist government favoritism, immigration walls, and weakening of the international rule of law that has extended the benefits of specialization and trade globally. It is also being attacked by Alexandria Ocasio-Cortez’s (LOC’s) vision of state leadership and control of production and a new generation of idealistic, but uninformed, voters who mean well but have missed the lessons of socialism’s failures. If we are to save the conditions in the United States in which the American Dream still lives, we must better understand what has led so many Americans to vote against it.

I am sure that the answers to that question are many and complex, but broadly speaking two stand out in my mind, both of which point to the measures needed to restore support for the dream.

The first is to better educate the public, especially its younger members, about the conditions that allow and encourage a productive, innovative economy. This includes understanding the proper role of government in protecting private property, enforcing contracts, maintaining public safety (the rule of law) and in providing the public infrastructure that facilitates private activities and commerce (the commons of public goods). It includes the lessons of why all socialist economies have failed as a result of the corrupting incentives of state direction of economic activity rather than the competitive search by profit seeking private enterprises for better ways to serve the public.

The second answer concerns the adequacy and efficiency of our social safety net. The American Dream concerns individuals who take responsibility for their own well-being. While on average this has opened the way for most to prosper to the extent of their talents and energy, some will, often through no fault of their own, fail and fall off the tightrope. Society has an interest (even beyond the obvious humanitarian one) in softening the fall. It has an interest in an effective social safety net. 

Some–those who have not understood the lessons of socialism’s failures–have looked to trade and immigration restriction to prevent them from losing their jobs. They object to the economic benefits of free trade when it means that they must look for a new job (however, most manufacturing job losses in the U.S. have resulted from technical progress and the resulting increase in productivity rather than from cross border trade). “Econ-101-trade-in-very-simple-terms”  “Trade-protection-and-corruption” Those with such views have supported Trump’s anti free market policies. They have been attracted by Trump’s “I win you lose, us vs them” rhetoric.

AOC and her friends point to the widening income inequality–the dramatic increase in the incomes of the wealthiest and the stagnation of the incomes of the middle class in recent years–and demand income redistribution. But she fails to understand that it has been the growth of government’s role in the economy and the incentives in big government toward corruption and crony capitalism (protectionism for the wealthy) that have reduced competition and protected the position and markets of the biggest companies with friends in government. Socialism would make those incentives even stronger.

America’s dynamism and success reflects the creative destruction of risk-taking entrepreneurs and their hard-working employees.  https://economics.mit.edu/files/1785  However, the workers whose jobs are displaced by new products and new technologies may need help in finding and retraining for new jobs. They may need financial assistance in between (unemployment insurance). If nothing else, this may be the cost of their support for such a dynamic system.  Our social safety net sometimes provides poor incentives and sometimes has holes. It is time to seriously consider replacing it with a less intrusive and more comprehensive Universal Basic Income.  “Our-social-safety-net”  “Replacing-Social-Security-with-a-Universal-Basic-Income”

The American Dream–the foundation of our freedom and affluence–is under attack from the left and the right. We should fight to preserve (or restore) it.

Are Venture Capitalists racists?

Shifting sovereignty from Kings to the people, was the beginning of human flourishing. In the United States, in its constitution the people returned only those powers to their government necessary to protect their wellbeing. The right to and protection of ones honestly acquired property is an essential aspect of this arrangement. This includes, of course, the right to invest our property anyway we choose.

Venture capitalists are those wealthy people who choose to take great risks in the prospect of large gains by investing in “startups” that have not yet established their profitability.  Put differently venture capitalists are prepared to finance an unproven idea/product/service that might gain public approval, i.e. might become profitable, though most of them fail.  As consumers we have benefited enormously from goods and services my parents never would have even imagined that a few wealthy investors took a chance on.

So the idea that the government might need to enact laws to insure that a venture capitalist’s investments do not reflect racial bias is shocking at several levels. “In the clubby world of venture capitalists, who spent $130 billion in the United States last year and helped anoint the world’s four most valuable companies and countless other successful start-ups, there is effectively no legal backstop that ensures people of color have an equal opportunity to share in its wealth creation.”   “Black-entrepreneurs-venture-capital”

First of all is the right of these investors to their property. They can give it all to their daughters if they want to.  Marxists and other egalitarians reject such a right but that would throw away the whole basis of the wealth our capitalist system has created that Marxists would like to redistribute.  But I want to focus on why capitalism minimizes the role of bias in our economic decisions.  This was explored long ago by Nobel Lauriat Gary Becker in his famous 1976 book on the Economics of Discrimination.

Becker’s basic point is that if your economic decision is influenced by racial or sexual or any other non-economic bias it will cost you money, i.e. you will make less than you otherwise would have.  If you hire a man when a woman was better qualified, he will contribute less to your company’s income than would have the woman, thus you pay a financial price for your bias. The same is true if you hire a white person when a black one was better qualified, etc.

The purpose of venture capitalist investments is to make a bundle by funding the next great idea. Most will fail but one or two turn into Facebook, or Amazon.  It may well be that a venture capitalist systematically under rates the potential of black entrepreneurs, i.e. that he suffers racial bias.  But in that case he will be less successful in his investments.  Capitalism will punish him for his prejudices and diminish his importance as a venture capitalist because it will diminish his wealth. None the less, an Irish venture capitalist may well bias her investments toward fellow Irishmen and a black venture capitalist may risk an extra break for a fellow black. But the profit motive of capitalism will discourage departures from objective evaluations of investment prospects.

The idea that a law should forbid or discourage racial or sexual bias when venture capitalists decide in what to invest is without merit.  Moreover, it is hard to imagine what such a law would look like and/or on what basis a government bureaucrat would overrule and direct the placement of a private investor’s chose of investments.

To peak briefly at the other–entrepreneurial–side of the equation, the unbiased opportunity provided by capitalism has attracted many foreigner entrepreneurs to our shores.  Steve Jobs (Apple, NeXT, Pixar), who was adopted at birth, was the son of Joanne Schieble who was Swiss-American and Abdulfattah “John” Jandali who was Syrian.  Steve Wozniak, Apple cofounder, was the son of Polish and Swiss-German parents.  Sergey Brin cofounder of Google/Alphabet escaped from the Soviet Union.  The famous architect, I.M. Pei, immigrated from China.  “How-12-immigrant-entrepreneurs-have-made-america-great”

Where does the desire to explore come from?

Long ago I had the pleasure of introducing a young friend to types of food he hadn’t tasted before.  He was quite comfortable with his American style hot dog and hamburger meals and wasn’t certain he wanted to try new and strange dishes.  People differ in this regard.  Some are eager to try new cuisine, see new places, and encounter new people and cultures. Some are not.  And some are even rather intimidated and reluctant to leave their familiar comfort zone. There is a lot to be said for the predictability of the familiar, perhaps similar to well-worn shoes.

After some gentle persuasion, my friend agreed to sample a few dishes.  I reassured him that nothing would be forced on him and that he might even discover some exciting new tastes.  If he found that he didn’t like a dish he would not have to finish it.  But he would never know what he might be missing if he didn’t explore a bit.  Once he started, however, it was hard to stop him.  He was pleasantly surprised at how interesting and tasty some dishes were.  He was particularly reluctant to try foie gras knowing it was goose liver, though he fell in love with it by the second bite.

As I noted earlier, people differ in their tastes for adventure.  We might just leave it at that but for two reasons.  The first is that being rich is more interesting and exciting than being poor.  I am speaking here of experience rather than money.  Seeing and engaging new and different places, meeting new and different people of different cultures, listening to new and different music can make life richer.  The core of a liberal arts education (as opposed to acquiring professional skills) is the introduction to and broadening of our understanding and appreciation of ours and other cultures. It makes our lives richer.

The second is that openness to change is a necessary aspect of economic progress.  Technical progress disrupts the established order but increases our productivity and standards of living.  Global trade not only significantly increases our material standard of living but confronts us with other people and cultures as well.  Both–technical progress and global trade often impose changes on us (such as the job skills demanded in the market) that we might otherwise not choose or want.  If people can choose to live where their opportunities are greatest and if firms are able to employ people with the skills that best fit the firms needs, economies will be more efficient and will raise the standard of living for everyone.  By allowing the disruption of innovation and trade we will have the opportunity to, or be forced to, confront and deal with strangers more often.

This can have a negative side for those who do not easily embrace adventure—those who prefer the familiar (hot dogs and hamburgers). If new neighbors come from different backgrounds and cultures, adventure lovers can enjoy the excitement of learning more about other places and people.  But those uncomfortable with strangers can be – well – uncomfortable.  Economic advances can also have negative impacts on those whose skills are no longer needed and we would be wise to develop and support government measures to soften and facilitate the needed adjustments.

A predisposition to seek and embrace adventures or to shun them is given to us by nature. However, civilization and its advance builds on nurturing more social skills and openness. Failure to teach/convince our fellow citizens of the rewards of adventure (or merely accepting and adjusting to change) can lead to disastrous results.  In extreme cases unease can turn to fear/hate as in the recent white nationalist terrorist attack in El Paso by Patrick Crusius.  As-his-environment-changed-suspect-in-el-paso-shooting-learned-to-hate.  The nature of public debate on race relations, religious freedom, globalization, etc., and the words of role models can have a profound impact on how those confronting change formulate their views on these subjects.

The world is a better, richer place when all of its people respect one another and live peaceably together. We and our education systems (school, churches, clubs, jobs) should do our best to encourage those reluctant to welcome strangers of the positive experiences it can open to them.  By learning to understand different ways of thinking and doing, we not only enrich our lives but can strengthen our own ways of doing things (our own cultures). Such interactions can show us what we like and value about our own ways and what we might adjust in light of the interesting practices of others. This is what the American melting pot is all about. It has produced a vibrant, dynamic and economically flourishing country. However, it is more friendly to the adventuresome types than to those resistant to change. We would do ourselves and our country a favor to kindly encourage those “left behind” to open up more to the wonders of our changing world.  With regard to a difference subject of misinformation Anne Applebaum explores multiple approaches to this task: Italians-decided-to-fight-a-conspiracy-theory-heres-what-happened-next?

 

The Sources of Prosperity

I am an economist so I can’t help writing about the virtues of trade in the (futile?) hope that what is obvious to economists might be better understood and appreciated by the general public. https://wcoats.blog/2016/12/22/save-trade/https://wcoats.blog/2017/01/06/the-liberal-international-order/,   https://wcoats.blog/2018/03/03/econ-101-trade-in-very-simple-terms/, https://wcoats.blog/2017/01/06/the-liberal-international-order/, https://wcoats.blog/2019/02/09/tariff-abuse/

So please bear with me one more time. If you join with ten, or a hundred, or a thousand others to cooperatively produce things, you can jointly produce much more than ten times, or one hundred or one thousand times as much as you could all produce individually as one person factories. But that huge increase in productivity and output is not possible unless you can sell your joint output to others for the many other things you need and want to consume that they produce. In short, none of this is possible without trade. The wider the area over which we can trade the greater are the possible gains in productivity from the specialization of labor and capital that a larger market makes possible. The American constitution recognized this when it prohibited restraints on trade between the states (across state lines).  The ultimate limit in the size of the market is given by the world itself.

But markets—the “places” or the arrangements through which trade deals (purchase and sales agreements) occur—require trust that deals will be honored.  The rule of law, which protects private property and the enforcement of contracts, provides the certainty needed for a manufacturer or other service provider to invest in the productive capacity and facilities needed to generate the promised supply of products that is the foundation of our relative affluence. When trade extends beyond national boundaries the rule of law takes the form of international agreements to rules of the game.  Bilateral, multilateral and global trade agreements establish the rule of law within their domains.  The World Trade Organization (WTO) was created to oversee this process. The astonishing skyrocketing of the standard of living of the average (even the poorest) earthling rest on, i.e. would not have been possible without, trade.

The uneven but persistent history of trade has seen the protection of less efficient and uncompetitive firms and industries reduced over time via trade agreements that reciprocally reduced the taxation of imports (i.e. tariffs).  Starting with President Trump’s misguided withdrawal from the Trans Pacific Partnership (TPP) trade liberalization has been thrown into reverse. Trump vs Adam Smith  TPP modernized and further liberalized existing trade agreements between the U.S. and a number of Pacific countries.  The agreement was to be between 12 Asian Pacific countries until the U.S. withdrew.  It would have provided a strong magnet to further draw China into the global system of rules for increasingly free trade. It was ultimately signed by 11 countries without the U.S. and renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The US withdrawal from the agreement was a serious mistake.

The United States as well as much of the rest of the world is beginning to pay the costs of Trump’s trade wars. In January of this year Deutsche Bank estimated that Trump’s trade wars have cost the U.S. stock market $5 trillion in forgone returns so far. Costs of trade war  “Bloomberg economists Dan Hanson and Tom Orlik have… concluded: If tariffs expand to cover all U.S.-China trade, and markets slump in response, global GDP will take a $600 billion hit in 2021, the year of peak impact.” US China trade war-economic fallout  “The import tariffs proposed by President Trump could wipe out the income gains provided by the Republican tax cuts for low- and middle-income earners, Jim Tankersley of The New York Times reported Monday.”  ”Trump-Tariffs-Could-Wipe-Out-Tax-Cuts-Most-Americans”

Are Trump’s import taxes old fashioned protectionism (protecting relatively inefficient domestic industries from foreign competition), a legitimate response to national security concerns, or a reflection of Trump’s “famed” negotiating style?

Protectionism

For starters Trump’s steel and aluminum tariffs of 25% and 10% respectively (following his earlier imposition of tariffs on solar panels of 30% and washing machines of 50%) are clearly protectionist and reflect an alarming over reach of executive authority. Using the “authority” given the President under Section 232 of the Trade Expansion Act of 1962, U.S. Department of Commerce found that imports of steel and aluminum “threaten to impair the national security” of the United States.  Canadian Prime Minister Justin Trudeau called the claim that reliance on Canadian steel could be considered a national security risk “absurd”.  Trump removed these tariffs on Canada and Mexico last month, but they remain in effect on our other friends (e.g., EU) and enemies. On several occasions Trump has threatened to raise tariffs on car’s imported from Europe on the same phony national security grounds.

The patters of trade that minimize costs of production and maximize labor productivity can be complex. While protecting a few inefficient American steel producers and their related jobs might be good for those few firms, it is bad for American consumers and the economy at large. Workers in less productive protected industries are thus not available to work in more productive activities. Moreover, more jobs were lost than saved as the result of high prices and lost sales by steel importing manufactures.  One study estimated that these tariffs could result in the loss of 146,000 jobs.[1]

Peterson Institute for International Economics study estimated that American businesses and consumers paid more than $900,000 a year for each job that was created or saved as a result of the Trump administration’s tariffs on steel and aluminum. The cost for each job saved as a result of the administration’s tariffs on washing machines was $815,000.[2]

National Security

The distinction between legitimate security concerns and protectionism is not always obvious. Trump’s approach is often more protectionist and bargaining chips than concerns for security.  An early indication of this was the U.S.’s treatment of ZTE Corp, China’s second largest telecoms gear maker.  In April 2018 the U.S. band U.S. companies from selling their products to ZTE in connection with its violation on U.S. restrictions on trade with Iran, Sudan, North Korea, Syria and Cuba.  “That means no Qualcomm chips or Android software for its phones, and no American chips or other components for its cellular gear.” NYT The company was effectively shut down and heading for bankruptcy when in early June of 2018 Trump ordered these restrictions lifted to save Chinese jobs!!  According to the NYT: “The Trump administration is pressuring China to make trade concessions. It may also need Beijing’s help to strike a deal with North Korea as Washington and Pyongyang plan a high-profile meeting on June 12 in Singapore.  Mr. Trump appears to be using ZTE’s punishment as a bargaining chip in negotiations with China, rather than a matter of law enforcement.” What is ZTE–A Chinese Geopolitical Pawn

Trump’s more recent banishment of Huawei, a Chinese tech company leading the world in 5G development, from the American market and efforts to convinces our once British and EU friends to do the same provides another example. In some applications security concerns when dealing with a Chinese company may be justified, but these areas are limited and Huawei has gone to great lengths to allay those concerns. “Google has been arguing that by stopping it from dealing with Huawei, the US risks creating two kinds of Android operating system: the genuine version and a hybrid one. The hybrid one is likely to have more bugs in it than the Google one, and so could put Huawei phones more at risk of being hacked, not least by China.”  “Google warns of US national security risk of Huawei ban” FT June 6, 2019

The Trump administration has expressed its anger with the refusal of many other countries to follow its lead thus incurring a diplomatic cost as well as the economic one of restricting access to the best and/or most cost-effective products. The dangers and potential damage of using trade threats for other objections are clearly express by seven former US Ambassadors to Mexico in a joint letter published June 5: Ex US Mexico Ambassadors-Tariffs would destroy partnership we built

Moreover, the US’s exploitation of the importance of the dollar as a reserve and payment currency in forcing its political agenda on the rest of the world has incentivized the EU, Russian, China and others to look for alternatives. As another example of the growing risks of relying on American markets, Alibaba, China’s national champion internet giant whose share are currently only listed on the New York Stock Exchange, will raise its next round of capital on the Hong Kong exchange.

Bargaining

But some of Trump’s threats of tariffs no doubt reflect his approach to a trade negotiation. While it is not the usual approach to a trade negotiation, in which the parties should be looking for win-win reductions in tariffs and other impediments to freer trade, it could occasionally work to achieve greater concessions from the other side than otherwise. There is really little evidence that it has, however. The renegotiated NAFTA, given the new name United States-Mexico-Canada Agreement or USMCA, is no better than a normal review and updating of the existing NAFTA would have been expected to produce. It incorporates most of the updated provisions of the TPP, as was expected. But Trump started the NAFT review and update, by tearing up the old agreement and threatening to revert to the bad old days. Trump’s threated 5% tariff on imports from Mexico if it doesn’t do more to reduce or deal with the flow of refugees across the US Mexican border seems to be a counter example of a threat that worked.

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Donald J. Trump‏Verified account @realDonaldTrump

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On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..

4:30 PM – 30 May 2019

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What if Trump doesn’t back down as China matches each of Trump’s escalations with new tariff increases of their own? Such a true trade war was not a necessary approach to the negotiations and could be terribly detrimental to both economies as well as those of our trading partners. Some of China’s behavior should be challenged. Its theft of intellectual property, state aid to some of its companies, and restrictions on foreign companies operating in China violate the spirit of the competitive deployment of resources to their most productive uses. But these criticisms are shared by most other countries (UK, EU, Japan, Korea, India, etc.). The US should negotiate with China together with these allies. It should use and strengthen the mechanisms of the World Trade Organization rather than ignoring and weakening it.

Even if Trump does backdown, as he generally has in the past, considerable damage has already been done that could take years to undo. The development of the cost saving, productivity enhancing global supply chains took time and were built with confidence in the rules that would apply—the rule of law. These very much included the maximum taxes (tariffs) and other regulations that would apply. The trust in that framework of rules has now been badly damaged.

Supply chains are already being restructured to reduce the risks of US policy shifts. While new arrangements may avoid or reduce these risks, they do so at the cost of efficiency.  Refusing to buy Russian booster rockets or Chinese semiconductors because of concerns that the Chinese or Russian government might exploit their companies’ products militarily or to steal our trade secrets, forces us into more expensive and/or inferior products and thus keeps us and the world poorer than otherwise. We had better be sure that the costs are necessary.

[1]  Timmons, Heather (March 5, 2018). “Five US jobs will be lost for every new one created by Trump’s steel tariffs”Quartz (publication).

[2] Long, Heather (2019). “Trump’s steel tariffs cost U.S. consumers $900,000 for every job created, experts say”The Washington Post.

The Wall: Form or Substance?

Most Americans support legal immigration into the United States (preferably more and better targeted than now) and oppose illegal entry. Controversy has arisen over how best to limit the illegal sort (to say the least).

The border between the U.S. and Mexico runs almost 2 thousand miles. By 2009 580 miles of fence or wall had been built for the purpose of reducing illegal entry of people and drugs. This grew to 654 miles by 2017.  Leaving aside the many controversies over the environmental impacts of fencing a border that runs through Indian reservations, and environmentally sensitive areas (“In April 2008, the Department of Homeland Security announced plans to waive more than 30 environmental and cultural laws to speed construction of the barrier.” Wikipedia), we must ask whether a fence/wall on even half of the border will significantly reduce, much less stop, illegal entry into the U.S. and whether it is the most cost-effective way of doing so (electronic “fences” are also now being deployed). The Economist magazine estimated that it may have “reduced the number of Mexican citizens living in America by only 0.6%.” “The-big-beautiful-border-wall-America-built-ten-years-ago”  About half of all illegal emigrants arrived in the U.S. legally by boat or plane and overstayed their visas.

Where there is a will, there is a way. Illegal immigration is reduced when conditions (incomes and security) in a potential immigrant’s home country are improved, when legal channels of immigration widened, and when illegal entry and residence are made less attractive (riskier).

While the North American Free Trade Agreement (NAFTA), which came into effect in 1994, benefited the United States, it improved living standards in Mexico and Canada as well, President Trump’s condemnations notwithstanding.  Over its first 20 years Mexican trade with the U.S. and Canada more than doubled. (Burfisher, Mary E; Robinson, Sherman; Thierfelder, Karen (2001-02-01). “The Impact of NAFTA on the United States”Journal of Economic Perspectives15 (1):125 44.  CiteSeerX 10.1.1.516.6543doi:10.1257/jep.15.1.125ISSN 0895-3309.)  Per capita income (GPD) in Mexico increased 37% and in the U.S. 52% between 1993 and 2017.

An example of Trump’s misuse of data was provided by his statement during his recent State of the Union Address when he claimed that: “One in three women is sexually assaulted on the long journey north”, referring to the Mexican caravans to the U.S. border.  The data comes from the Doctors Without Borders, who reported that of the 57 women caravaners who sought their medical care one third “said they were “sexually abused” on the journey, not “sexually assaulted” as Trump says.” This is not even in the same ball park.  “Fact-checking-president-trumps-state-union-address”

On multiple occasions over the last 20 years sensible bipartisan immigration reform laws were proposed but never passed. We badly need to adopt some such reforms in order to meet the labor market needs of the U.S. economy and to settle the legal status of earlier illegal immigrants (including the Dreamers).  See my earlier comments on such reforms:  https://wcoats.blog/2017/02/12/illegal-aliens/  https://wcoats.blog/2018/01/11/our-dysfunctional-congress/

The most challenging component of the policies to reduce illegal immigration are policies to make illegal status as unattractive as possible. In short, a barrier to illegal status that immigrants can’t climb over, tunnel under, or walk around. Illegal status should be very unattractive. Illegal residence should not have access to any, other than emergency, welfare services. People generally immigrate to the U.S. in search of a better life. That generally means a better paying job than they could find at home.  Employers who hire undocumented workers should be heavily fined (especially if the employer happens to be the President of the United States).  Efforts to deny services and jobs to illegal immigrants should not intrude on the privacy and lives of legal residents however recently they might have arrived. Our conflicted approaches of overlooking illegal status, reflects our failure to have adopted sensible laws for legal immigration.

America is an attractive place to live and we have benefited greatly from the best and the brightest who have chosen to come here (legally).  For our own sake and for the sake of those who might come we need to improve the process and widen the door for legal immigration while making the illegal sort less attractive.

Alex Jones

Alex Jones and his Infowars website have been removed and banned from YouTube, Facebook, Apple, and Spotify among the most popular social media platforms.  As of this moment, Twitter claims to be reviewing CNN claims that Jones and Infowars violate Twitter’s standards.  What should we think about this?

Jones has made many ridiculously false claims, such as the belief that Sept. 11 was an inside job, that the Sandy Hook massacre never happened and that Michelle Obama is a transgendered person with male genitalia.  “An InfoWars video posted in July 2018 falsely declared that the ‘CIA admits transgenderism is a plot to depopulate humanity.’” Twitter-Infowars-Alex Jones But accuracy and honesty haven’t been criteria for banning posts or President Trump’s tweeter account would have been closed long ago. Who is to decide whose lies can be tweeted and whose can’t?

Hate speech, which violates Twitter’s rules, is another matter, as is the promotion of violence.  Twitter’s rules state that it does “not tolerate” content “that degrades someone.”  President Trump violates this rule as well on a regular bases.

What should we do about the lies and hate that are regularly posted on the Internet?  I agree with Kimberly Ross who said that: “It is imperative that we don’t view those like Alex Jones, who peddle in fear-mongering and lies, as harmless. In fact, we should actively call out such appalling behavior….  We should never wait around for the Left to come in and clean up our side.  We should do that ourselves.  Individuals like Jones who manufacture outrage and spread falsehoods should find that the market on the Right for their wares is minuscule.”  Dont-defend-Alex-Jones-but-dont-let-the-government-get-into-censorship-either

Several important policy issues arise from this.  We should challenge what we believe to be lies and hatred ourselves.  Our First Amendment protection of free speech rightly prevents the government from deciding what is true and what is hateful and banning it.  Few of us would be happy letting Stephen Miller, a nasty minded White House Adviser, determine what could be posted on Facebook about American experience with immigrants.  Jonathan Rauch has updated his wonderful book Kindly Inquisitors: The New Attacks on Free Thought,in which he argues that the best defense against fake news and hateful speech is to exercise our free speech to challenge it.  Kindly-Inquisitors-Attacks-Free-Thought. See also his short essay on this subject:  “Who-will-regulate-hate-speech”.

Facebook and Twitter are private companies and should be free to set whatever policies for access that they want.  On the other hand they come close to being public utilities like telephone companies and Internet access providers who should not be allow to block access to the Alex Joneses of the world because they lie and spread hate.  This deserves further thought.

Turning to government to protect us from every unpleasantry we might encounter weakens us and takes us in the wrong direction.  Those who defend protecting us from hate speech with “safe zones” and “trigger warnings” reflect a paternalistic attitude toward the responsibilities of our government and of ourselves as citizens of a free society.  Like the well-meaning, but ultimately harmful, helicopter moms, we risk creating a society of wimps dependent on government for far more than is healthy for a free society.  Part of our training as we grow up and encounter a sometimes nasty world should be to stand up and challenge falsehood and hate when we encounter it.  Safe zones deprive us of such training.  It’s our job to counter lies and hate, not the government’s.

Immigrants from Hell

What immigration policies best serve the national interests of the United States?

Every country on the face of the earth has citizens whose intelligence, enterprise, and moral character range from 0 to 10. In poorly governed countries, we might call them “hell hole” countries, their best and brightest (the 8, 9, and 10s) often immigrate to more promising environments. The United States, with our constitution of liberty, has attracted a disproportionally large number of them. This is a dominant factor in the economic success of America and our spirit of individualism and enterprise. https://wcoats.blog/2010/06/10/a-nation-of-immigrants/

Just as individuals and companies compete in the market place to maximize the reward for their efforts (those who serve the public best, profit the most), so do the countries of which they are a part. When and if individuals and companies are given the chance to protect themselves from and restrict such competition they generally take it. Free (i.e. competitive) markets rarely offer such opportunities but governments often do. Governments claim to restrict competition to protect consumers or protect jobs from cheap foreign labor, etc. But more often than not government measures to interfere in the market are the result of political pressure to serve and protect special interests, what most of us would call corruption. Examples of government measures to protect companies or individuals from competition include: import tariffs, teachers’ unions that protect the jobs of bad teachers, excessive product safety standards that foreign competitors as well as domestic start-ups find hard to meet, and restrictive professional licensing through which medical doctors (to name just one profession) have limited who and what medical services can be provided.

The government’s regulation of who may immigrate temporarily or permanently is another area heavily influenced by individuals and companies seeking to protect themselves from competition. Subjecting American firms and workers to competition from foreign firms and workers (either from “cheap” foreign labor making it there and exporting to us, or immigrating and making it here), promotes long run economic growth.

Immigrants don’t take existing jobs from Americans; they create new jobs needed to pay for the consumption they add to the economy. While it is true that a firm can profit more with a monopoly by charging more by supplying less, the income of the nation as a whole suffers when supply is monopolized. Thus while worker and firm monopolies (e.g. the United Auto Workers, and uncompetitive steel manufacturers protected by import tariffs on potential competitors) will increase worker and firm incomes in the short run, the country would be poorer than otherwise in the long run. If we closed the border to trade all together, the country’s income would suffer considerably in the long run.

In this note I review a few immigration issues from the perspective of what policies best serve the national interest. By national interest I generally mean policies that best promote broadly shared economic growth. The self-selection of the best and brightest from around the world to immigrate to the U.S. in our earlier history clearly helped make us the prosperous nation that we are today. Our poorest citizens live better than the average citizen in many of the world’s poorer countries.

Attract the best and the brightest. To continue our past history of attracting the best and the brightest from around the world, our immigration policy should favor admitting the most talented and those with the work skills most needed. If we do not continue to attract and admit them they will go elsewhere boosting the economic fortunes of other (competitive) countries. “Immigration-is-practically-a-free-lunch-for-America”

Of the approximately one million foreigners given permanent residency each year about 70% are extended family members of existing permanent residents. These are the parents and grandparents and aunts and uncles of existing citizens or green card holders most of whom do not intent to work and/or do not have skills relevant to our labor markets. From a given total of immigrants the extended family preference crowds out workers. If we want to promote faster economic growth, we should pull the family preference back to the nuclear family (spouse and children) and keep or increase the total number of immigrants allowed each year thus increasing those coming to work.

Attract the best and the brightest. Similarly we should replace the existing green card lottery with merit based selection criteria (i.e. with H-1B visas, which are currently limited to 85,000 per year). The green card lottery, which provides 50,000 immigrant visas per year from countries with a low number of immigrants over the preceding five years, is meant to increase the diversity of countries from which people immigrate. Such country quotas, even if immigrants from each country are accepted on merit rather than luck, diminish the average skill levels from a global total without diversified country quota. A case might be made, however, that America’s interests are served by the good will gained when citizens of a large number of countries have a better chance of immigrating to the United States.

Help those displaced. While increased worker productivity increases our standard of living, it also causes some workers to loose their old jobs and to acquire the new skills needed for the evolving work place. While some of these dislocations come from the competition of global trade, most is the result of improving technologies that increase labor productivity and from changes in consumer tastes. These costs, which fall on a few for the benefit of many, must not be minimized or ignored.

Many of us are no longer such big risk takers as were our ambitious ancestors. We prefer a bit more security at the expense of increases in income. In any event we need to provide an effective and efficient safety net for those of us whose skills are no longer appropriate in the labor market while retraining for the new jobs that replaced the old ones. Very importantly, a public – private partnership should improve the targeting of training of new entrance into the labor force for today’s and tomorrow’s needs and to better support the retraining of those already in the labor force but in no longer needed occupations. This is a reasonable price to pay by the rest of us who benefit from the raising living standards of improving productivity.

Restore the rule of law. There are 11 to 12 million illegal immigrants living in the United States. It is not in our national interest to go on ignoring the law. But it would be devastating to our economy (to the firms that employ them) and to the personal lives and welfare of these people to expel them even if we had the military/police capacity to do so. So the laws defining their status must be changed. There is almost unanimous agreement that the Dreamers (those brought into the country illegally as minors) should be given legal status (permanent residency) but less agreement about citizenship. In my opinion, all illegal immigrants who have been here for more than say five years and have not been convicted of a felony should be granted permanent legal residency. However, to become citizens they should be required to go through the same process and procedures as anyone else applying for citizenship (though from their American residence). https://wcoats.blog/2017/02/12/illegal-aliens/

Our dysfunctional Congress

Congress is failing to do its job. It sometimes overrides states’ laws when it shouldn’t. At other times it fails to exercise its authority over the Executive branch, which then exceeds its constitutional authority. For many years it has failed to build broad consensus for important public policies resulting in laws with narrow partisan support or no action at all. This rather long note examines several examples of the above.

The rule of law requires that properly adopted laws be enforced. I favor states’ rights to the maximum extent consistent with the Constitution, such as the overriding federal principle of equal protection of the law for everyone. In particular, I favor the right of each state to determine whether growing, selling and consuming marijuana is legal within that state. Federal law has made dealing with pot illegal. The conflict is untenable and the dominant jurisdiction of laws on pot should be clarified. I favor the states’ right to determine the law in this area.

With regard to national laws, I favor legalizing the residency status of immigrants brought to the United States illegally when they were children (the Dream Act) as well as broad immigration reforms. Currently there is no such law and what to do with and about the rest of those here illegally remains highly controversial.

I also (sort of) support Attorney General Session’s move to rescind the Obama Administration’s enforcement guidelines for the federal enforcement of its anti marijuana laws. “Those guidelines had finessed the state-federal conflict by saying, in effect, that federal prosecutors wouldn’t go after people who complied with state laws, but would instead concentrate on drug cartels, money laundering and other high-priority targets…. In a memo, [Session] said the federal pot statutes “reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime.” “Is this stuff legal? federal-position-on-pot-makes-situation-foggy-draws-pushback” However, given that resources are always limited, law enforcement agencies must prioritize their law enforcement efforts. With or without DOJ guidelines they are likely to adhere to the priorities suggested by the Obama Administration.

And I strongly support President Trump’s rescinding of Obama’s executive order halting the deportation of those who came to the U.S. illegally as children.

In this note I want to explain why I hold these seemingly contradictory views—pro legalization of pot and dreamers and pro rescinding the executive orders that accomplished each of those. More broadly I want to appeal to our dysfunctional legislative branch to shape up and do its job for the citizens and residents of this country.

Immigration Policy

The history of our immigration laws is complex reflecting compromises between interests with very different motives and objectives. It is currently a mess that does not serve the broad interests of the country very well. As Ilya Shapiro put it: “Immigration is quite possibly the most feckless part of the federal government. More than advancing bad policy, our immigration system consists of schizophrenic laws that don’t advance any particular goal.  If you tried to draw up rules for how foreigners enter a country, how long they can stay, and what they can do here, you’d be hard-pressed to come up with anything worse than our hodge-podge of conflicting regulations. This immigration non-policy serves nobody’s interest, except perhaps lawyers and bureaucrats. And yet Congress has shamelessly refused to fix it.“ President Obama’s DAPA order oversteps his Immigration Powers

The 1965 Immigration and Nationality Act expanded the annual number of permitted immigrants and extended the preference given to members of nuclear families (spouses and underage children) to extended family members (aunts and grandmothers, etc.). Extended family members now take the majority of slots allowed annually—so called chain migration. In my opinion, the preference for extended family members should be rolled back to the nuclear family and preference given to those with the skills and education demanded in the labor market. We must not lose the enormous benefits we have enjoyed from our immigrants. See: A nation of immigrants

A particularly contentious issue concerns what to do with the 11 or so million people who are here illegally, often by overstaying their visas. Deporting them would disrupt their lives as well as the enterprises that depend on their labor. But letting them stay seems unfair to those waiting patiently to enter legally. Jeb Bush and Clint Bolick provide an excellent discussion of these issues in their book: Immigration Wars: Forging an American Solution. See also my earlier blog on: Illegal-aliens.

Early on broad, across the aisle, agreement was reached to single out those who were brought into the country as minors and remain illegally, while continuing the debate about what to do with the rest. These illegal residents did not knowingly break the law on their own and many cannot even remember their earlier lives abroad.

Legislation to grant this group conditional residency leading eventually to permanent residency and maybe citizenship, which later became known as the Dream Act (Development, Relief, and Education for Alien Minors Act) was first introduced in 2001 but failed to received the required 60% in the Senate needed to avoid a filibuster. Over the succeeding years it was reintroduced, some times as part of broader immigration reforms, on a number of occasions without success. The 2011 attempt added stronger enforcement provisions against illegal alien workers by requiring employers to verify the legality of each worker in the government’s E-Verify database, the government’s Internet-based work eligibility verification system. But even with this compromise it again fell short of the 60% favorable votes needed in the Senate.

Giving up on Congress, President Obama announced on June 15, 2012 that the government would stop deporting undocumented immigrates matching the criteria covered by the failed DREAM Act. His executive order was called the Deferred Action for Childhood Arrivals (DACA) program.

A year earlier President Obama had said:  “America is a nation of laws, which means I am obligated to enforce the law…With respect to the notion that I can just suspend deportations through executive order, that’s just not the case…There are enough laws on the books by Congress that are very clear in terms of how we have to enforce our immigration system that for me to simply through executive order ignore those congressional mandates would not conform with my appropriate role as President.” (March 28, 2011)

Though I sympathize with the President’s impatience with Congress, his reversal of his earlier understanding of his executive powers is more than a stretch. In recognition of this stretch, DACA only granted temporary residency and work authorization, which would have to be reauthorized from time to time. This is not a very satisfactory solution, even if legal, which is very questionable.

On November 14, 2014 President Obama issued another executive order “offering temporary legal status to millions of illegal immigrants, along with an indefinite reprieve from deportation called the Deferred Action for Parents of Citizens and Lawful Permanent Residents (DAPA) policy.

The executive action would have two key components:

  1. “It would offer a legal reprieve to the undocumented parents of U.S. citizens and permanent residents who’ve resided in the country for at least five years. This would remove the constant threat of deportation. Many could also receive work permits.
  2. “It would expand the 2012 Deferred Action for Childhood Arrivals (DACA) program that allowed young immigrants, under 30 years old, who arrived as children to apply for a deportation deferral and who are now here legally. Immigrants older than 30 now qualify, as do more recent arrivals.

“People in both groups will have to reapply every three years.“ WashPost complete guide to Obama’s immigration-order

DAPA not only protected five million undocumented immigrants from being expelled, but also permitted them to have work permits. This order was blocked in the courts—ultimately by a divided Supreme Court. In Mr. Shapiro’s and the Cato Institute’s view, DAPA was good policy, bad law, and terrible precedent.

In September of last year the Trump administration also withdrew DACA. In making the announcement to rescind DACA Attorney General Jeff Sessions said:  ‘The program, called Deferred Action for Childhood Arrivals, or DACA, put a temporary halt to the deportation of immigrants who came to the United States illegally as children and who have grown up in the country going to school or working.

“We are a people of compassion and we are a people of law. But there is nothing compassionate about the failure to enforce immigration laws,”

Homeland Security Acting Secretary Elaine Duke said the decision was not taken lightly, but was an attempt to reconcile the program with existing law.

“As a result of recent litigation, we were faced with two options: wind the program down in an orderly fashion that protects beneficiaries in the near-term while working with Congress to pass legislation; or allow the judiciary to potentially shut the program down completely and immediately,” Duke said in a statement. “We chose the least disruptive option.”

The Trump administration said no current beneficiaries would be impacted before March 5, 2018, giving Congress time to act.” Session terminates Obama’s immigration executive order

In my opinion Trump/Sessions did the right thing in terms of the law and of the desirability of finding a more permanent determination of the status of DREAMers, which can only be provided by Congress. Now it is Congress’ turn to finally fix this.

While they are at it (but without holding up the Dream Act) they should fix as much of the immigration mess as possible. For example, the Immigration Act of 1990 allows the Attorney General to provide temporary protected status (TPS) to immigrants in the United States who are temporarily unable to safely return to their home country because of ongoing armed conflict, an environmental disaster, or other extraordinary and temporary conditions in their home country. This authority was transferred to the Department of Homeland Security last October.

The TPS program currently covers about 300,000 people from ten countries, namely El Salvador, Haiti, Honduras, Liberia, Nepal, Nicaragua, Somalia, Sudan, South Sudan, Syria, and Yemen. The DHS recently announced the termination of TPS status for about 2,500 immigrants from Nicaragua and 45,000 Haitians and most recently 200,000 Salvadorians. They will all have about two years to find a new status or pack up and leave. Most of them have been here since devastating earthquakes struck Central America in 2001. Some 192,000 U.S.-born children, who are therefore U.S. citizens, have at least one Salvadoran parent who holds TPS. In my opinion, children born in the U.S. to nonpermanent residents should not automatically receive citizenship. But a compassionate and realistic treatment of TPS residents requires ignoring existing laws. The rule of law requires that laws be enforced. But then we need to be sure that we only have laws we want enforced. This is a dilemma with an obvious solution, which has not been easy to achieve.

Marijuana and States’ Rights

In the case of the legalizing marijuana, the issue is the rights of state versus federal law. Racial discrimination allowed and/or promoted by some state laws in the past tarnished the image of states’ rights. The constitution (XIV Amendment) and related federal laws appropriately deal with such discrimination in the market place, though the poison in some hearts remains a problem that only education and public debate and good will can address. States should be given the maximum latitude possible to regulate their own affairs. Bad ideas and approaches will be exposed through their experience and good ones demonstrated and copied by other states. Congress should rescind any laws that label marijuana a dangerous or restricted substance.

I support shifting more responsibility to the states for fashioning the details of medicaid within each state.

War powers and the eternal war on terror

In other instances Congress has given away powers that should only belong to it. We should not fight abroad unless Congress approves it. Yet at the moment the U.S. military is involved directly or indirectly in our “Global war on Terror” in 76 countries largely without explicit congressional approval. “Seeing_our_wars_for_the_first_time”.

Congress has not declared war since World War II. It has authorized military engagements on a number of occasions since then without actually declaring war on anyone. The Korean War was dubbed a police action and undertaken under a UN Security Council Resolution. The Vietnam and related wars were fought under the authorization of the Gulf of Tonkin Resolution of Aug 7, 1964. The Persian Gulf War with Iraq (remember that) was authorized by the UN and by our Congress in the Authorization for Use of Military Force Against Iraq Resolution of January 12, 1991.

Three days after the 9/11 attach on New York and Washington DC, Congress enacted the Authorization for Use of Military Force (AUMF). The law provided that: That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

The law was passed one vote short of unanimously. “The lone dissenter, Representative Barbara Lee, warned that the resolution gave a “blank check to the president to attack anyone involved in the Sept. 11 events — anywhere, in any country, without regard to our nation’s long-term foreign policy, economic and national security interests, and without time limit.” Rome’s empire without end and the endless U.S. war on terror. This law provides the continuing authority under which the U.S. and a few other countries attacked and still fight in Afghanistan as well as in Yemen, Somalia, Philippines, Pakistan, Libya, Iraq, and Syria.

President George W Bush signed the Authorization for Use of Military Force Against Iraq Resolution on Oct 16, 2003.

Individual liberty takes second place to security in times of war. But we now live in an era of permanent war and we are not escaping its price.

“The Committee for Responsible Foreign Policy – a bipartisan initiative designed to advocate for more oversight of U.S. military intervention abroad – commissioned research on U.S. citizens’ positions on war intervention. The coalition announced [recently] that the results prove a majority of Americans are mostly skeptical of the benefits of military intervention overseas and military aid in the form of funds or equipment…. The research showed that 67.4% of American voters disapprove of Congressional leadership allowing our involvement in conflict overseas without formally approving military action – or even allowing a debate.” http://responsibleforeignpolicy.org  “A November poll from J. Wallin Opinion Research showed the vast majority of Americans, over 70%, want Congress to impose at least some specific limits on overseas conflicts and exercise more direct oversight.” “Yemen-proves-US-needs-get-handle-war-making-powers”

Our polarized Congress

In the latest Gallup poll (Dec 4-11, 2017) 78% of those responding “disapproved of the way Congress was handling its job.” Congress’ failure to build broad inter party consensus on important public issues such as immigration, medical care and insurance, taxation, use of our military, marijuana and states rights more generally, has led the executive branch to over reach its proper authority, state and federal law to conflict as the Federal government extends its reach, the failure of Congress to resolve dysfunctional laws such as immigration, and the failure of Congress to agree on budget priorities that would arrest the upward march of our national indebtedness.

There are many reasons for Congress’ dysfunction and the deepening division of public attitudes toward our government and fellow citizens. The gerrymandering of congressional districts into safe Republican and safe Democratic districts has encouraged the selection in primary elections of each party’s more extreme candidates. I place considerable fault on the extent to which government has grown and dictates more and more aspects of our lives. This forces us to take public positions on one side or the other of issues that we used to be able to deal with (or ignore) privately allowing a more live and let live environment. Our sources of news have also become more siloed making it more difficult to confront all of the pros and cons of public policy issues.

What can we do? To name but a few ideas, we should each strive to restore civil public discussion. We should each commit to regularly consulting at least two sources of news from reputable sources coming from different sides of each debate. For example, I read the Washington Post and the Wall Street Journal every day. We must open our ears and minds and listen to what others say. Check out the following from what I bet is a different (and I think refreshing) side of the sexual harassment issue: “Catherine Deneuve denounces #metoo”. I will do my best to convince you that a more limited government will promote greater social harmony, individual freedom, and economic prosperity. And I will demand (if the courts don’t do it first) that my crazy congressional district (Maryland’s 6th congressional district—look it up and be amazed) be redrawn more sensibly. Even-a-gerrymandering-ban-cant-keep-politicians-from-trying-to-shape-their-districts