Topic: General

A Marshalltown Plan for Immigration

Below, Tom Palmer mentions Cato adjunct scholar Don Boudreaux’s wonderful essay on the ability of today’s United States to absorb immigrants as compared to our storied Ellis Island immigration heyday. I’d like to add a point that many Lou Dobbs fans seem not to fully grasp. Not only can we accommodate more people, we need more people.

I grew up in Marshalltown, Iowa. I’ll tell you, they’re not running out of space in Marshalltown. From the historic courthouse at the center of town, a ten to fifteen minute drive in any direction will put you in a cornfield. Over the past decade or so, Marshalltown has seen an influx of Mexicans – many from a single village, Villachuato – who came to work at the Swift meatpacking plant, or in the fields in the summer. This has caused a bit of friction in a middle-class town with a largely German and Scandinavian heritage – but just a bit. In fact, many small Midwestern towns like Marshalltown have been fighting for decades to hold on to a dwindling population. This is a real problem. Marshalltown businesses, for example, receive less than one application for each new job opening.

In 2001, with typical Iowan civic spirit, then-mayor Floyd Harthun ventured down to Villachuato to see if he could learn something about Marshalltown’s newest workers and taxpayers. Here’s part of an account of that trip, from a 2002 article in Governing Magazine (for state and local governments), which illustrates the symbiotic relationship between Mexican immigrants and towns like Marshalltown:

[Villachuatans] account for about half of the 1,900 employees at the largest employer in Marshalltown, a Swift & Co. meatpacking plant that also generates 1,200 additional jobs at related companies. Mexicans also have opened several new businesses in town, and their children have propped up sagging enrollment in Marshalltown schools. Not surprisingly, Mayor Harthun was eager to learn more about them – in part, because he wanted them to stay. “I was being self-serving,” he admits. “We need people.”

When Harthun reached Villachuato, several hours’ drive west of Mexico City, he was surprised to discover just how much the people there need Marshalltown as well. “About a third of the license plates were from Marshall County,” he recalls. He learned that Villachuatans who live in Marshalltown sent money to provide electricity and underground water in their native town, helped finance road-paving projects and restored the town church and town plaza. As Harthun visited with his hosts, he also started to understand something else: The villagers in Mexico are in close contact with their friends and family members in Iowa. “If a job opens up in Marshalltown,” he says, “the people in Villachuato know about it even before I do.”

Marshalltown (population 29,000) and Villachuato (about 15,000) are examples of what [University of Northen Iowa professor Mark] Grey calls “unofficial sister cities” – pairs of communities in Iowa and Mexico whose economies have become interdependent as a result of the flow of workers across the border. As Harthun learned, these relationships have developed out of view of the mainstream media and established institutions, following a logic rarely acknowledged in today’s polarized debates over immigration. And they show that while Americans often view immigration as an act of graciousness on our part, for many communities, it is becoming an economic development strategy as well, possibly making the difference between prosperity and economic decline.

What I love about this story (other than the fact that it makes me proud of my hometown) is the way it illustrates the positive-sum nature of exchange and human cooperation. Nobody loses when Marshalltown and Villachuato become sisters. It is maddening to see the Minutemen stringing barbed-wire along the Mexican border because that is an attempt to erect a literal barrier to the exercise of our natural moral right to cooperate – to deny our ability to make strangers our friends (our figurative siblings, even) through exchange. I agree that there is something terribly wrong when millions of people have to break the law to excercise their moral rights. But the problem isn’t that people are trying and succeeding to exercise them. The problem is poor legislation that fails to acknowledge, accommodate, and protect those rights. We can do better.

Marshalltown, a typical apple pie and baseball Midwestern town, has a great physical infrastructure, outstanding public schools, and more than enough room, physically and culturally, for tortillas and futbol. But it can’t merely accommodate more people, it needs them. There are thousands of Marshalltowns in this country (though no other may have my heart) that new immigrants could benefit and that could benefit new immigrants.

Now, part of the difficulty with immigration in a huge country like ours is that a lot of newcomers never make it out of the region of entry. This does place an undue burden of absorption on border states and port cities. No doubt most rural Mexicans have never heard of such exotic, faraway places as Iowa or Nebraska. But they should hear of them; they are needed there. Perhaps immigrants ought to be encouraged, like subway riders, to make space around the doors and move to the center.

Economics 101, Republican Style

According to Greenwire (a subcription-based electronic daily on all news environmental), House Speaker Denny Hastert (R-IL) told reporters yesterday that increasing the supply of ethanol available to refineries would have no positive effect of any kind. “I just don’t see an economic plus in it right now” he said. Apparently, it’s just a Democrat myth that increasing the supply of something will have a favorable impact on the price of that something.

Of course, Hastert’s comment was made in the context of a discussion about tariffs the United States currently has in place to discourage ethanol imports from Brazil. Removing those tarrifs would certainly help motorists (whose fuel prices are going up in part because Congress mandated massive increases in ethanol consumption at the pump in the 2005 energy bill), but there would indeed be “no economic plus in it” for U.S. corn farmers, who are thriving on the ethanol shortages that are driving up fuel prices.

Sooner or later, politicians are going to choose between motorists and farmers. Denying economic reality isn’t going to hold off the day of reckoning.

The Battle over Entitlements Isn’t Lost Yet

I thought I would step out from behind Cato Unbound’s editorial curtain and make a comment here about what’s going on over there. In particular, I’d like to offer some words of encouragement to my friends David Frum and Bruce Bartlett, both of whom are downhearted (excessively, in my opinion) about the prospects of checking and reversing the entitlement-driven expansion of government spending.

Both David and Bruce make strong cases for their pessimism. David points to the opportunities blown during the nineties, while Bruce stresses the huge increases in spending that existing commitments under Social Security, Medicare, and Medicaid will necessitate in coming years.

Good points, but not the whole story. Yes, the nineties offered what in retrospect were optimal conditions for restructuring America’s entitlement commitments and thereby winning huge victories for good policy and limited government. But to adopt the clear-eyed realism that David and Bruce urge, since when did countries ever make major systemic reforms at the optimal time? Over the past generation, we have seen bold moves around the world to unwind overreaching government and install more market-friendly policies. And almost without exception, those moves have occurred, not when favorable conditions permitted sweeping changes with a minimum of short-term pain and dislocation, but when countries had their backs against the wall. Gorbachev’s launch of perestroika and the resulting collapse of communism in the Soviet bloc, India’s dismantling of central planning, the general turn toward macroeconomic stabilization, trade liberalization, and privatization throughout the less developed world, New Zealand’s dramatic policy turnaround – all occurred when countries were in extremis and alternatives to liberal reform had been exhausted.

So while it’s disappointing, it’s not terribly surprising that we have thus far failed to face up to the fiscal unsustainability of our existing entitlement commitments. We have opted for delay because delay has been the path of least resistance, but it will not remain so indefinitely. At some point, the day of reckoning will arrive, and we will face an unavoidable choice: pay to keep the promises we have made with huge tax increases, or repudiate those promises and restructure the programs that made them. It is entirely possible that, when the time comes, we will end up choosing something much closer to the former than the latter. Certainly that is what David and Bruce seem to assume.  But I don’t think it’s inevitable. Indeed, there are sound, non-wishful-thinking reasons for believing that the limited-government side has a fighting chance.

After a steady runup from the 1930s through the 1960s, total government spending as a percentage of GDP has been stable for a generation [.pdf], knocking around the 35 percent range (see Figure VI.1 on page 163). Yet if no changes are made to Social Security, Medicare, and Medicaid, spending under those programs will increase dramatically over the coming decades – according to this CBO report, from 8 percent of GDP today to 21 percent in 2075. Which means a commensurate 13 percentage point increase in overall government spending as a share of GDP, and a mind-bogglingly large tax increase to pay for it all.

Bruce assumes that because past efforts to roll back government spending’s share of GDP have been unsuccessful, further whopping increases in that share are all but inevitable.  But how does that follow? Look at things another way: efforts to prevent increases in government spending’s share of GDP have been highly successful for over three decades. Why is it unimaginable that such success can be continued? Isn’t it conceivable that, when faced with a ruinously expensive tax increase, Americans will choose a repudiation of past promises, and a restructuring of future commitments, as the lesser of two evils?

David and Bruce seem to assume that repudiating past promises will be next to impossible. I think that assumption is unwarranted. Countries around the world have repudiated obligations under fiscally unsound public pension programs – and so did we (by increasing the retirement age and subjecting benefits to taxation) in the 1983 Social Security reform. And unsustainable corporate promises to retirees are being repudiated left and right these days, without any strong political backlash.

So there is hope. A battle is looming, and the limited-government side is very much alive. Because we have waited so long, partial repudiation of past promises will inflict pain that could have been avoided. And even with partial repudiation, the price tag of taking care of existing retirees and near-retirees will be hefty. But if we do succeed in restructuring these programs, that transition can be financed, and after digesting the rat the government snake can slim down again.

It won’t be easy. We could lose. But we are not foredoomed.

NSA Database

USA Today reports that the NSA has a massive database of Americans’ phone calls. This is going to keep Bush’s controversial legal theories in the news for the next few weeks – especially since confirmation hearings for CIA director-designate General Michael Hayden are right around the corner. Here’s a pertinent excerpt from our new report on Bush’s constitutional record:

President Bush’s claim that he has the “inherent” power as commander in chief to order the secret surveillance of international e-mail and telephone conversations of persons within the United States raises a host of disturbing questions. For example, if the president can surveil international calls without a warrant, can he (or his successor) issue a secret executive order to intercept purely domestic communications as well? Can the president order secret warrantless searches of American homes whenever he deems it appropriate? Attorney General Alberto Gonzales has indicated that the president can order secret searches of American homes because President Bill Clinton deemed such break-ins “legal,” as if that would bolster the validity of his claim. 

Since Bush and his lawyers believe the president can arrest Americans without warrants (see the Department of Justice legal brief in the Padilla case), they presumably believe that domestic eavesdropping without warrants is also legal and appropriate. We’ll see what General Hayden says when he comes before the Senate.

Recent Cato debate on the NSA program here. Even more general background in this Cato report, Watching You.

Diversity: Math Counts

The Washington Post reports:

President Bush’s crop of political appointees includes fewer women and minorities than did President Bill Clinton’s at comparable points in their presidencies, according to a new report by House Democrats.

Women made up about 37 percent of the 2,786 political appointees in the Bush administration in 2005, compared with about 47 percent in the Clinton administration in 1997, according to the report and supplemental data released last week by the Democratic staff of the House Government Reform Committee. Similarly, about 13 percent of Bush administration appointees last year were racial minorities, compared with 24 percent in the fifth year of Clinton’s presidency.

Unlike the Democratic report [.pdf], the Post noted that Bush is the first president to appoint a minority to any of the top four Cabinet posts: State, Defense, Treasury, and Justice. And he has appointed three minorities to those jobs.

But there’s another problem with the Democratic analysis. Presidents usually draw their appointees from the ranks of their supporters, and they tend to reward constituencies that support them. Get more support from the South, and you’ll likely appoint more Southerners to office. If Catholics vote heavily for one party, that party is likely to appoint more Catholics. That’s partly a matter of rewarding your voters, and partly a reflection of the pool of supporters you can draw from. If blacks vote 9 to 1 Democratic, it’s likely that a Democratic president will have more blacks among his campaign workers, contributors, and party faithful. By that criterion, Bush has lived up to the demands of affirmative action better than Clinton.

In 1996, about 58 percent of Clinton’s voters were women, 11 points higher than the percentage of women among his appointees. In 2000, about 47 percent of Bush’s voters were women, about 10 points higher than the percentage of women among his appointees.

More dramatically, Clinton got 27 percent of his votes from minorities, compared with 24 percent of his appointees. Bush got only 9 percent of his votes from minorities, but 13 percent of his appointees were minorities. So an identity-politics advocate would say that Clinton under-rewarded his minority supporters while Bush over-rewarded his.

The people who are going to manage vital services ought to be selected on the basis of their qualifications, not their race and gender. (Appointees who are merely going to be involved in useless and unnecessary federal programs can, I suppose, be selected on some other basis than ability and experience.) But to the extent that we’re going to look at “diversity” criteria, it seems appropriate to note that Bush has appointed more women and minorities in proportion to their presence in his coalition than Clinton did.