Topic: Trade and Immigration

The Auto Bailout Warrants No Pride, Mr. President

President Obama is in Michigan today, which means his handlers at the White House recently consulted their very thin manila file folder labeled “Economic Successes or Anything That Might Pass for Such” to cull talking points about the auto bailout. Of course, nothing has been more celebrated as an economic policy success of this administration by this administration than the “rescue” of GM and Chrysler.
 
I spent a good deal of time in 2008-2010 analyzing, commenting, and testifying about the collateral damage–the often unseen but important externalities and longer term costs–that was being inflicted on third parties, the U.S. economy, and the rule of law, all for the purpose of ensuring that specific interests were insulated from the consequences of their behavior. So let me just summarize by repeating some previous thoughts.
 
It is galling to hear the auto bailouts characterized as “successful.” The word should be off-limits when describing this unfortunate chapter in U.S. economic history. GM and Chrysler, through their own relatively poor decisions with respect to labor contracts, product offerings, and quality management, failed by the market’s judgment and were rightful candidates for downsizing or liquidation. The bailouts essentially deprived the better auto companies of the spoils of competition and forestalled a capacity reckoning, which meaning that in the years ahead, auto workers in Alabama, Tennessee, South Carolina, Indiana, and even Michigan and Ohio may lose their jobs because GM and Chrysler were propped up beginning in 2009.
 
Calling the bailouts “successful” is to whitewash:
  • the diversion of funds from the Troubled Assets Relief Program by two administrations for purposes unauthorized by Congress;
  • the looting and redistribution of claims against GM’s and Chrysler’s assets from shareholders and debt-holders to pensioners;
  • the use of questionable tactics to bully stakeholders into accepting terms to facilitate politically desirable outcomes;
  • the unprecedented encroachment by the executive branch into the finest details of the bankruptcy process to orchestrate what bankruptcy law experts describe as “sham” sales of Old Chrysler to New Chrysler and Old GM to New GM;
  • the costs of denying Ford and the other more deserving automakers greater market share and access to GM’s and Chrysler’s best workers and capital;
  • the costs of insulating irresponsible actors, such as the United Auto Workers, from the outcomes of an apolitical bankruptcy proceeding, and;
  • the diminution of U.S. moral authority to counsel foreign governments against similar market interventions, to name some.
Acceptance of the president’s claim of auto bailout success demands profound gullibility or willful ignorance and virtually guarantees similar interventions in the future. 

Interpreting the New Deportation Statistics

Shortly before Christmas the Department of Homeland Security (DHS) released a report detailing deportations (henceforth “removals”) conducted by Immigration and Customs Enforcement (ICE) during fiscal year 2014.  Below I present the data on removals in historical context – combined with information from the Migration Policy Institute and Pew.  See my previous writings on this topic here and here.       

ICE deported 102,224 unauthorized immigrants from the interior of the United States in 2014, down from a peak of 188,422 in 2011.  Removals from the interior are distinct from removals of recent border crossers.  Removals from the interior peaked during the Obama administration and have since fallen to a level equal to that of 2007. 

Source: MPI and DHS.

The number of interior removals under the last six years of the Bush administration (the first two years are unavailable so far) was about 475,000.  From 2009-2014, the Obama administration removed about 950,000 from the interior of the United States.  

President Bush’s administration removed an average of about 276,000 unauthorized immigrants per year for the years available and an average of 79,000 of them annually were interior removals.  President Obama’s administration has removed an average of 405,000 unauthorized immigrants a year, an average of 158,000 of them annually were interior removals.  There were a large numbers of unknowns during the Bush administration that decreased as the years progressed. 

 

Source: MPI and DHS.

The Obama administration’s recent decrease in the number of interior removals is not the whole story.  The best way to measure the intensity of immigration enforcement is to look at the percentage of the unauthorized immigrant population removed in each year.  Based on estimates of the total size of the unauthorized immigrant population, 0.89 percent of that population was removed from the interior of the United States in 2014 – down from 1.15 percent in 2013. 

 

Source: MPI, Department of Homeland Security, Pew, Author’s Calculations. 

For every year for which data was available, the Bush administration removed an average of 0.7 percent of the interior unauthorized immigrant population.  President Obama’s administration has removed an average of 1.39 percent of the interior unauthorized immigrant population every year of his presidency – about twice the rate as under the Bush administration.  Even when focusing on interior removals, President Obama is still out-deporting President Bush based on the data available.

The unauthorized immigrant population increased under the Bush administration from 9.4 million in 2001 to a peak of 12.2 million in 2007 and then declined to 11.7 million in 2008.  During Obama’s administration, the number of unauthorized immigrants has, so far, stayed at or below 11.5 million.    

Obama’s interior removal statistics show a downward trend beginning in 2012 through to 2014.  The Obama administration has also focused immigration enforcement on criminal offenders (not all unlawful immigrants are criminals) but the data is a little difficult to disentangle for 2014 so I left it out of this blog post – stay tuned for a future one on that topic. 

The Obama administration has clearly not gutted interior immigration enforcement as their 2014 figures for interior removals are higher than they were for every year of the Bush administration except for 2007 and 2008.  

Industrial Policy Courtesy of the Cromnibus…Because No More Inferior Potassium

Though a monument to the ravages of Soviet central planning, the barren Magnitogorsk steel works complex still inspires America’s industrial policy proponents.  “Failure to plan is a plan for failure,” said comrade Rep. Dan Lipinski (D-IL), as he described the “pro-manufacturing” legislation he helped slip into the mammoth Cromnibus bill, which became law this month.

The Revitalize American Manufacturing and Innovation Act directs the Secretary of Commerce to establish a “Network for Manufacturing Innovation” to:

  • improve the competitiveness of U.S. manufacturing and increase production of goods manufactured predominately within the United States;
  • stimulate U.S. leadership in advanced manufacturing research, innovation, and technology;
  • accelerate the development of an advanced manufacturing workforce; and
  • create and preserve jobs

Of course, the verbs “revitalize,” “improve,” “stimulate,” “accelerate,” “create,” and “preserve” are euphemisms for protect, subsidize, regulate, and intervene.

How Long Is the TPP Going to Take?

We were once told that the Trans-Pacific Partnership would be completed by the end of 2013.  Then it was early 2014, then late 2014, or probably sometime before 2015, or in early 2015 for sure.  At this point, only two things are certain: you shouldn’t believe any predictions about the TPP, and the TPP is taking a really, really long time.

To get an idea for how long the TPP is taking, consider this graph put out by the Peterson Institute earlier this month showing the negotiation and ratification times for previous free trade agreements:

Peterson FTA graph 

The argument they’re trying to make with this graph is that the United States needs to pass trade promotion authority to make sure the TPP doesn’t get bogged down in Congress (the red line) after negotiations finally conclude.  They may be right, but I think it also tells us quite plainly that quick ratification of the TPP, with or without trade promotion authority, is an unrealistic expectation.

Here’s the same data presented with the negotiation and ratification times stacked on top of each other and with the current progress of the TPP (and TTIP) included:

timetable with TPP 

As you can see, the TPP negotiations are taking an unprecedentedly long time to complete. 

Undaunted by the failure of previous predictions, the U.S. Trade Representative is now claiming that the negotiations will conclude and the whole deal can be passed by Congress before the end of 2015.  That would be an impressively abrupt end to a long project, with a blue and red line total of just under 70 months. 

It’s possible that passing trade promotion authority will bring much needed energy to the TPP process.  Hopefully, USTR is right, and Congress will pass trade promotion authority, the TPP negotiations will conclude, and the ratification will be swift. 

It seems more likely, however, that the TPP is a trade policy quagmire the United States entered into with overly ambitious goals and inadequate resolve to see them met.  There’s a lot more than just the lack of trade promotion authority keeping the TPP negotiations from concluding.  And you might notice from the graph above that, even with trade promotion authority in place, the most recent trade agreements lingered in Congress for a very long time after the negotiations were completed.

Maybe I’m wrong.  Maybe the stars are about to align for the TPP.  But if I’m right, how long do we have to wait before we rethink our strategy?

Internationalists vs. Isolationists

Last week, I had a piece in Townhall in which I criticized those who call libertarians “isolationists.”  I explained the various ways libertarians are just as internationalist, if not more so, than those of other political persuasions.  The recent Rand Paul-Marco Rubio back and forth on President Obama’s new Cuba policy helps illustrate the point.  Here is the Washington Post summarizing the exchange:

Hawkish Republicans have long called Paul’s foreign policy “isolationist,” a label he rejects. In this week’s Cuba debate, Paul applied the label to Rubio.

Paul’s comments were unusually personal, beginning with a series of tweets aimed at Rubio followed by a two-paragraph message on his Facebook page. “Senator Rubio is acting like an isolationist” and “does not speak for the majority of Cuban-Americans,” he wrote.

Paul followed up with an op-ed on Time’s Web site Friday afternoon in which he wrote that he grew up learning to despise communism but over time concluded that “a policy of isolationism against Cuba is misplaced and hasn’t worked.” He noted that public opinion has shifted in favor of rapprochement — especially among young people, including young Cuban Americans — and that U.S. businesses would benefit by being able to sell their goods in Cuba.

Rubio responded to Paul’s comments Friday evening, telling conservative radio host Mark Levin, “I think it’s unfortunate that Rand has decided to adopt Barack Obama’s foreign policy on this matter.”

I don’t think there can be much doubt that Paul’s approach of engagement with Cuba is internationalist, not isolationist.  The Rubio approach is harder to define.  It can be seen as isolationist, in a sense; alternatively, it could be some sort of aggressive, interventionist – and ineffective – internationalism.  Either way, the Cuba issue is a good illustration of how libertarians are not isolationists, and hopefully this will put an end to that mistaken characterization.

Republicans in Congress Really Like the Cuba Embargo

President Obama made a number of spot-on arguments yesterday for why the United States should end the ineffective trade embargo that has helped impoverish the people of Cuba for over fifty years.  However, the core components of the embargo are statutory law that will require an act of Congress to overturn.  While it’s very encouraging to see the president take a leadership role in pursuit of a good policy, getting Republicans on board is going to be difficult to say the least.

Over the last 20 years, there have been 11 votes in the two houses of Congress seeking to eliminate or amend the Cuba embargo.  In all of those votes, loosening the embargo got majority opposition from Republicans.  According to Cato’s trade votes database, it wasn’t even close.  Republican support for the embargo has ranged from 61% (in support of travel ban) to 91% (in support of import ban) with the average level of support at 77.5%.  Indeed, in 2005 more Republicans voted to withdraw the United States from the World Trade Organization than voted to end the Cuba embargo.

That’s not to say that positive movement on the embargo in a Republican congress is impossible.  There are encouraging signs as well: shifting opinion among Cuban Americans alters the electoral politics of the embargo in favor of opposition; resurgent emphasis on free markets may temper the Republican party’s reflexive love for belligerent foreign policy; and long-time Republican opponents of the embargo will now have renewed energy. 

In practical terms, embargo opponents will need to persuade House leadership to schedule a vote and find enough support in the Senate to overcome an inevitable filibuster from Marco Rubio and others.  It may not be impossible, but there’s a lot of heavy lifting left to do.  Hopefully, the President’s actions will be enough to get the ball rolling toward more reform of this antiquated and harmful policy.

The Failure of the Americanization Movement

Introduction

Last week I was on an immigration panel discussing my new booklet Open Immigration: Yea & Nay, coauthored with Mark Krikorian of the Center for Immigration Studies.  The other panelists were Michael Barone, George Will, Andrew McCarthy, and John Fonte.  They all had interesting comments about the booklet and the issue of immigration broadly.  However, I do want to take issue with some comments by John Fonte about the assimilation of immigrants and his view that the United States needs a modern version of the Americanization movement – an early 20th century initiative that sought to assimilate newcomers rapidly into American civic life.  Fonte claims that modern immigrants just aren’t assimilating as well as previous waves of immigrants, especially in their patriotism, because there is no modern equivalent of the Americanization movement to help them. 

During the event, I challenged Fonte’s claims about both the assimilation rates of today’s immigrants as well as the effectiveness of the Americanization Movement.  On the former point, research by Jacob Vigdor and others shows solid and sustained assimilation of immigrants over the generations that is comparable to the assimilation rates of previous immigrant groups.  On the latter point about the effectiveness of the Americanization movement, I mentioned that there were no data available from the early 20th century to confirm or disconfirm that it was responsible for the assimilation of immigrants in those groups.  Fonte countered by saying [2:44:15]: “It’s true we don’t have data on how well assimilation worked, but I think we have plenty of anecdotal evidence that Americanization did help.”  Elsewhere Fonte writes “assimilation of the Ellis Island generation succeeded only because American elites (progressive at the time) insisted upon ‘Americanization.’”  The success of the Americanization movement is an empirical question but there is precious little data from that time period.  There may be some anecdotes available that support his position so I will list some others below that question the effectiveness of the Americanization movement.    

Fonte and I clearly disagree over how successful current immigrant assimilation is in the United States, but this blog will focus on the little-researched and less understood Americanization movement of last century.  Contrary to Fonte’s claims, the Americanization movement had no discernible impacts on immigrant assimilation at best and, at worst, it may have slowed down assimilation.  The Americanization movement was not a benevolent government program that sought to assimilate immigrants into American society so much as it was an avenue for American opponents of immigration to vent their frustrations about immigrants.  Such an atmosphere of hostility could not produce greater assimilation.  The Americanization movement, however, did create an air of government-forced homogeneity similar to the government policies of Russia, Hungary, and Germany that tried to forcibly assimilate ethnic and linguistic minorities with tragic consequences – an experience many immigrants came to America to avoid.  The Americanization movement replaced the tolerant cosmopolitanism (for the most part) that defined America’s experience with immigration up to that point, and represented a low-water mark of American confidence in the assimilationist power of her institutions.  Below I will lay out the history of the Americanization movement, how it worked, and why it was likely ineffective.