Topic: Trade and Immigration

Damned With Faint Praise

Well, not faint exactly. Indeed, it is pretty hearty. But considering the source, I’m not sure it is an asset.

In an article in today’s Congress Daily, key sugar lobby groups praised Senator Obama’s newfound enthusiasm for the U.S. sugar program. As a senator from the candy-making state of Illinois, he was none too fond of the price supports and import restrictions that raised input prices for factories in his state.

Not anymore. In a letter to sugar groups, Senator Obama gave assurances that while he “has concerns” with the program, he would listen to and work with them to “reward [their] hard work with policies that will keep [their] industry and your communities strong”. Oh dear.

One former lobbyist pointed out that “…the candidate now “represents a broader range of interest” than when he was a state legislator…[and] added that Obama has never voted against the sugar program and supported the 2008 Farm Bill.” McCain, on the other hand, would likely have lost the support of formerly Republican-leaning farmers because “…[he] has consistently opposed the program and agreed with President Bush’s decision to veto the Farm Bill.” Another lobbyist said that “Sen. McCain seems to want to radically alter [the farm safety net].”

Considering the woeful sugar policies of the United States, an honorable person should be ashamed to receive Big Sugar’s support.

But Wait, There’s More!

The Democrat-aligned National Farmers Union is pushing for an increase (that’s right, an increase) in government price targets for agricultural commodities when (very few people seem to be using the word “if” these days) the Democrats take the White House and solidify their majority in Congress this fall.

Apparently, farmers’ production costs have increased above levels assumed by the current government price floors. Those floors therefore need to be adjusted upward so that if “prices stay low” (they are currently off their record highs, but still pretty high by historical standards) the safety net can be “bumped up,” according to the NFU’s president, Tom Buis. The increase in price-linked subsidies would be paid for by reducing direct payments, fiscally offensive but non–distortionary payments to farmers based on historical production. 

Hold on to what is left of your wallets, America.

Congratulations Paul Krugman

Today, the Royal Swedish Academy of Sciences awarded Princeton University economist and New York Times columnist Paul Krugman the Nobel Memorial Prize in Economic Sciences “for his analysis of trade patterns and location of economic activity.”  

I recently debated Krugman on whether it’s a good idea for government to guarantee universal health insurance coverage.  But today I have nothing but congratulations for him.

On Krugman’s Nobel

The Swedish Academy of Sciences has awarded the 2008 Nobel Memorial Prize in Economic Sciences to Paul Krugman, in recognition of his contribution to trade theory and specifically for his work on the effect of economies of scale in international trade.

Although Prof. Krugman is perhaps better known these days for his columns in the New York Times and his strong criticism of the Bush administration, trade wonks are well aware of his scholarly contributions, which number in the hundreds of scholarly journal articles and tens of books (including, jointly with Maurice Obstfeld, my undergraduate trade textbook). He won the John Bates Clark medal in economics in 1991, an arguably tougher prize to win than the Nobel.

I have my concerns with Prof. Krugman’s later work and his tendency to allow his political views to trump economic good sense. As the Economist [$] wrote in 2003 “A glance through his past columns reveals a growing tendency to attribute all the world’s ills to George Bush…Even his economics is sometimes stretched…” He is generally considered to be a big-government liberal. But the prize was not awarded for his NYT columns or his opinions on economic or foreign policy.

The Nobel is much deserved, even if Prof. Krugman’s rants have led him to stray far from his admirable trade-theory roots.

How to Save E-Verify: Grow the Federal Government!

The Heritage Foundation’s Robert Rector has written a careful defense of the “E-Verify” program, the federal immigration background check system. Unfortunately, his prescriptions for rescuing the program would grow the government in several directions - cost and intrusiveness, to name two. At root, E-Verify and “internal enforcement” of immigration law are incompatible with life in a free country under a federal government of limited scope and power.

The paper starts with an important admission that I failed to address with sufficient force in my paper on E-Verify: Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration.

“Of the millions of illegal immigrants in this country,” Rector says, noting a trio of studies, “the best evidence suggests that some 50 percent to 60 percent of this employment occurs ‘on the books.’”

This means, of course, that 40 to 50 percent of illegal immigrants working in the country are “off the books.” Even a flawless E-Verify system would have no effect on their ability to work in the country. The “magnet” of working and living the United States would not even be weakened for them. Spending a billion dollars over the next four years to continue E-Verify would do about half what people think it would do.

(The $1 billion figure is Rector’s number, combining private sector and government costs. Government estimates put the five-year government cost of E-Verify at $572 million, and lost federal revenue from a similar proposed program at $178 billion over ten years.)

To make E-Verify work there would have to be more. “Additional government expenditures might be required to meet the costs of prosecuting employers,” Rector says. “[H]ow­ever, fines on such employers could offset some or all of this enforcement cost.”

Though he doesn’t say so outright - it is “generally felt that fines are too modest” - a fair reading is that Rector would increase penalties on employers. Thankfully, he shies away from the idea of imprisoning them. We need the productive sector more than ever.

But the productive sector would be less productive under his eleven-point plan for E-Verify, which I will review and critique ever-so-briefly:

  • Require universal employment verification. Taking E-Verify national would increase yet again, in yet another way, the burden on productive U.S. employers. It’s the kind of bureaucratic accretion that Republican revolutionaries in 1994 came to town to stop.
  • Reauthorize E-Verify and provide adequate funding for implementation. Spend that billion dollars (and get rid of those revenues).
  • Improve government data to further reduce erroneous tentative non-confirmations and provide opportunities for individuals to review the accuracy of their personal data in government files. Among other things, this is the idea that there could be a system in which people could use government-licensed contractors to check whether the information about them in government databases was correct. Perhaps “government-licensed contractors” would do a better job than the government itself of preventing identity fraudsters from checking the information of other people, but it’s not likely. At its core, a national E-Verify system requires a national biometric database to work well.
  • Penalize employers who continue to employ workers who have failed verification. These are those fines - luckily, not jail - for employers.
  • Facilitate information sharing between DHS and SSA. That’s dataveillance. There will be a lot more of it in the future. Real-time or near-real-time monitoring of your behavior through your data.
  • Increase penalties, in law and in practice, for unlawful hiring. More fines on employers and more money spent on enforcement.
  • Issue clarifying letters to employers regard­ing Social Security mismatch notifications. This sounds innocuous, but “clarifying” in this case creates the legal predicate for fining employers when they have failed to be good deputies of U.S. Immigration and Customs Enforcement.
  • Do not restrict state efforts to limit the em­ployment of illegal aliens. This doesn’t directly grow the federal bureaucracy. It suggests states should force employers to submit to federal bureaucracy.
  • Establish supplemental procedures to pre­vent employment by means of identity fraud. Again, a national ID is essentially required to implement a national system for adjudicating personal rights, but Rector proposes something less: a complex program where people would be notified if it appeared that their identities were being used by others in the employment sector. The logistical and data security issues with this are forbidding. It’s something like describing how to build the cathedral of Notre Dame by saying, “Well, you put up a church … .”
  • Establish supplemental procedures to reduce “off-the-books” employment by illegal aliens. More dataveillance and more penalizing of employers.
  • Incorporate the current new-hire data collec­tion for child support into E-Verify. Yet more dataveillance - rolling employment information about every American into federal government databases.

Last week at the Heartland Institute’s 24th Anniversary Dinner, Jacob Hornberger of the Future of Freedom Foundation debated immigration policy with Peter Brimelow of Hornberger returned again and again to the theme that immigration law is a statist interference with the freedom of migrants and citizens alike.

He did not force the scales from the eyes of Brimelow or many of the other immigration opponents in the room, but people who appreciate freedom and limited government hope for the day when those scales do fall.

Fear of Sharia? Oh, Please.

Reviewing the new bills in Congress for my side-project, I come across some interesting stuff — and some dumb stuff.

Very dumb is how I would characterize a new bill introduced this week. H.R. 6975 would require aliens to attest that they will not advocate installing a Sharia law system in the United States as a condition of their admission to our country.

On the blog, I assessed it thusly:

First, there’s the simple bureaucratic nonsense of administering this thing: We’re going to ask every Christian, Catholic, Zen Buddhist, and Hindu not to advocate traditional Islamic law? What an utterly stupid waste of time. I don’t want a penny of my money going to pay for this.

But more importantly, a law like this communicates precisely the wrong thing to new immigrants and the world at large. It tells the world that we’re a weak, fearful country, and that we believe Sharia law is possible in the United States. It tells the world that we’ve come off our traditional moorings and that we no longer believe in free speech and tolerance of all opinions, no matter how wrong.

Let’s talk substance, just in case one or two of you out there are weak and fearful: There is no possibility — none — that Sharia law will be established in the United States. Not by any government body at any level. This country can stand to have Sharia advocated by whatever tiny minority might want to — without any risk. In fact, allowing such discussion will help dispel whatever small demand there could be for Sharia, because it would be so obviously incompatible with our way of life.

It’s embarassing that a strong, free country like ours would even consider an idea like this.

Five More Years of E-Verify: $572,000,000

More than half-a-billion dollars is the cost that the Congressional Budget Office estimates it will take to run “E-Verify,” the federal government’s immigration background-check system, for five more years. That’s about five dollars per U.S. family, according to’s net present value calculation. (Disclosure: I run that site.)

Think that’s not much? Take five dollars out of your wallet and tear it up. Then imagine every family in the country tearing up five dollars at the dinner table - before eating a meal made more expensive by the dearth of good workers in the United States to grow, harvest, process, ship, and vend their food.

E-Verify is about spending money to worsen our country’s economic situation. And if E-Verify were to go national, it would be used to give the federal government even more regulatory control over law-abiding Americans.

My paper on the topic is “Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration.”