Topic: Trade and Immigration

Spain: Immigration Up, Unemployment Down

The recent economic success of Spain has not received the attention it deserves. One element in Spain’s resurgence, which I didn’t previously know about, is a relatively liberal immigration policy. According to BusinessWeek:

Over the past decade, the traditionally homogeneous country has become a sort of open-door laboratory on immigration. Spain has absorbed more than 3 million foreigners from places as diverse as Romania, Morocco, and South America. More than 11% of the country’s 44 million residents are now foreign-born, one of the highest proportions in Europe. With hundreds of thousands more arriving each year, Spain could soon reach the U.S. rate of 12.9%.

And it doesn’t seem to have hurt much. Spain is Europe’s best-performing major economy, with growth averaging 3.1% over the past five years. Since 2002, the country has created half the new jobs in the euro zone. Unemployment has plummeted from more than 20% in the 1990s to 8.6%, within shooting distance of the 7.2% euro zone average. The government attributes more than half this stellar performance to immigration. “We are very thankful for all these people who have come here to work with us,” says Javier Vallés, economic policy chief for Prime Minister José Luis Zapatero.

Apparently all those immigrants haven’t “taken all the jobs.” Ask your favorite Lou Dobbs-loving friend to explain to you how this is possible.

Landlords Drafted into War on Illegal Immigration

A couple of weeks ago, I testified in the House Immigration Subcommittee on the difficulties with, and undesirability of, a national employment verification system. Beyond some costly and inconvenient, bleeding-edge tech solutions, there’s no way to confirm on a mass scale that people are legally entitled to work under our immigration law - not without putting a national ID in the hands of every American.

I observed that such a system, once built, wouldn’t be restricted to employment, but would naturally expand:

Were an electronic employment verification system in place, it could easily be extended to other uses. Failing to reduce the “magnet” of work, electronic employment verification could be converted to housing control. Why not require landlords and home-sellers to seek federal approval of leases and sales so as not to give shelter to illegal aliens? Electronic employment verification could create better federal control of financial services, and health care, to name two more.It need not be limited to immigration control, of course. Electronic verification could be used to find wanted murderers, and it would move quickly down the chain to enforcement of unpaid parking tickets and “use taxes.” Electronic employment verification charts a course for expanded federal surveillance and control of all Americans’ lives.

Now comes news that a suburb of Dallas has become the first in the nation to prohibit renting to illegal immigrants. It requires apartment managers to verify that renters are U.S. citizens or legal immigrants before leasing to them.

A policy like this doubles-down on the error of enlisting employers into immigration law enforcement, and it shows how immigration law creates pressure to expand domestic surveillance. “The policy that will dissipate the need for electronic verification by fostering legality is aligning immigration law with the economic interests of the American people. Legal immigration levels should be increased,” I testified.

But you knew that if you’ve been following this stuff.

(Some) Developing Countries Don’t Like the “Trade” Bit in “World Trade Organization”

The Doha round of world trade talks stagger on, with the latest “deadline” for completion of a deal set at end-2007 (i.e., before the US presidential campaign season gets underway in earnest). Last week the chair of the agriculture negotiations released a paper designed to inject movement back in to the agriculture negotiations that are proving the key stumbling block to reaching a deal on the other important areas of world trade. (On why agriculture is such a big deal, considering its relatively small share in world goods trade, see here). In any event, the chairman’s paper has been roundly criticized, which means it has been a success.

Part of the skirmish, and this is true of the trade talks more broadly, is the explicit commitment to give developing countries “special and differential (S&D) treatment” in the negotiations. In other words, poorer countries have to lower their trade barriers less than do developed countries. In the wake of the disastrous meeting in Cancun in September 2003, when developing countries flexed their muscle, these sorts of concessions were deemed necessary to get the Doha round back on track.

Unfortunately, the S&D provisions have been used frequently as an excuse for developing countries to do almost nothing to lower their trade barriers. It is not quite that clear-cut, of course. Many developing countries have an interest in exporting to other developing countries, and so want to see trade barriers come down across the board. But generally, developing countries feel that this round is about developed countries lowering their barriers to developing country goods and services, while the poorer nations continue to protect their “sensitive” goods markets from competition.

Mercantalism is to some extent the basis of the World Trade Organization: it presupposes that countries will only open their markets in return for increased access for their exports, from which the benefits of trade flow. That’s economic nonsense, of course, but in the absence of political will for unilateral trade liberalization (see more about that here), the negotiated multilateral route is the best one towards freeing markets and giving consumers access to cheaper and more goods and services.

The new development focus of the WTO, however, is proving to be an obstacle in itself to reaching a deal. South Africa, for example, on behalf of a group of other developing countries, read a statement in a meeting earlier this week of the negotiating group on market access (for industrial–or manufactured–goods) that, according to an article today:

“accused rich countries of subverting the talks known as the Doha round by seeking to advance their commercial interests instead of the original “development” goal of lifting millions of people worldwide out of poverty through free trade.” (emphasis added)

Seeking to advance their commercial interests? Those shameless knaves!

The World Trade Organization is just that – a trade organization. It is not a development institution. It is true that freer markets and trade lead to economic growth, but the Doha round of trade talks is a commercial negotiation, not a donors’ conference.

Naming it the ‘Doha Development Agenda’ may have been politically necessary, but it has proven to be a big mistake.

Ban on Travel to Cuba Makes a Martyr out of Michael Moore

I normally don’t have the time of day for Michael Moore, the far-left filmmaker, but count me on his side in his current run-in with the U.S. Treasury Department.

Moore is under investigation for allegedly violating the U.S. government’s virtual ban on travel to Cuba. In February, Moore traveled to the socialist workers’ paradise with a group of Americans seeking medical care. The trip formed a segment of Moore’s new film “Sicko” that takes a critical look at America’s health care system.

According to an Associated Press story this morning:

The Treasury Department’s Office of Foreign Assets Control notified Moore in a letter dated May 2 that it was conducting a civil investigation for possible violations of the U.S. trade embargo restricting travel to Cuba. A copy of the letter was obtained Tuesday by the AP.

This office has no record that a specific license was issued authorizing you to engage in travel-related transactions involving Cuba,” Dale Thompson, OFAC chief of general investigations and field operations, wrote in the letter to Moore.

According to U.S. law, Moore could be fined thousands of dollars for violating our decades-old ban on travel to, trade with, and investment in Cuba.

As we have long argued at Cato [check out our research on the subject], the economic embargo against Cuba violates the freedom of Americans while giving the Castro government a handy excuse for the economic failures of its communist system.

By bringing this action against Moore, the U.S. government will turn him into a sympathetic martyr while providing millions of dollars of publicity for his latest piece of propaganda.

The Welfare State Causes “Sickness”

Sweden suffers from the world’s highest reported disability rate. This does not mean people there are actually sick, to be fair, but it does show that the welfare state creates bad incentives. People with weak values learn that they can feed at the public trough instead of doing something productive with their lives. A Wall Street Journal story explains how Swedish policy makers are trying to reverse the damage:

Swedes are among the healthiest people in the world according to the World Health Organization. And yet 13% of working-age Swedes live on some type of disability benefit – the highest proportion on the globe. To explain this, many Swedish policy makers, doctors and economists blame a welfare system that is too lax and does little to verify individual claims. … [G]overnments from Finland to Portugal are trying to cut back and get more people to work. Sweden’s bloated sick bay, which includes roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick. … During the 2002 monthlong World Cup soccer finals, short-term sick leave among Swedish men suspiciously rose by 55%. Earlier this year, police in Sweden’s capital city Stockholm investigated the local chapter of the Hell’s Angels biker gang for suspected benefit fraud, because 70% of the gang were on extended sickness benefits. The same doctor had certified them all as suffering from depression. … In Europe, roughly 20% of the working-age population – or 60 million people – depend on various government benefits as their sole or main income, compared with 13% in the U.S. That’s a major economic handicap. … Assar Lindbeck, one of Sweden’s best-known economists, says the lenient welfare state has changed the country over the past generation. In place of the old Protestant work ethic, it has become acceptable to feel unable to work and to live on benefits, he says. “I would not call it cheating,” Prof. Lindbeck says. “I would call it a drift in attitudes and social norms.”

The Latest from the Children’s Defense Fund

Or maybe a small child, judging by CDF’s fairly shameless pro-SCHIP campaign.

Turns out there is a solid case to be made that expanding SCHIP and Medicaid would leave us with more dead kids.  Of course, the ideological left won’t engage that debate. 

They’d rather just accuse their opponents of killing kittens.

Rare Sighting of Pro-Trade Democrats Rumored, Unconfirmed

Just when it seemed that control over the direction of U.S. trade policy was hopelessly and totally in the grips of congressional forces of darkness, there is a faint glimmer of hope that some Democrats might remember the days when they weren’t forced to consider trade a dirty word.  Given where things stand today, that’s not a trivial matter.

In a letter (sorry, subscription required–see excerpt below) dated May 2, six members of the House Ways and Means Committee (five of whom are Democrats!) urged Commerce Secretary Carlos Gutierrez to abandon (or at least work to minimize the disruption to trade caused by) his Department’s Import Monitoring Program of Textile and Apparel Products from Vietnam.  The novelty alone of a letter from Congress urging the administration to tread lightly where imports are concerned warrants this post.

As you may recall from a previous post, the Bush Administration felt it had to buy off opposition to the bill that granted Permanent Normal Trade Relations (PNTR) status to Vietnam.  Prominent holdouts demanding compensation were Sen. Elizabeth Dole (R-NC) and Sen. Lindsey Graham (R-SC), and the price, ultimately, was a commitment from the administration to monitor imports and to self-initiate antidumping cases if the situation warranted. That commitment from the administration was unprecedented, unnecessary, and disappointing.  Today it is reported to be scaring away investment in the Vietnamese industry and deterring trade between Vietnamese producers and U.S. customers. On trade policy, Democrats have earned most of their scorn by marching to the tune of labor unions, which would just as soon permanently separate U.S. customers from their foreign sources.  But Democrats also count among their constituents importers, distributors, wholesalers, retailers, producers, truckers, warehouse operators, port employees, and consumers who suffer when supply chains get tangled and severed.  The authors of the letter acknowledge:

Congressional passage of [PNTR] for Vietnam was intended to provide benefits for both United States businesses and consumers, as well as strengthen the U.S.-Vietnam relationship and provide opportunities for economic growth that would benefit the Vietnamese people.  We are deeply concerned that the disruption in trade caused by the import monitoring program is cutting away at many of the benefits of granting PNTR status to Vietnam.

Well put, indeed! Hopefully, the congressional trade leadership was copied because its recently unveiled New Trade Policy for America reflects predominantly an antitrade perspective that has been allowed to fester and metastisize within the Democratic caucus.