Topic: International Economics, Development & Immigration

Time to Cut U.S. Foreign Aid Programs

The federal government funds an array of aid programs aimed at promoting growth in less-developed countries. Funding goes to federal agencies, such as the U.S. Agency for International Development, and it also goes to international aid groups, such as the World Bank.

The federal government spends more than $30 billion annually on foreign aid. Aid spending has more than doubled in the past two decades. The Trump administration has called for substantial cuts to foreign aid spending.

Ian Vásquez has published a new study on foreign aid at DownsizingGovernment.org. He argues that despite the political enthusiasm for aid, there is little evidence that it is effective. Indeed, it is often counterproductive. There is no correlation between foreign aid and economic growth, and efforts to condition the receipt of aid on market reforms have failed. As such, Ian argues that the federal government should end its development aid programs.

However, Ian also discusses the good news on economic development. Decades of experience show a strong relationship between economic growth and market-oriented policies. Countries eager to improve living standards can do so themselves with domestic reforms, such as securing property rights, reducing arbitrary and bureaucratic regulations, and encouraging entrepreneurship and investment.

Ian’s new study on foreign aid is here.

 

Statement for Hearing on “Agricultural Guestworkers: Meeting the Growing Needs of American Agriculture”

PDF here

Statement for the Record
of David Bier of the Cato Institute[1]
Submitted to Subcommittee on Immigration and Border Security,
House Committee on the Judiciary 
Hearing on
“Agricultural Guestworkers: Meeting the Growing Needs of American Agriculture”
July 18, 2017

Foreign agricultural workers allow farms to expand production, lower prices, and raise incomes for most workers in the United States. Government intervention in the labor market inhibits the ability of farmers to plan the planting and harvesting of crops appropriately, leading to a reduction in production at the start of the season or crops rotting at the end. This government-created uncertainty also makes it more difficult for U.S. companies that rely on U.S. agricultural products to expand. At the same time, unnecessary regulations on agricultural guest workers limit their availability, incentivizing illegal immigration.

To fix these problems and end the regulatory uncertainty, Congress should grant a lawful status to the existing unauthorized immigrant workforce—a disproportionate share of which works in agriculture—and it should reform the current H-2A temporary worker program for future agricultural workers. Excessive regulatory costs and arbitrary limitations on the occupations that H-2A workers may perform limit the use of the program. Any revised H-2A program should allow guest workers to change employers without ex ante government permission and to freely negotiate wages or other benefits without fear of losing their status.

E-Verify Does Not Lower Unemployment

The Federation for American Immigration Reform (FAIR) released a report claiming that E-Verify lowered unemployment rates in states that implemented it.  FAIR’s report is deeply flawed.  The first section of this blog will catalog FAIR’s errors and show that states with mandatory universal E-Verify typically had higher unemployment.  The second portion of this blog will use the synthetic control method to look at E-Verify’s effect on unemployment in Arizona after the E-Verify mandate.  The flaws in FAIR’s report are important to highlight as more states are considering a universal E-Verify mandate.  There is little evidence that E-Verify mandates lower unemployment but much evidence that they raise it.   

Criticisms of FAIR’s Report

E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce.  The system would be used at the point of hire to verify that any new worker is actually authorized to work in the United States.  FAIR attempted to show that states with E-Verify have higher employment growth relative to other states.  This is likely an attempt to overcome one of the stronger criticisms of E-Verify: It is an expensive labor market regulation that will increase unemployment by raising the cost of hiring new workers among other problems.  However, FAIR excluded the first state to mandate E-Verify and made numerous other silly methodological choices that make their results unreliable. 

First, the FAIR authors excluded Arizona from their report.  Arizona was the first state to mandate E-Verify for all new hires.  Unemployment rates as measured by U3 were lower in Arizona than in the rest of the United States prior to the implementation of E-Verify and they shot up afterward, remaining consistently above the rest of the United States (Figure 1).  The result is even more extreme for the U6 unemployment rate that the FAIR report insisted on using (Figure 2).  Narrowing the comparison to the southwestern states of California, Colorado, Nevada, New Mexico, Oklahoma, Texas, and Utah shows similar results whereby Arizona had relatively lower unemployment prior to mandating E-Verify and higher unemployment afterward (Figures 3-4).  Utah mandated E-Verify for some employers during this time but excluding that state does not affect the results.  Mandatory E-Verify did not appear to improve employment in Arizona. 

Figure 1

Arizona Unemployment Rate (U3) vs. United States Unemployment Rate (U3)

Source: Bureau of Labor Statistics.

North Carolina and Other States Should Reconsider E-Verify

Many states are considering an E-Verify mandate for all employers and employees in their states. E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce. In practice, E-Verify imposes high economic costs and does little to dampen the wage magnet that attracts illegal immigrants to the United States.

State attempts to mandate E-Verify have run into serious roadblocks in at least three states this year and are likely dead there. For instance, Illinois’ HB 3415 is still stuck in committee and is very unlikely to become law. In fact, Illinois is so averse to E-Verify that it even tried to prohibit its use of that system by any employer in the state. New Jersey’s A 3249 is extremely unlikely to pass in a state government dominated by Democrats. Maine HP 904 is effectively dead as that legislator has more pressing matters to attend to.

However, a watered-down form of mandatory E-Verify has an excellent chance of becoming law in North Carolina. The Protect North Carolina Workers Act (HB 35) passed the House and will likely be taken up by the state Senate when it returns in late August. The Protect North Carolina Workers Act would require mandatory E-Verify for every new employee hired by a firm with 15 or more employees. Legislators have exempted domestic and farm workers from E-Verify, likely because they believe those sectors of the economy would be devastated if they also had to comply with the mandate. 

They Cannot Make Us Hate Them

Liu Xiaobo passed away on July 13th, 2017, at age 61. This piece was originally posted at AtlasNework.org on September 8, 2016.

When I think of examples of successful self-control and dignity under the most difficult circumstances, one person comes to mind before all others: 刘晓波, Liu Xiaobo, the Chinese writer and human rights activist, who was sentenced on Dec. 25, 2009, to 11 years of imprisonment in China on the charge of “inciting subversion of state power.” Liu’s body is in prison and he is being made to suffer deprivation of liberty, health, companionship, and more by state authorities, but he will not allow himself to be consumed by the hatred that would destroy a person with less self-control. Before being subjected to years of imprisonment and abuse, he had tried to lead a life of freedom and responsibility.

“What I demanded of myself was this: whether as a person or as a writer, I would lead a life of honesty, responsibility, and dignity,” Liu said.

Liu read his final statement after his sentencing, but was cut off after 14 minutes by the “judge” on grounds that the prosecution had spent only 14 minutes making the case against him. In it, he said, “I have no enemies and no hatred.” Liu exemplifies great self-control and mindfulness. He is focused on his goal: to foster a society of free and responsible persons who live together in equal freedom and mutual respect. He refuses to be consumed by hatred, because hatred and bitterness foster violence, cruelty, revenge, and oppression.

“Hatred can rot away at a person’s intelligence and conscience,” Liu said. “Enemy mentality will poison the spirit of a nation, incite cruel mortal struggles, destroy a society’s tolerance and humanity, and hinder a nation’s progress toward freedom and democracy. That is why I hope to be able to transcend my personal experiences as I look upon our nation’s development and social change, to counter the regime’s hostility with utmost goodwill, and to dispel hatred with love.”

I blink away tears every time I read Liu Xiaobo’s final statement. He not only refuses to be consumed by hatred, he takes the unjust occasion of his imprisonment to express his love for his wife, Liu Xia, who was forbidden by the state authorities to see him.

“I am serving my sentence in a tangible prison, while you wait in the intangible prison of the heart,” he said. “Your love is the sunlight that leaps over high walls and penetrates the iron bars of my prison window, stroking every inch of my skin, warming every cell of my body, allowing me to always keep peace, openness, and brightness in my heart, and filling every minute of my time in prison with meaning. My love for you, on the other hand, is so full of remorse and regret that it at times makes me stagger under its weight. I am an insensate stone in the wilderness, whipped by fierce wind and torrential rain, so cold that no one dares touch me. But my love is solid and sharp, capable of piercing through any obstacle. Even if I were crushed into powder, I would still use my ashes to embrace you.”

Liu Xiaobo: A Voice of Freedom

The death of Liu Xiaobo from liver cancer on July 13, under guard at a hospital in Shenyang, marks the passing of a great defender of freedom—a man who was willing to speak truth to power. As the lead signatory to Charter 08, which called for the rule of law and constitutional government, Liu was sentenced to 11 years in prison for “inciting the subversion of state power.” Before his sentencing in 2009, Liu stood before the court and declared, “To block freedom of speech is to trample on human rights, to strangle humanity, and to suppress the truth.” With proper treatment and freedom, Liu would have lived on to voice his support for a free society. 

While Liu’s advocacy of limited government, democracy, and a free market for ideas won him the Nobel Peace Prize in 2010, China’s leadership viewed him as a criminal and refused to allow him to travel to Oslo to receive the award. Instead, the prize was placed on an empty chair at the ceremony, a lasting symbol of Liu’s courage in the face of state suppression. Beijing also prevented liberal Mao Yushi, cofounder of the Unirule Institute, from attending the ceremony to honor Liu. 

IdealMentre

The mistreatment of Liu, and other human rights’ proponents, is a stark reminder that while the Middle Kingdom has made significant progress in liberalizing its economy, it has yet to liberate the minds of the Chinese people or its own political institutions. 

The tension between freedom and state power threatens China’s future. As former premier Wen Jiabao warned in a speech in August 2010, “Without the safeguard of political reform, the fruits of economic reform would be lost.” Later, in an interview with CNN in October, he held that “freedom of speech is indispensable for any country.”

Article 33, Section 3, of the PRC’s Constitution holds that “the State respects and protects human rights.” Such language, added by the National People’s Congress in 2004, encouraged liberals to test the waters, only to find that the reality did not match the rhetoric.

The Chinese Communist Party pays lip service to a free market in ideas, noting: “There can never be an end to the need for the emancipation of individual thought” (China Daily, November 16, 2013). However, Party doctrine strictly regulates that market. Consequently, under “market socialism with Chinese characteristics,” there is bound to be an ever-present tension between the individual and the state.

In an interview with the Wall Street Journal (September 22, 2015), President Xi argued that “freedom is the purpose of order, and order the guarantee of freedom.” The real meaning of that statement is that China’s ruling elite will not tolerate dissent: individuals will be free to communicate ideas, but only those consistent with the state’s current interpretation of “socialist principles.” 

CBP Dodges Sen. Wyden’s Electronic Searches Question

Sen. Ron Wyden (D-OR) is concerned about Customs and Border Protection’s (CBP) searches of travelers’ electronic devices at the border and ports of entry. CBP’s responses to Wyden’s queries about such searches are illuminating but far from reassuring.

In February, Sen. Wyden sent a letter to Department of Homeland Security (DHS) Secretary John Kelly, asking a range of questions about searches of electronic devices. DHS responded to this letter, but the agency’s response didn’t satisfy Sen. Wyden, who posed some followup questions to CBP acting commissioner, Kevin McAleenan.

McAleenan’s answers to Sen. Wyden’s questions are revealing, in part because of what they don’t discuss.

The answers begin by noting that the Supreme Court recognizes the CBP’s “broad scope” of authority to conduct border searches.

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