Rally ‘Round the Flag, Liberals

Stars and Stripes


Writing in the Washington Post, Kate Cohen says, Let the extreme right have the “Betsy Ross flag,” and “the left wing can just take back that boring ordinary flag we all use every day.” Why would anyone want the Betsy Ross flag, she asks:

I mean, honestly, if you’re into the Betsy Ross flag, I assume it’s because America was great back in 1777, when only white male landowners could vote and slavery was legal in all 13 colonies.

Well, I can’t speak for the extreme right. But speaking as an American history major and a lover of America’s libertarian roots, that’s not how I see it. I think the flag with 13 stars and 13 stripes represents the people who launched the first great national liberation movement to throw off their distant imperial overlords and did so with the argument that all men were created equal, endowed with the inalienable rights of life, liberty, and the pursuit of happiness. True, that promise was very imperfectly realized, and is still imperfect, but we’ve made progress in ensuring that all people are equal in the eyes of the law, with their rights guaranteed and protected. And that Declaration served as a guidestar for that progress. As Andy Craig wrote last week on July 4, those words were used by Frederick Douglass and Abraham Lincoln and Martin Luther King Jr. to challenge the nation to make good on its promissory note. And by the feminists at Seneca Falls to insist that “all men” must include women, too. And he could have added, by the advocates of equal liberty for gay people.

That’s not a flag that liberals – people who believe that the role of government is to protect everyone’s rights and freedom – should give up.

And by the way, people who don’t believe that all people are created equal? They shouldn’t fly the flag of the American Revolution. There are plenty of flags of monarchic, theocratic, ethnic, fascist, or communist states to choose from.

Housing Affordability and Zoning Reform

In recent years, housing prices and rents have increased dramatically in the cities of the Northeast corridor and the West Coast. Leading Democratic presidential candidates have proposed plans to address this issue and, fortunately, most of these proposals recognize that public policy (i.e., local zoning and land use regulations) has limited the construction of new housing. As Edward Glaeser and Joseph Gyourko observed in a 2002 Regulation article, local and state laws have restrained housing supply from keeping pace with demand. While the willingness of Democrats to admit the importance of constraints on private supply is an important step away from an exclusive focus on public provision of housing or subsidies, a more direct and local option would be to establish a framework for developers to pay localities to alter their zoning constraints.

A recent New York Times editorial outlines Senator Cory Booker’s, Julian Castro’s, and Senator Elizabeth Warren’s plans to incentivize local governments to relax land-use laws and allow more housing development. Booker and Castro would require local governments to institute land-use reforms before they can obtain existing federal infrastructure subsidies while Warren would attach the land-use reform requirement to a new $10 billion spending program for governments that comply. Booker and Castro have additionally proposed increasing subsidies to tenants through tax credits or expanded housing vouchers. (Senator Kamala Harris also has proposed increasing tenant subsidies but without a parallel incentive to increase the housing supply.)

For the most part, Booker’s, Castro’s, and Warren’s plans eschew traditional, deleterious alternatives such as rent regulations and subsidies for developers. Last month I discussed how New York State’s recently tightened rent control regulations will decrease housing supply and harm both current and future renters. And, while not ideal, tenant-based assistance is more efficient and equitable than project-based assistance, such as housing tax credits.

It is encouraging that the proposals have managed to avoid those types of interventions and identified the harmful effects of zoning laws, but the proposals’ downside is that they tie land-use reform to federal subsidies for infrastructure. As a recent Regulation article argued, “although there are some reasons for higher-level governments to provide some local infrastructure projects … it is preferable for users to pay whenever that is feasible.”

In the current issue of Regulation, law professor Christopher Elmendorf proposes an alternative. Instead of incentivizing jurisdictions to relax zoning laws with federal money, state and local governments can independently create systems for developers to pay incumbent homeowners for the right to build more and denser housing. Fundamental to Elmendorf’s proposal is the recognition that zoning rules have become de facto property rights. Currently, local governments hold these rights and capture value from them by imposing impact fees, mandating that developers offer communities in-kind benefits (such as affordable housing requirements), or, most commonly, by zoning for less development than needed and extracting benefits including money, land for parks, and affordable housing from developers on a project-by-project basis (Roderick Hills and David Schleicher describe the negative consequences of this ad hoc exaction in their Fall 2015 Regulation article). The negotiations between developers and politicians are often behind the scenes and the benefits extracted do not always clearly go to incumbent homeowners.

Elmendorf’s alternative is for localities to transparently and directly sell developers the right to upzone. As he explains,

Development rights would be auctioned in the form of tradeable “development allowances” roughly analogous to the emissions allowances that are now bought and sold under cap-and-trade regimes for greenhouse gas emissions. Each allowance would permit its owner to build, say, 100 square feet of housing in excess of the baseline, up to a maximum defined by the new zoning map. To illustrate, imagine a parcel of 5,000 square feet that had been zoned for a floor-to-area ratio of 2:1, i.e., 2 square feet of housing for every square foot of lot size. After upzoning, the maximum floor-to-area ratio is 8:1. This means that the owner of the parcel, who previously could build no more than 10,000 square feet, may now construct as many as 40,000 square feet. But to obtain a permit to build 40,000 square feet, she would have to acquire and redeem 300 development allowances ([40,000 – 10,000] ÷ 100 = 300).

The local governments would be able to take the proceeds they receive and put them towards building new parks, infrastructure projects, tax reductions, or direct compensation of incumbent residents.

I have made similar proposals to resolve conflicts over Airbnb and conventional air pollution, which are rooted in economic theory developed by Nobel Laureate Ronald Coase. Allowing those with initial property rights to negotiate with entities who wish to purchase those property rights leads to trade and conflict resolution as long as transaction costs are low. In regard to the aforementioned examples and zoning rights, those who wish to offer their homes up for short-term rental, emit air pollutants, or develop new housing can purchase the right to do so and thus reimburse the initial property rights holders for any costs imposed.

Though the theory supporting Elmendorf’s idea is sound, there are pragmatic concerns. In a comment on Elmendorf’s article, economist William Fischel, one of the originators of the concept of exchanging zoning rights, notes that there will still be significant interests opposed to new development. The same incumbent homeowners that currently fight each building project and the unions and other interest groups that attempt to capture some of the producers’ surplus from development, will still attempt to influence the local politicians who will retain control of the zoning rights auctions. In fact, Fischel contends that because a zoning rights auction confers an abstract right to increase a plot’s floor-to-area ratio, as opposed to a tangible building plan that interests groups can directly address in zoning hearings, Elmendorf’s proposal actually may increase homeowners’ perceived risk of land-use change. 

But if the compensation for change is high enough and directed specifically to incumbent homeowners, change occurs. For example, Northern Virginia was once dominated by single-family homes. Between the late 1980s and early 2000s, developers bought up neighborhoods for redevelopment, often paying homeowners more than double the listed price of their houses. The Ballston corridor now has 22-story apartment buildings.

Allowing local governments to convert the current in-kind, opaque, underground market for zoning change into an explicit legal exchange of cash for density would facilitate the development of housing and address affordable housing shortages.

Written with research assistance from David Kemp.


We Need More Speech about the Census

Facebook has pledged to remove misinformation about the Census from its platform. Inevitably this removal involves suppressing speech that would be protected by the First Amendment if uttered in a public forum. After all, there is no misinformation exception to the First Amendment.  However, Facebook may remove the speech because as a private firm, it is not obligated to enforce the First Amendment. Nonetheless, we might ask: why speech about the Census? What’s different about misinformation about that project? I see four possibilities as to why speech about the Census might merit closer attention by content moderators.

Facebook might feel obligated to protect basic political institutions. For example, Facebook tries hard to combat misinformation around elections including the 2018 American midterms. The Census and elections are mentioned in the U.S. Constitution, with authority over the latter largely given to the states. But so are Congress, the presidency, the courts, and the Post Office. I doubt anyone expects Facebook to remove misinformation about all these institutions.

And the slope might be slippery. Facebook faces pressure to adopt an expansive, militant understanding of “democracy” in Europe. It has largely resisted doing so, relying on account authenticity, advertising transparency, and fact-checking to support election integrity. Facebook’s restraint makes sense. An expansive agenda of protecting institutions might lead to suppression of speech that should be seen.

The distinction between facts and opinion offers a second general justification for treating “Census speech” differently. “Misinformation” would contravene clear, not controversial, facts. This justification appeals to many. Consider an election example. Polls in a district are open for a set period that is public and easily confirmed. Spreading the wrong hours for voting is incorrect beyond doubt. In contrast, opinions about who should win and hold office cannot be confirmed by some external authority. Disagreements about that question are why we have elections.

Some questions about the Census are clearly not facts. One might believe that ours is a Constitution of No Authority, that the more efficient exercise of state power is deleterious of freedom, and that, as James C. Scott writes, to be made legible is to be governable. From this perspective, the census is a dangerous tool of control. Whatever you may think of this position, it is coherent, internally consistent and plausible even if ultimately wrong. Articulations of this belief ought not be thrown out with the bathwater of misinformation.

Some propositions look like facts but are really contestable claims (i.e. opinions). Consider the apparently factual claim that “the census will help the government deport illegal immigrants.” The government denies this. Some say that this is misinformation intended to depress census completion rates. Notice this is a “fact” about the future. Perhaps the past might inform our assessment of this “fact.” While census data may not be legally shared with law enforcement, this prohibition was lifted during the Second World War to allow the FBI to more efficiently apprehend Americans of Japanese ancestry. In other words, the past suggests a reasonable person might have doubts about future uses of census data. The government’s future use of census data is more a matter of trust than of hard facts. Facebook cannot use the “clear facts” criterion to side with the government here.  

Political science suggests one important difference between “census speech” and other social media talk. Organized groups and the Census Bureau are concerned about misinformation on Facebook about the Census. Misinformation that matters little to organized groups or the government may be overlooked by social media content moderators. But Facebook should avoid at all costs acting in response to specific demands of organized groups. The more Facebook is seen to cater to specific demands, the more demands will be made of it. And being responsive to interest group campaigns may delegitimate Facebook’s content moderation in general.

The Census Bureau seems to be different. Facebook generally enforces local laws criminalizing speech. The law requires responding to the Census which itself, as mentioned, is constitutionally required. But speech misinforming the public about the census is not illegal in the United States. The Bureau is asking Facebook to help facilitate law enforcement regarding the census. And the law requiring answers to the census is, in fact, a constitutional exercise of legislative power under the necessary and proper clause (John Marshall edition). The same can be said of laws criminalizing sodomy prior to Lawrence v. Texas. Would Facebook have facilitated enforcing Texas’s law prior to Lawrence? Something that might seem as simple as helping the Census Bureau turns out to require Facebook to take sides on controversial political questions.

Facebook might do better by distinguishing between misinformation about the Census that can be dealt with by “more speech” and misinformation that cannot. Most errors about the Census may be corrected by “more speech.” After all, unlike elections, the census does not take place on one day at determinate places. The government and its allies can make their case against misinformation, disinformation, and controversial claims. There is time for “more speech” to bring about the best outcome for the society.

Elections may be different. Let’s say it’s widely and wrongly reported that a candidate has dropped out of a race. That’s a hard fact though perhaps temporarily unclear. It matters a lot whether the report circulates two days or two weeks prior to election day. “More speech” can handle the latter; avoiding harm to the candidate might be much harder two days before the voting. Speech inciting violence may be criminalized because in limited situations there is no time for “more speech” to rebut the appeals to force.

But there’s an important difference between the two harms, violence and false beliefs about elections. I cannot avoid being punched in the nose as a result of incitement. I can avoid false beliefs by modest research regarding facts. Here’s a (hardly obscure) place to start. Our freedom of speech does require that citizens take some responsibility for their beliefs and the reasons for them. Facebook should not protect us from our sloth.

Senators Manchin and Braun Are Attempting to Practice Medicine Without a License—And Fighting the Wrong War

Senator Joe Manchin (D-WV) and Mike Braun (R-IN) are still trying to address the fentanyl and heroin overdose crisis—soon to be joined by a methamphetamine and cocaine overdose crisis—by denying chronic pain patients access to pain relief. They have just introduced a bill they call The FDA Opioid Labeling Accuracy Actwhich would “prohibit the Food and Drug Administration (FDA) from allowing opioids to be labeled for intended use of ‘around-the-clock, long-term opioid treatment’ until a study can be completed on the long-term use of opioids.”

Set aside the fact that most pain specialists agree that, in some cases, long-term opioid therapy is all that works for some chronic pain patients. The 2016 guidelines on opioid prescribing put forth by the Centers for Disease Control and Prevention have already been misinterpreted and misapplied by legislators and regulators, leading to forced and rapid tapering off of opioids in many chronic pain patients, causing many to resume lives immobilized by pain, and in many cases, seek relief in the black market or by suicide. It has gotten so bad that the CDC recently issued a “clarification” in April, reminding regulators that the guidelines were only meant to be suggestive, not prescriptive, and did not in any way mean to encourage the rapid tapering of patients on chronic opioids for pain management. Johns Hopkins bioethicist Travis Rieder, PhD delves deeply into this subject and relates his own experiences in his book, In Pain.

What the senators fail to recognize is that patients are not one-size-fits-all. Different patients respond to pain and to pain management differently. Their proposed legislation, if passed, will only serve to exacerbate the unnecessary suffering of patients in pain that the CDC is trying to undue with its guideline clarification.

Meanwhile, they should take a look at the government’s own numbers. The data show there is no correlation between the number of prescriptions written and the incidence of non-medical use of prescription opioids or prescription pain reliever use disorder. And less than 10 percent of opioid-related overdose deaths in 2017 involved prescription pain relievers unaccompanied by other drugs such as cocaine, heroin, alcohol, or fentanyl.

The continued war on patients by politicians and regulators will not get one IV heroin user to take the needle out of their arm. Senators Manchin and Braun need to recognize that the overdose crisis has been on a steady, exponential increase since the 1970s and shows no signs of stopping—and that its ultimate cause is drug prohibition

If they want to get serious about addressing the problem, they should switch their focus to harm reduction. A good way to start would be to repeal the “Crack House” statutes that prevent cities and states from establishing overdose prevention sites called “safe injection facilities.”

Sen. Paul’s BELIEVE Act Raises Skilled Immigration Without Tradeoffs

Today, Sen. Rand Paul introduced the Backlog Elimination, Legal Immigration, and Employment Visa Enhancement (BELIEVE) Act (S. 2091). The BELIEVE Act would solve most of the major issues with skilled immigration in one piece of legislation. Altogether, the bill would increase green cards (which grant permanent residence) for employment-based immigrants by nearly fourfold, and it does so without making any changes that would injure other categories of legal immigration.

The long-term economic and fiscal benefits of this bill are difficult to overstate. The National Academy of Sciences (NAS) estimated in 2016 that the lifetime net present value of the average immigrant with a college degree to all levels of government was between $210,000 and $345,000 (Table 8-14). For those with more than a bachelor’s degree, the NAS estimate was between $427,000 and $654,000.

The BELIEVE Act would do more to move the United States toward a merit-based system than any other legislation introduced this congress. No legislation since the 2013 immigration reform bill that passed the Senate would increase skilled immigration more than this bill. A fourfold increase in employment-based permanent immigration would bring the United States more in line with the Canadian system, though Canada would still allow about twice as much economic legal immigration per capita than the United States and a higher rate of legal immigration overall.

Here are the specific elements of the bill:

  • Ends the per-country limits on green cards for employment-based immigrants (p. 2). This is the same change as the Fairness for High-Skilled Immigrants Act, which passed the House yesterday (H.R. 1040). Right now, the law states that nationals of no single country can use more than 7 percent of the green cards unless the green cards would go unused. If the cap is reached, nationals of other countries get to bypass them in line and receive a green card ahead of those who applied earlier. This change would make every foreign worker wait in the same line and so face the same wait times.As a result of the country limits, Indian employees of U.S. businesses receiving green cards under the EB2 or EB3 categories in 2018 waited a decade while everyone other than Chinese applicants waited less than a year. If the country caps remain, Indians who are applying today for an EB2 or EB3 green card face about a half century wait and roughly 50,000 will die without seeing a green card. The per-country limits also inadvertently force immigrants with the highest wage offers (Indians, again) to wait much longer than others.
  • Increases the limit on green cards for employment-based immigrants from 140,000 to 270,000 (pp. 1-3). This increase would double the caps for the first through third preference categories (mainly employees of U.S. businesses) as well as the fifth preference category for major investors in U.S. enterprises. The worldwide limits have not increased since 1990 when the U.S. economy was half the size that it is today, and most of the major tech companies did not exist or were in their infancy. About three quarters of the Fortune 500’s largest companies in 1990 have been replaced. This update reflects the changes in the economy since 1990.
  • Exempts spouses and minor children of employment-based immgirants from the limit (p. 3). This change accords with the actual statute as it exists today, but this legislation would explicitly require the government not to count them against the quotas. About half of all green cards issued under the employment-based categories are actually used by spouses and minor children. It makes no sense to reduce the quota on workers simply because the worker is married or has a child. In other words, this would further double the employment-based cap. As a result, these two changes would end wait times for all immigrants in a very short period of time.
  • Exempts “shortage occupations” (currently nurses) from the limit (pp. 3-4). If the Department of Labor (DOL) currently lists an occupation as a shortage occupation, employers may hire foreign workers on green cards without the normal burdensome labor certification process. So far, DOL has listed only two occupations as shortage occupations: nurses and physical therapists. The BELIEVE Act would exempt shortage occupations from the green card limit entirely. This change is important because nurses are currently ineligible for H-1B high-skilled visas, which means that the only way for them to get a foot in the door of a U.S. business is a green card. There are not precise statistics from the government on the number of foreign nurses, but it is likely about 7,000. While this would immediately benefit nurses and physical therapists, this change would also allow DOL to exempt occupations in future years if it updated its regulations.
  • Creates uncapped green card category for children of legal temporary workers (pp. 4-5). Under current law, skilled workers who enter on temporary worker visas can bring with them their spouses and minor children, but when their children turn 21, they “age out” of eligiblity and either have to leave the country or find a new visa for themselves. They are in a very similar situation to the Dreamers in DACA who grew up in the United States from a young age but whose temporary status can expire.Section 4 of the legislation would grant a green card to any foreign graduate of a U.S. unviersity who ever entered as a child of an E, H, or L temporary worker and lived in the United States for an aggregate period of at least 10 years. This language would even include some children who have already been forced to self-deport. I have previously written about the huge fiscal benefits that these children would provide to the United States but also about how the Dream Act excludes them by requiring applicants to be in the country illegally.
  • Provides employment authorization to spouses and minor children of temporary workers (pp. 5-6). As mentioned above, the law allows temporary workers to bring with them their spouses and minor children, but it doesn’t explicitly authorize them to work. The BELIEVE Act would specifically require the government to issue an employment authorization document to the spouses and children of E, H, or L temporary workers. This would provide huge economic benefits to the United States by incorporating a large and talented group of workers into the economy.
  • Provides employment authorization and legal status while waiting for a green card (pp. 7-8). Under current law, it can be very difficult for skilled workers waiting for a green card to change jobs without risking one’s status. This bill would grant employment and travel authorization “incident to status,” meaning that they wouldn’t need to apply for a new set of documents and that the authorizations would remain valid until a visa becomes available. Given the other fixes in this bill, this change is not as consequential as it would otherwise be because this bill would eliminate the backlog for green cards entirely. As a result, no employment-based immigrant would need to wait due to the quotas and be forced to take advantage of this provision. Nonetheless, it is a safeguard against workers being stuck with a single employer during their waiting periods.

I have written about nearly all of these changes in my posts: Why the Legal Immigration System Is Broken: A Short List of Problems, Ten Irrational and Infuriating Aspects of U.S. Legal Immigration, and elsewhere. There are a couple of problems with skilled immigration that the bill doesn’t address—including the outdated H-1B limit and the burdensome and nonsensical labor certification process for employers—but overall, the legislation would make the United States far more competitive for foreign talent than current law and prevent the removal of hundreds of thousands of skilled workers. This legislation would benefit the U.S. economy enormously.

H-2 Visas Reduced Mexican Illegal Immigration

Government data for the month of June show a substantial decrease in the number of immigrants apprehended along the Southwest border.  Much of this decline is probably due to extra Mexican immigration enforcement prompted by President Trump’s threat of imposing tariffs on Mexican imports if they don’t reduce the surge of Central Americans from the Northern Triangle.

Lost in all of this debate over the Northern Triangle migrants arriving at the border is that fact that Mexican arrivals have collapsed in recent years.  If we understand what caused the collapse in Mexican arrivals, then the government should apply that lesson to halt the flow of Northern Triangle illegal immigrants and asylum seekers.  The vast increase in the number of H-2 guest worker visas issued to Mexicans can explain a large percentage of the decrease in Mexican illegal immigrants.  Increasing the numbers for Northern Triangle migrants will likely have a similar negative effect on their arrivals.

Figure 1 shows the tradeoff between the number of Mexicans apprehended on the Southwest border and the number of H-2 visas issued to Mexicans from 2000-2018.  There is a clear negative relationship between the two variables. 


Figure 1

Apprehensions of Mexicans on the Southwest Border and H-2 Visas Issued to Mexicans


Source: U.S. Department of State and U.S. Border Patrol. 


Figure 2 is similar, but instead shows the number of Mexican apprehensions per Border Patrol agent and the number of H-2 visas issued to Mexicans.  Figures 1 and 2 are very similar, but the drop off in Mexican apprehensions is a little faster when the number of Border Patrol agents is controlled for in Figure 2.


Figure 2

Apprehensions of Mexicans Per Border Patrol Agent on the Southwest Border and H-2 Visas Issued to Mexicans


Source: U.S. Department of State and U.S. Border Patrol. 


Figures 3 and 4 show the strong negative relationship between the number of Mexican apprehensions and the number of H-2 visas issued to Mexicans, where the latter figure controls for the number of Border Patrol agents and the former does not.


Figure 3

Apprehensions of Mexicans on the Southwest Border and H-2 Visas Issued to Mexicans


Source: U.S. Department of State and U.S. Border Patrol. 


Figure 4

Apprehensions of Mexicans Per Border Patrol Agent on the Southwest Border and H-2 Visas Issued to Mexicans


Source: U.S. Department of State and U.S. Border Patrol. 


Table 1 are the results of a regression where the dependent variable is the number of Mexicans apprehended on the Southwest border and the independent variables are the number of H-2 visas issued to Mexicans and the number of Border Patrol agents per year, all logged.  Independent variables are those that seek to explain variation in the dependent variable, so we are trying to see if changes in the number of apprehensions is correlated with changes in the number of H-2 visas and Border Patrol agents.  Since we expect serial correlation to be an issue in these time series, we ran Breusch-Godfrey tests for serial correlation for each model.  In both cases we find evidence for serial correlation in the regression residuals, therefore we compute Newey-West standard errors as a correction. 

From 2000-2018, a 1 percent increase in the number of H-2 visas for Mexicans is associated with a 1.04 percent decline in the number of Mexicans apprehended on average.  At the same time, a 1 percent increase in the number of Border Patrol agents is correlated with a 1.4 percent decline in the number of Mexicans apprehensions.  If there is a causal relationship between the increase in the number of Border Patrol agents and decline in apprehensions, it is due to deterrence.  Both findings are significant at the 1 percent level.  These are both consistent with other findings, but it’s important to note that the median starting salary for a Border Patrol agent is $55,863, they take about a year to train, and private firms are having a difficult time hiring more when the unemployment rate is so low

If the goal is to get control of the border by cutting illegal immigration, it is much simpler and cheaper to issue more H-2 visas than to hire more Border Patrol agents.  Since H-2 visas increase economic production in the United States and Border Patrol agents decrease it by consuming taxpayer resources that would otherwise be used by the private sector, H-2 visas have been a much more cost-effective way to cut Mexican illegal immigration than hiring more Border Patrol agents.

These results imply that, for the year 2018, an additional 2,426 H-2 visas issued to Mexicans would have cut the number of illegal Mexican immigrants apprehended by 1,584 – on average.  The total cost to taxpayers of that would be zero, with an increase in total tax payments because the H-2 workers would provide taxable goods and services in the United States.  On the other hand, for the year 2018, these findings imply that hiring an additional 166 Border Patrol agents would have cut the number of Mexican apprehensions by 2,132 that year – at a total additional salary cost of $9,277,727 that year.  American taxpayers can either pay $4,353 per additional Mexican apprehension in extra Border Patrol wages – which doesn’t include any of the other large costs of immigration enforcement – or decrease the numbers by issuing more H-2 visas with a net-positive fiscal impact. 


Table 1

Apprehensions of Mexicans on the Southwest Border and H-2 Visas Issued to Mexicans



Table 2 is the same regression as described above, except the dependent variable is the logged number of Mexican apprehensions per Border Patrol agent and the only independent variable is the logged number of H-2 visas for Mexicans.  A 1 percent increase in the number of H-2 visas for Mexicans cuts the number of apprehensions per border patrol agent by 2.2 percent.  These regressions are all significant at the 1 percent.  We also ran the regressions for Tables 1 and 2 that included the U.S. unemployment rate as a control variable, but it didn’t have much of an effect.


Table 2

Apprehensions of Mexicans Per Border Patrol Agent on the Southwest Border and H-2 Visas Issued to Mexicans



For those who think that the Northern Triangle migrants apprehended on the Southwest border are asylum seekers, these findings will be largely irrelevant.  If people are coming because their lives are threatened, then an expansion of H-2 visas for them won’t have much of an effect on the number of asylum seekers arriving at the border.  If, on the other hand, you believe that the flow of people from the Northern Triangle is largely driven by economics, then you should support a vast increase in the number of H-2 visas for workers from the Northern Triangle – just like David North from the Center for Immigration Studies does.

Importantly though, the government should not increase the number of H-2 visas for those from the Northern Triangle by decreasing those available to Mexicans.  That would only increase Mexican illegal immigration.

More H-2 visas for Mexicans cheaply and effectively cut the number of illegal Mexican immigrants coming over the border without the large and recurring taxpayer cost of hiring more Border Patrol agents.  The government should at least try to expand the number of H-2 visas to workers from the Northern Triangle, perhaps by exempting them from the H-2B numerical cap, before taking further costly actions to increase border security.   

Of Libras and Zebras: What Are the True Financial Risks of the Facebook-Led Digital Currency? (Part I: Systemic Risk)

In medicine, “zebra” describes an instance when the doctor diagnoses an unlikely but eye-catching condition instead of a less noteworthy but more probable one that also fits the symptoms. Professor Theodore Woodward of Maryland University coined the expression when he admonished his students “When you hear hoofbeats, think of horses not zebras.”

As the zebra phenomenon illustrates, even experts tend to judge more memorable events as more likely – a bias known as availability – and to remember unusual events more clearly than more mundane ones. Uncorrected, such predispositions can lead to bad prescriptions, whether in medicine or further afield.

Woodward’s rule-of-thumb came to mind as policymakers around the world reacted to the announcement of Libra, the Facebook-led digital currency that is to launch in the first half of 2020. To say that their responses struck a note of caution is an understatement. Representative Maxine Waters called on Facebook to halt the project. Her Senate ally Sherrod Brown warned that “we cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account.” The international reactions were perhaps less shrill but not much warmer, with French Finance Minister Bruno Le Maire openly worrying that Libra might dispute states’ currency monopolies.

Hearings before the House Financial Services Committee, which Rep. Waters chairs, and the Senate Banking Committee, of which Sen. Brown is the Ranking Member, are due to take place on July 17 and 16, respectively. Policymakers here and elsewhere, however, appear to already have made up their minds about Libra.

In so doing, I fear that the gatekeepers of the global financial system are mistaking horses for zebras: focusing on improbable risks and discounting the tangible but less headline-grabbing benefits of a global low-cost payments application such as Libra’s founders envisage. Because Facebook is leading the effort and marketing Libra as a cryptocurrency, the official responses are informed more by connotation (risk, monopoly, market power, data abuses), than by any actual knowledge concerning what Libra will do.