Gideon's Blog

In direct contravention of my wife's explicit instructions, herewith I inaugurate my first blog. Long may it prosper.

For some reason, I think I have something to say to you. You think you have something to say to me? Email me at: gideonsblogger -at- yahoo -dot- com

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Wednesday, October 13, 2004
Wow! Steve Sailer, I think you've really gotten through to Mickey Kaus.

I suspect Kaus is right: a new conventional wisdom on immigration is developing faster than our straight-jacketed politics can handle it. The question then is: what will we do about it?

When it became accepted that welfare, by contributing to broken homes, was fuelling the growth of the underclass, in turn fuelling high crime rates, this eventually led to welfare reform - which has already had profoundly positive effects. With respect to immigration, a majority has opposed illegal immigration for decades, but the issue rarely rises to the top tier of concerns - particularly in the go-go 1990s when labor markets were tight. 9-11 added a new dimension to the "negative externalities" of open borders - the risk of terrorists swimming in an ocean of illegal immigration. I think that's the aspect that's potentially leading to a tipping point on the issue, where the country actually cares about the issue with enough intensity to do something about it (as crime, in the 1980s and early 1990s, got bad enough that people went from griping about welfare to demanding the government do something about it).

But (just a caution for excitable restrictionists) the push for welfare reform didn't lead to any change in divorce laws, even though divorce is a big contributor to the ranks of the working poor, because that would affect too many members of the middle and upper classes. And the middle and upper classes reap the lion's share of the benefits of our current immigration regime. What does that portend for any politics of immigration reform that does emerge during or after the next Administration?

I decreasingly believe that Americans are willing to continue with the status quo. But there are numerous choices of where we could go from here.

We could follow the Bush Administration approach, which would formalize into a guestworker program what is today informal and illegal immigration. Instead of sneaking into the country and looking for work in the underground economy, people would be processed by the government as formal guestworkers. The economic effects of uncontrolled immigration would remain essentially as they are, assuming they wouldn't become even more pronounced. (In brief: uncontrolled immigration lowers wages at the bottom of the scale and lowers prices for products produced by said labor.) So from an economic perspective, if you oppose high immigration (particularly of the unskilled) because you want to tighten labor markets and thereby help the working poor, Bush's approach is a big step in the wrong direction.

There are three advantages to Bush's proposed approach over the current system, however. First: security. Assuming it actually worked (which is, admittedly, questionable), we'd now at least know who was coming into the country and where they were. That should make it easier to catch terrorists, drug-dealers, car thieves and other undesireables who currently swim in an ocean of illegal immigration. Second: worker safety. If illegal immigrants become, effectively, legal, it will be easier to extend to them the basic protections of the law. That's a good thing not only for the immigrant workers but for American citizens in the communities they live in. Third: compensation. Formal guestworkers would be part of the tax system, and hence the drain on local resources from illegals would be lessened. Moreover (and this is not a feature of the Bush approach, but that approach does make it *possible*) businesses who employ formal guestworkers *could* be required to further compensate local communities for the negative externalities associated with immigration, in the way that the U.S. military compensates local communities for the resources that basing consumes. That's not possible now, needless to say, when it's technically illegal for employers to hire these people.

The disadvantages, of course, are familiar to immigration restrictionists. Immigration would probably increase, not decrease, under such a plan. Wages would be further depressed at the bottom of the scale. This would be offset nationally by a drop in prices for goods, which benefits everyone, but of course inequality would increase as the benefits would be spread across the economy while the drop in wages would primarily impact lower earners. And before anyone suggests that we could use other policies to compensate for this driver of inequality, long experience has shown that government redistribution of income through taxes and benefits is profoundly inefficient, economically destructive and doesn't work that well anyhow. The cultural impact of immigration, making it more difficult to assimilate newcomers to American norms in a conscious as opposed to haphazard way, would continue. Our educational system would continue to be badly stressed, as would the environment in certain overcrowded areas like Southern California.

There is a further disadvantage, however, that is not much discussed. I think it is extremely likely that, if a comprehensive guestworker program like Bush's were passed, America would consider abandoning birthright citizenship. If, after all, these people are coming on temporary visas, why should they be able to turn themselves into citizens just by having children? That's going to be a powerful political argument - and a very divisive one, even if it loses at the polls. Why? Because once we abandon birthright citizenship we have to debate: what makes one an American? And, other than "an American is someone born to Americans or in America" there's no good answer that isn't dangerously divisive.

America, after all, is not an ethno-national state like Germany, Hungary, Ireland, Israel or Japan. Each of these states give some degree of immigration preference to members of the national ethnic group born outside of the country. To varying degrees, the immigration laws of each of these countries are designed to facilitate (in Israel's case, to promote) the "return" of foreign-born members of the dominant ethnic group, and to maintain the ethno-national identity of the country. Some of these countries also lack birthright citizenship; guestworker families can trace their lineage in Germany through three generations without acquiring citizenship. While this presents social and political problems, this approach to citizenship is congruent with an ethno-national definition of the polity.

Such a definition cannot plausibly fit America, which is arguably the most ethnically diverse nation on earth (depending on how you count tribal and linguistic diversity in a place like New Guinea, and depending on how important a diversity of different *European* ethnic groups is to your definition of diversity). A campaign to abandon birthright citizenship would open up a very ugly argument over who is a "real" American, an argument that would surely take place across ethnic lines, and that would be very damaging to our national fabric. I think such a debate is likely if we continue in our current direction, and it will come quicker if we adopt the Bush approach to immigration reform of converting illegals to legal guestworkers, because such an approach almost necessarily *implies* the abandonment of birthright citizenship.

What are some of the alternatives to the Bush approach? I think there are, broadly speaking, three, and they can theoretically be adopted simultaneously: rationalize legal immigration; export more capital to Mexico; and seriously enforce immigration law.

First: rationalize legal immigration. Anyone who has actually tried to *honestly* deal with American immigration knows that we do not make it easy for people we should *want* to come here. Bend any Silicon Valley exec's ear and you'll get an impassioned speech on the subject of H1-b visas and how tough it is to get them for business-critical technical talent. How can we make it so tough to bring in people and so easy for people to sneak in?

Canada has a very liberal but highly rational immigration regime, with two primary components: a humanitarian component focused on accepting refugees from persecution and an economic component focused on attracting high-value, high-skill immigrants. Our own immigration regime is much less rational, focused as it is on a liberal definition of family-unification; in addition, we have a huge illegal-immigration problem that Canada does not have to the same degree.

Could we adopt Canada's approach? We could, but it raises questions of its own. Three stand out: How do you define "persecution"? How do you define "skill"? And at what point do high-skilled immigrants begin to pose a "national problem" comparable to the one that Sam Huntington worries about with respect to the Mexican immigration?

If you define "persecution" loosely enough, you with up flooded with migrants from unstable parts of the world. This is what has happened in much of Europe and in Canada. Essentially the entire population of Central Africa can call itself "persecuted" if that means you are at risk of personal violence because of your identity. Why? Because Central Africa is riven by dozens of tribal wars. Tens of millions of people have been displaced internally within the region for fear of their lives. All of them on some level can claim to be persecuted and hence eligible for asylum. Would it be humanitarian to accept them all? Yes. Is it realistic? No. But the difficulty is in defining "persecution" so as to get down to realistic numbers of the eligible without excluding people who with any justice should fit the definition. This is not an easy problem; every developed country is grappling with it right now.

Next: "skill." Clearly a brain surgeon is skilled and an illiterate beggar is unskilled. What about a nurse? What about someone who doesn't have a nursing degree but has performed as a medical assistant? What about a functionally illiterate man who has the skills of a master carpenter? What about someone with a degree from a prestigious university in literary criticism who wants to come here to be a nanny? What about someone without a college degree who has worked as a nanny for 20 years? Is "skill" a function of education? Of training in a formal discipline? Or of economic need? Are nurses "skilled" when we have a nursing shortage but "unskilled" when we have a surplus? How about teachers of Spanish? How about native Spanish speakers with college degrees but no education credentials who want to come here to teach Spanish? These are, again, real questions that we grapple with today in our immigration laws, and so does every other country, and I don't think we, in America, handle the question very well.

It seems very silly to me *not* to take economic need into account when considering immigration. It's one thing to say that if we have a shortage of lettuce pickers that we should just let wages rise until workers show up. It's quite another to say that if we have a shortage of nurses we should just make do for a few years until higher wages produce a bumper crop of natives with the proper credentials. But drawing the line is not at all obvious. And it will necessarily become a political process. Specifically, we are only going to face increasing demand for workers in the health and personal-care professions that are on the borderline in terms of whether you'd consider them "skilled" or "unskilled." We're currently importing lots of workers in these professions, from the Philippines and the Caribbean especially (that's my impression from New York; maybe California is importing them from elsewhere). This question is going to be contentious.

And: numbers. Steve Sailer likes to say that he thinks American immigration should work like hiring at a big corporation: you want to select for the best people. Okay, but "best" for what job? Let me tell you, I worked at a company that thought the "best" people for every job were the people with the highest SAT scores. Guess what? There were a lot of jobs these guys weren't all that good at. We had an oversupply of people who thought they already knew everything, an undersupply of people who understood the value of *experience*, *knowledge* and *common sense* as opposed to pure intelligence and abstract reasoning. America "needs" a diverse array of talents. Many of these are things we don't know how to measure so well with tests.

But there's a deeper problem with this formulation: do we really want to import an overclass any more than we want to import an underclass? We already have a problem that the cultural and economic elite of the country is somewhat dislocated from and fails to identify with the majority of the people. The wealthy and well-educated often don't have family members in the military, or who work in blue-collar jobs. Already, people who work in banking, journalism, law, academia and other elite professions frequently find they identify better with members of their class from other countries than with their fellow citizens from different classes. Do we want to accentuate this trend by focusing our immigration policies on bringing in high-achievers from all over the world? Look at Canada, with its rational immigration policies and its national religion of multi-culturalism. Look at Britain, where economic dynamism is concentrated in multi-cultural London, and that city is increasingly divorced culturally, economically and even ethnically from "Middle England." Do we want America to develop along these lines, to a greater degree than it is already? Again, these are real questions.

The second alternative to the Bush approach: invest more in Mexican industrialization. President Bush said that the ultimate solution to illegal immigration is for Mexico to develop a broad middle class. He's right. America is in a unique situation globally, being a highly developed country with a long, porous border with a growing, populous underdeveloped country. Europe has a big problem with immigration from North Africa and the Middle East (and also from the former East bloc, by the way), which many there feel has gotten out of control, but they don't have anything like the numbers of illegal immigrants that we do because, in part, they don't have the same geographic vulnerability that we do. Immigration has a push and a pull component: the pull of jobs here, the push of poverty and unemployment there. Tackling the "push" component means changing Mexico.

Is really profound change possible? Could Mexico become a developed country? Well, I don't know. There's evidence on both sides of the ledger. Mexico has made enormous strides in democratizing and in developing its economy since the oil bust of the mid-1980s put an end to the easy good times. But Mexico isn't South Korea or Taiwan; it isn't even Thailand or Malaysia. It's got a long way to go to make it to the industrialized club, and it isn't moving fast enough.

Short of changing Mexico profoundly (or one possible route to doing so), what we can do is invest massively in Mexico-based industry. If there are plentiful manufacturing jobs in Sonora, that should to some extent reduce the impetus for Oaxacans to keep going all the way to Chicago for factory work. The main effort by Mexico and America to create a magnet for Mexican migration for jobs that is south of the Rio Grande is the maquiladora program. That's the key avowed purpose of the program: to get American industry to export capital to Mexico rather than import workers from Mexico. Note that the impact on American wage rates should be roughly similar in either case, since either way American capital is combining with low-cost Mexican labor. Investing in Mexico is effectively the same thing as "exporting jobs" - what John Kerry has been decrying on the campaign trail. But right now these are not jobs we're creating for *Americans* - we're importing the people who work at them. And if we export capital instead of importing people, we create positive externalities in Mexico rather than negative externalities in America.

I have the impression that the maquiladoras have become less important since NAFTA because they no longer get uniquely favorable export treatment to the U.S. But I don't know much about this area of policy. I imagine there are a few problems with the maquiladora approach, though. First, they probably don't pay as well as comparable jobs north of the border. So many people who come north for these jobs probably keep going. Second, precisely because the maquiladoras are located close to the border, and their managers are Americans coming from cities on the other side, we've seen the growth of sister cities that straddle the border, which, needless to say, facilitates the flow of people in both directions. El Paso is a prime example of this. To the extent that there are any advantages to being on the U.S. side (and it would be hard to eliminate all of them) the maquiladora program has made jumping the border only easier. Third, precisely because maquiladoras are American-managed, they probably have a relatively limited impact on developing a genuine Mexican middle class that could initiate a "virtuous circle" of development.

There are, broadly speaking, three models for developing a country like Mexico: the Indian model, the South Korean model, and the IMF model. The Indian model, which India is currently in the process of abandoning, was known as "import substitution" - when your economy needs something, make it locally rather than importing. The goal is economic self-sufficiency. No one believes in this model anymore - it's a pretty well proven economic loser - but nearly all countries practice it to some extent, for political reasons.

The South Korean model is known as "export-led development" - use subsidies, tariffs and restrictive laws with respect to foreign investment to politically direct development towards industries with large export markets, and continually climb the "value-added" ladder by moving into industries with a higher return to capital inputs. This model seems to have worked quite well for South Korea and Taiwan, and is currently being pursued by China. The great danger with this model is that it depends on patriotic and disinterested government leadership. This model, after all, is what is derided by the IMF types as "crony capitalism" - having the government direct the economy to this degree necessarily means cozy relationships between government and business leaders, and hence raises enormous risks of corruption. It's also a hard model to follow in a country with populist political traditions, since it implicitly asks worker to make the lion's share of the sacrifices for the sake of national development (Japan, South Korea, Taiwan and now China are able to grow so fast in part because their people save enormous amounts of money, which they then invest at very unfavorable rates in domestic financial institutions that are the primary levers the government uses to direct national development; while the banks generally do terribly, and the workers who invest in them lose out, cheap capital makes it possible for the government to make lots of mistakes and still achieve their development objectives).

The IMF model is basically the liberal model - open your markets, float your currency, privatize state enterprises, increase transparency, run a tight fiscal and monetary policy and let international capital come in and develop your country's natural comparative advantage. The Wall Street Journal editors would modify this only very slightly; they would advise *not* floating your currency, but rather adopting a foreign currency as the effective legal tender in the country (through the implementation of a currency board), and they would ignore fiscal policy in the sense of whether the budget is balanced, and focus on reducing aggregate government spending. They think this is a major disagreement, but really their recommendations and the IMF's are variations on a theme of liberalism. The WSJ version of this model was practiced successfully by Hong Kong and Chile and was attempted, unsuccessfully, by Argentina (because the Argentines simply would not control spending); the IMF version is roughly what Thailand and Indonesia are trying, and what we've basically pushed on Mexico beginning with the maquiladora program and extending with NAFTA and the 1994 bailout. The upside of the liberal model is that it fits the theory; countries should grow the most when they liberalize their economy and invest where they have comparative advantage. The downside is political; this model increases economic insecurity, increases income disparities, and puts apparent control of the country in the hands of foreigners (and in the hands of "market-dominant minorities" to use Amy Chua's phrase). And, what is most apparent since the currency crises of 1997, the model puts small economies at the mercy of international capital flows. It might make a lot of sense of a small country to forego maximizing growth in the short term in exchange for reducing volatility and maintaining some degree of control over the national economy; that's certainly the decision Malaysia came to after 1997, which is why they rejected the IMF approach and imposed tight controls on the movement of capital. It's an approach that has worked very well for Malaysia.

With respect to Mexico, there are significant risks to either approach. The "export-led" model runs high risks because of Mexico's long history of corruption; because the country does not have a very high savings rate (something on which the model depends); and because the country has a populist political tradition that sees the government as the dispenser of benefits to the people (albeit these are always really paid for by the people - nobody said populism made *sense*) rather than a political tradition that emphasizes the people making sacrifices for the government (as in Japan, or China, or South Korea). So the South Korean model, if applied to Mexico, seems more likely to fail than succeed. But the liberal model runs high risks as well, again because of Mexico's populist political traditions, but also because there aren't a whole lot of success stories to point to with respect to this model of development. Precisely because the liberal model increases income disparities and puts the economy in the hands of foreign capital, it seems unlikely to lead to the rapid development of a middle class that can ease the "push" to emigrate to the U.S.

I don't know a good answer to this question of how to help Mexico develop a robust middle class. To some extent it's already happening, at least in the north and in the D.F. But not in the poorer provinces that are the main sources of emigrants to the U.S. So my only insight to offer is: our efforts to date have focused on the development of the north, which is all to the good, but we need to develop strategies that will work in developing Mexico's poor south, so the Indians don't even start migrating *within* Mexico, the beginning of a trek that frequently leads to America.

Finally, the third alternative to the Bush approach: enforcing immigration law. I'm not going to spend a lot of time on this, because other people understand this aspect of the subject much better than I do. I'll merely point out a few things. First, that we passed employer sanctions in 1986, and the law is simply not enforced. So passing a law is not enough. And ensuring enforcement is hard to do; if strong political forces oppose enforcement of a law, how do you *mandate* that it is enforced? Second, one great political difficulty here, as the folks at the Center for Immigration Studies have voluminously documented, is that local and state law frequently actually prohibits enforcement of Federal law in this area. That suggests that the *national* politics of immigration and the *local* politics may not perfectly coincide. I know that here in New York, it would be politically disastrous to even talk about getting tough on illegal immigration; politicians compete over who can more ostentatiously proclaim their belief that "immigration status" should not be an issue. This is true even for law-and-order types like Mayor Giuliani.

Distasteful as it may be for the restrictionists to think this way, it might make sense for them to think about what *incentives* they might offer to states and localities with unhelpful laws to change their ways. Third, however angry Americans are about illegal immigration, and however fearful of criminals and possible terrorists who swim in the ocean of illegal immigrants, it is quite apparent that many, probably most, Americans also don't want to seem like harsh, nasty people who want to throw people who "haven't done anything wrong" out of the country. Restrictionists, then, should think about strategies for "encouraging voluntary compliance with the law" whether these strategies are carrots or sticks or both.

Restrictionists are starting to get excited that their issue is about to break out. I think they are right that it is about to break out. But I'd raise a key word of caution. The reason Bush's plan is going nowhere is that *Bush* has proposed it. He's a Republican, and a chunk of his base *hates* his plan. But what do you think would happen if Clinton (or Kerry) proposed the following?

(a) beef up border patrols with a massive increase in funding;
(b) create a generous guestworker program to "mate" employers with "willing" workers from foreign countries;
(c) rationalize legal immigration to make it more possible to bring in skilled workers and easier for immigrants who play by the rules to be naturalized;
(d) increase sanctions against employers for hiring illegals, and initiate a big crackdown to catch and imprison illegal immigrant criminals, sex-slavers, terrorists, etc.

That's a somewhat toughened version of Bush's approach; it means *expanded* immigration, but with an emphasis on how such an approach would help solve the *security* problems associated with illegal immigration. Don't you think that would play well? Where, precisely, is a Democrat going to lose votes with a plan like this? Blacks don't vote this issue, even though immigration hurts them. Hispanics wouldn't object unless there were some attempt to tighten rules for bringing in extended family members, and I haven't suggested that my hypothetical Democrat would propose doing *that*. Public-sector unions are pro-immigration, and they dominate the world of organized labor these days. Liberals, of course, would be supportive of the increase in immigration; business would love it; and "security Moms" (whoever they are) would be reassured that we were being both "tough" on security issues and "compassionate" towards people who just want to "put food on their family" as the President once said. Wouldn't this be a winning approach for a Democrat? I think it would.

The GOP is the party that is having a hard time keeping its restrictionist base and its big-business funders happy at the same time, which is why immigration is causing Bush agita. A Democrat would not have this problem, and could actually *gain* votes by adopting a pro-immigration but tough-on-security position like the above.

Something for restrictionists to think about.