Saturday, May 27, 2006

A Nation of Immigrants Should Not Have a Guest Worker Program

In general, I have tried to limit the subject matter of this blog to politics within Indiana (Mitch Daniels, the state legislature, and so forth), with a special focus on the 9th District race between Mike Sodrel and Baron Hill. Plenty of blogs exist in every political stripe for national issues, with varying audience sizes. Sometimes I have talked about more national issues (and I try to view it through a Hoosier prism), but I try hard as a rule to avoid them (and sometimes failed).

This is one of those more national posts, so I am breaking my own rule here. I actually wrote this almost two months ago, when the immigration debate first began. I did not post it, since for a time the idea of immigration reform seemed to have fallen apart and since I didn't think it fit well with the overall subject matter typical for this blog. I came across it yesterday, reread it, and found it to still be salient and worthwhile. So, with a few tweaks, here it is.

While pictures like those over at Hoosier Hawk can temporarily sour me on it, I (like, I daresay, most Americans) am an idealist when it comes to immigration. Since before it was the United States, this land has been a refuge for the people that did not like things back home. People who got into little ships to cross a storm-tossed sea to escape the wretched conditions behind them, and maybe just strike it rich in a land of great opportunity. Forgive me if this waxes a bit idealistic about our country’s history with immigration.

I could list practically every ethnic group on the map, and started to do so before thinking better of even trying. When home became hell, people have looked to America for opportunity, escape, freedom, and a new life. Unless you are African American or Native American, your ancestors came here to seek a new life. The shining city on the hill held its doors open to them. It is a tried and true cliché, but the United States of America is a nation of immigrants.

In historical terms, at any given moment about one American in ten—ten percent of the population in other words—was not born in this country on average. Right now, that number hovers around twelve or thirteen percent, which close to the peak of between thirteen and fifteen percent during the “Great Migration” period between about 1870 and 1920. It strains the institutional structures of the United States (schools, government services, law enforcement, legal immigration programs, everything else) to accommodate and successfully absorb those numbers of immigrants.

Setting aside the practical issues of whether the United States can successfully absorb an even greater level of immigration, the new mechanism passed by the Senate as a conduit for this immigration is deeply flawed.

We simply cannot have a guest worker program. Regardless of a fence. Regardless of amnesty. Regardless of deportation. Regardless of earned citizenship. Regardless of practical issues concerning the absorption of immigrants into “American” culture and society.

Guest workers will not all come from Mexico (something that politicians in Congress, talking heads, and policymakers seem shockingly slow to realize), and every other guest worker program instituted in other developed countries in recent times has created a segregated second-class minority whose economic prospects are limited and whose bleak futures promote dangerous radicalization and ghettoization. A guest worker program is a significant barrier in the path of the integration that has been the hallmark of American immigration for centuries.

Give them amnesty if you like. Give them a path to citizenship if you like (work-nesty?). Deport them if you like. Build a fence to shut them out if you like. But we should have none of this guest worker nonsense. A country made of immigrants cannot have an immigration policy that places new immigrants in an inferior socioeconomic position to other immigrants and citizens descended from immigrants.

A guest worker program is not a program for regulating immigration. It is a program for providing cheap employees for businesses. No more, no less. It will suppress wages, further distorting a labor market already skewed by illegal immigration, and it will probably restrict the economic opportunities of those who participate in it. In sheer economic terms, there is nothing wrong with low labor costs (they, like cheap imports from China, keep inflation in check and contribute to a generally higher standard of living), but the debate now happening on immigration in Congress must recognize the distinction between speaking about a solution for illegal immigration and a solution to labor shortages (at least in terms of cheap and relatively unskilled labor) in the American economy. Thus far it has not, and that is unsettling.

Virtually all of the public debate on the subject fails to make this distinction as well. I have lost track of how many people I have talked to, or read, that say they are conflicted, or “of two minds on [the] subject,” as Instapundit Glenn Reynolds put it. As well they should be of two minds about it; I think it should be clear that there are two distinct (albeit related) subjects present, not one.

It is not a semantic distinction, but one critically important for an informed debate both on illegal immigration and the labor shortage in the United States (in macroeconomic terms the American economy is running at or near what Keynesian economics would call full employment). Some politicians, of course, wouldn’t want to admit that there was a labor shortage. It would hinder partisan complaints about unemployment rates and the state of economy as a whole, but that is another matter entirely.

The recent immigration demonstrations in the United States have been remarkably peaceful. Government policy structured not towards creating opportunity for immigrants, but instead for providing guest workers for employment demand will create a “guest worker” population in the United States more like that in Germany or France (remember the riots there in late 2005?), and another round of protests by guest workers will not be so peaceful when they are second-class non-citizens, the labor market inevitably is no longer facing a shortage, and there is rising sentiment against them among citizens seeking jobs. America’s own little-remembered in Bracero Program from the 1940s and 1950s should serve as a warning against establishing a guest worker program in the United States today. Coupled with the strains on institutional structures to absorb the current levels of immigration (legal or otherwise), a guest worker program is all the more potentially dangerous.

If you think that nativist sentiment is strong now, wait until after Congress enacts a program like this and the economy enters a serious and prolonged recession. When the day inevitably comes that unemployment is higher and the economy is not doing as well, the guest workers will be stuck, and so will America.

We should also not forget the frightening possibility that guest workers will come from countries that have populations of not exactly nice people that might like to blow themselves up. There is nothing that says that guest workers will have to come from Mexico. They could instead come from Morocco. They could come from Peru or Pakistan, and Panama or Palestine. They could come from Ecuador or Egypt, or from Costa Rica or Saudi Arabia.

When guest worker programs were established by countries like Germany, companies recruited workers from places where cheap but relatively skilled labor was then available. For Germany, those workers came mostly from Italy, Yugoslavia, and Turkey. For France, they came from Portugal, Algeria, and the former French West Africa.

Everyone assumes that guest workers for any American guest worker program will come from Mexico. But in a global age of jumbo jets that routinely cross oceans, guest workers will come from anywhere that recruiting companies can find willing laborers whose bodies they can ship or fly here. People have been caught being smuggled from Asia into this country inside shipping crates. Simple reason suggests that it is foolish to think that all future guest workers will just be from Mexico and Central America.

If you question or worry about our visa policies (student, travel, whatever) with regards to countries like Saudi Arabia, is there any reason to think that a guest worker policy would be any different with regard to applicants from such countries? It is more than just a little scary to think that they might be quite similar. In the post-September 11 world, we must consider seriously the threat posed by Al Qaeda or other terrorist sleeper cells entering the United States from such countries under the cover of a guest worker program.

Regardless of your opinion on illegal immigration—whether you favor deportation, earned citizenship, amnesty, a fence, or whatever—we must recognize that a guest worker program is something that must be considered very separately from a debate purely about illegal immigration. I am inclined to think that a guest worker program would be bad public policy for the United States. The history of other countries, and our own, with such programs has indicated as much. We would be trading our proud (admittedly abstracted and generalized) history of welcoming immigrants for a policy of importing cheap labor for totally unrelated reasons. That is not a good trade, regardless of how you feel about illegal immigration to the United States, and the illegal immigrants already here.

“The New Colossus” by Emma Lazarus is inscribed at the feet of the Statue of Liberty. Its most famous lines are recognizable to pretty much every American (and a great many foreigners, too), but the whole sonnet bears quoting:

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!!”


There is nothing in there about welcoming as “guests” the huddled masses yearning for nothing more than a job (and offering them no more in return, to boot). I’ll take the tired, poor, huddled masses yearning to breathe free any day.

Monday, May 22, 2006

Thoughts on Major Moves and Privatization

Apologies for the drought in blogging; I went on vacation and returned to find a ruptured water heater in my basement. Becoming less soggy became a rather high priority. I still intend to do a county-by-county look at the numbers for the 9th District primary sometime soon. In the meantime, some recent news about Major Moves has caught my attention.

Mitch Daniels has been asked to talk to the House Transportation and Infrastructure Committee about Major Moves. Of course, I doubt that the presence of 9th District Republican Congressman Mike Sodrel on that committee has anything to do with them wanting Daniels to come and tell them about his "creative new mechanism."

This comes on the heels of news (and here) that Ed Rendell (the Democrat governor of Pennsylvania) is considering something similar to Major Moves for his state, New Jersey (run by Democrat Jon Corzine) is looking at selling a 49% stake in some of its toll roads, and California's Democrat-dominated legislature has passed legislation opening the door to the privatization of some of the Golden State's toll roads.

It is worth noting that it is not yet clear just how similar the (Democratic) plans of other states will be to Major Moves' agreement trading a 75-year lease for a lump-sum up front. I doubt that many will be similarly structured. Chicago pioneered the lease-for-up-front-lump-sum idea several years ago, but everything mentioned in the above articles points to other methods, such as selling a minority stake in the toll road or full and outright privatization.

Wikipedia has a nice article about privatization, but little about its history. Pulitzer Prize-winning author Daniel Yergin and Joseph Stanislaw provide a good account of this in The Commanding Heights: The Battle for the World Economy (later a series on PBS). While the term privatization has older origins, it first entered the popular lexicon after the election victory of Margaret Thatcher in 1979.

The term, chosen because it was much more elegant than "denationalization", became associated with Thatcher's policy of selling off the British government's controlling stakes in many elements of the British economy. Thatcher wanted to create an ownership society (certainly little like Bush's unrealized 2004 campaign notion) where citizens would own shares in the various newly "privatised" companies, rather than the government.

In 1979, vast sectors of the British economy were run by the government, and the government ran them inefficiently. "Privatisation" created competition, both within Great Britain and outside of it, and was so successful that Tony Blair, the next Labour prime minister after the Tories held power for so long, did not want to upset the new dynamic that Thatcherism had created. He ran (and won) on embracing (and declaring his intent to humanize and add compassion to) Thatcherism rather than promising to overturn it. This became the so-called Third Way.

Thatcher privatized forty-six businesses having among them almost a million employees. The British government made thirty billion dollars in the process (a dollar being worth a heck of a lot more then than now; the state is getting almost four billion for a length of highway). Twenty percent of the adult population in Britain ended up owning shares in the new companies. Privatization under Thatcher (whatever its other flaws) ended chronic labor unrest in Great Britain, revived and made competitive a moribund economy, and eliminated the government-controlled state monopolies.

The "privatisation" of British Gas, British Coal, British Airways, British Telecom, and most of the other forty-six companies were resounding successes, while others--like British Rail--were apparent failures. It is worth noting that Thatcher and her team were gone when British Rail was privatized (and its privatization was by the very nature of railways much more complex than privatizing many other elements of the economy); it was done by the following Tory government of John Major.

Privatization became much more widespread after the collapse of the Soviet Union and its Eastern European satellite states, when vast state-owned industries and monopolies were hastily sold off.

Anyway, how does this relate to Major Moves? Strictly speaking, it doesn't. Major Moves is often called privatization, both by opponents and news organizations (and I could cite dozens of references by both). Most supporters tend to note, correctly, that it is not privatization in the traditional sense, but something of a "variant" of privatization, if privatization at all.

Indiana is not 1970s Great Britain. No government in the United States--state or federal--has ever been that intrusive into the economy. Efforts by Harry Truman to nationalize the steel industry during the Korean War were rebuffed by no less than the Supreme Court, and efforts to increase the government's involvement in health care resulted in the Democratic Congressional election disaster of 1994. Indiana's state government does not operate a telephone monopoly, an electricity monopoly, a gas monopoly, an oil monopoly, a health care monopoly or anything of the sort.

Now, I have never driven on the Indiana Toll Road. It is entirely possible that I never will. But I like the idea of a big new road-building initiative for the rest of the state. Infrastructure and public works improvements make the state's businesses more competitive, improve the economic environment for other businesses to move here, and directly generate jobs from construction work.

The state, Daniels says, will spend almost twelve billion dollars on new road construction as a part of Major Moves. Less than four billion of that, apparently, will come from the lease of the toll road, and there are a lot of well-reasoned objections to toll road privatization. These range from increased tolls to the impact of non-compete clauses (the lease of the Indiana Toll Road includes one; LA has had problems with such clauses) that prevent nearby roads from being improved. There are also the claims (as alleged in the recent lawsuit) that the lease is unconstitutional.

I voted for Daniels. I like and agree with most of what he has done. I like the idea of twelve billion in new road construction. I even like the idea of privatizing the Indiana Toll Road, or at least contracting out its operation and maintenance to eliminate some of the notable problems with it. I wouldn't have a problem with the state legislature letting private companies build more toll roads in various places in the state (though I would prefer that they didn't). I don't even care if the Indiana Toll Road is run by "ferrinners"; disgraceful nativism has little to do with my view of Major Moves. But I do not like the whole 75-year lease notion, questions of constitutionality aside.

I will probably never drive on the Indiana Toll Road during that period, but I'll drive on plenty of roads improved by that big pile of lease money. And the lease deal gives the state a lump sum. All of these new roads will need maintenance, and (unless I am just ill-informed since Major Moves coverage down here is not as great as in Indy; there might be details that I am unaware of) it does not seem to me that the lease deal will contribute one penny towards maintaining those twelve billion dollars of roads during the sixty-five years after Major Moves' ten year plan is over. What then?

Privatization, under Margaret Thatcher, broke up what were (in effect) government-run monopolies. Anyone with a basic understanding of monopolies and high school economics knows that they are bad. They stifle competition, they allocate resources inefficiently, they slow development in related and surrounding areas. Government-run monopolies are even worse (a government-run toll road is a different animal from the government building and maintaining normal roads, I think).

The toll road lease takes something that is a government-run monopoly and makes it into a privately-run monopoly, in exchange for a pile of money up front. But it is still a monopoly (with all of the negatives that entails, and are further enshrined by the no-compete clause), and the state gets a bad deal for the sixty-five years after that nice pile of money is spent. The Hoosiers (I don't care so much about non-Hoosier drivers on the Indiana Toll Road) that have to use the toll road over those 75 years get a bad deal.

If Mitch Daniels wanted to privatize the Indiana Toll Road, why not (like New Jersey is considering) sell a 49% stake in it to someone? Given that the company that won the lease is likely to make something like twenty-one billion dollars after it pays off the cost of the lease (a return on investment of upwards of 500%), it stands to reason that someone out there wouldn't have minded paying a good-sized similar amount (if not more) for a half-stake in the road that would have been good forever.

If he wanted to eliminate problems with its maintenance and operation, why not (instead of leasing it for seventy-five years) contract out the operation and maintenance of the toll road to a private company? Does the state constitution effectively prohibit selling such a stake or contracting out the operation of the toll road?

The answer to all of these questions is that the governor wanted that pile of money for road construction, improvement, and maintenance. He needed it quickly, and this was a clever way to get it.

Perhaps the road could have been transferred to a legal entity in which shares would be sold, and that entity could in turn either operate and maintain the road or contract with someone to operate and maintain the road. All of that would have retained some measure of state control, some measure of a revenue stream for state coffers, generated income for improvement elsewhere, and fixed many of the problems with the road (including upgrades and such).

I am reminded of how folks in the state legislature from Indianapolis wanted $200 or so million quickly to help pay for a new stadium for the Colts. The thought that taking gambling revenue away from the counties hosting casino riverboats would be a cheap and easy way to get that money, and introduced legislation to that effect. Fortunately, the bill never got to a vote (though every county that has a casino should fear the return of that legislation; its day will surely come) because the speaker of the house wouldn't let it come to the floor for one.

Major Moves is a great thing. The only problem with it is that the governor decided to try to fund a good part of it by looking for a quick way to get a pile of money to get it started. He didn't look to the counties hosting casino riverboats (to be fair that was the idea of some fellow representing Carmel, not the governor). He looked to the counties hosting the Indiana Toll Road (and every Hoosier user of the road) instead. He pushed the legislation through quickly to seal the deal, and in so doing ruined a lot of the political capital he might have gained elsewhere in the state from forthcoming road construction. Worst of all, he probably could have structured the "privatization" of the toll road such that roughly the same money could have been gained, far less political opposition garnered, and fewer feathers ruffled.

Sunday, May 7, 2006

*ominous and foreboding music plays*

The Sunday Indianapolis Star provides the usual boilerplate analysis on Republican chances in November. To Democrats hoping to make the election a referendum on his policies, Mitch Daniels says, "Let's have it."

For the governor, that's about as much bravado as you're going to get. It's not exactly the confrontational bluster of his former boss daring terrorists and insurgents in Iraq to "Bring it on," but (after all) this is Indiana and not Texas.

And the Star parrots the usual conventional wisdom and partisan spin about the Congressional primary results with regards to Sodrel and Hill, and with regards to Hostettler. I intend to take a closer look at those numbers. At the moment, the Secretary of State's website still does not have vote totals for those portions (the southern third or so) of Bartholomew County in the 9th District, so I am waiting for them to put up final quasi-official numbers.

I think that an examination of this year's numbers in comparison to those in recent history (particularly the prior runs of Hill and Sodrel) will prove quite illuminating. It may be a week or more before I can do this, as I will not have time to blog for the next week or so.

The Courier-Journal reports that the Democrats, finally recovered from the stern drubbing given them by U.S. District Judge Sarah Evans Barker, are going to appeal her decision on the voter ID law to the Seventh Circuit Court of Appeals in Chicago. Barker is a conservative and a Republican appointee, and eleven of the sixteen judges (including those in senior service) on the 7th Circuit are Republican appointees. Only three of the eleven active service judges were not appointed by Republicans; the court is generally considered moderate.

Regardless of any ruling, I doubt that the court will render a decision on the appeal in time for the law to not be in place for the November election.

Friday, May 5, 2006

Daniels Touts "Monster Month"

The Courier-Journal reports that state revenues in April were some two hundred million dollars more than originally expected. The governor is right to tout such figures; two hundred million dollars is not exactly small change for anyone outside of the nation's capital or the management of ExxonMobil.

It would be nice if this were to become a lasting trend indicative of a significant upswing in the Indiana economy. Mitch Daniels should hope that this is just the beginning of such a rising tide for obvious reasons. However, similar figures in future months will be needed before any real judgment to that effect can be made.

There is good reason to think that this will become a trend. The national economy is performing well despite rising oil prices. Gambling revenues are always depressed from around March to June because of pleasant spring weather (a similar slow period is seen during the holiday season between Thanksgiving and Christmas), and are likely to pick up as the summer goes on (and the economy continues to improve), marginally benefiting state coffers. The Riverboat Wagering Tax provides about 6% of state revenue, but this excludes other taxes paid by the companies operating the various casinos and another casino will open in Orange County in late 2006.

All of this puts the state on course to full-day kindergarten and some nice economic development initiatives that have the political potential to seriously soften public opinion about the governor and the general assembly. Looks like someone is trying to engineer a comeback.

Wednesday, May 3, 2006

2006 Hoosier Primary Day, +1

It's official, at least sort of. Mike Sodrel and Baron Hill will face off in the 9th District for the third time. Garton is out up in Columbus.

In some places, the counting was a fiasco. In others, not so. Down here in the southern end of the state, Floyd county had its results by nine or ten o'clock. Clark county had to manually tabulate precinct results (which is fortunately not the same as manually counting every ballot). The Harrison county clerk has declined to certify their results.

Your humble correspondent took in the election results from the Harrison county courthouse, where there was much initial confusion after an initial batch of bad results showing highly improbable vote totals. Early results showed not a vote for Hill or Sodrel, or the incumbent sheriff, though Lendall Terry had to be happy with his techno-glitch-generated landslide of unanimity.

Fortunately, (ostensibly) correct totals were soon forthcoming, but many questions remained. In the hotly-contested Democratic sheriff's primary, where incumbent Mike Deatrick faced four primary challengers (and many thought a potential upset), tempers flared. Into the night, there was much ill-will lingering from the initial faulty tallies among the challengers as Deatrick pulled ahead, despite running a sheriff's office plagued with questions, rumors of mischief, and allegations of misdeeds.

Admittedly, such things seem commonplace in Harrison county sheriff's office and the race to hold it. The Republican incumbent was defeated in 2002 by Deatrick amidst a swirl of allegations, rumors, and questions. I will let you hazard a guess as to whether the problem lies more with the office itself, the race to hold it, or those who seek it.

In the 9th District race, both Hill and Sodrel prevailed (as expected). Each carried about eighty percent of the vote in their respective primaries. The spin doctors were out already for both sides last night, as quoted in the Courier-Journal article mentioned above. I will blog more on this later, as some perspective is obviously needed and it will not be forthcoming by merely quoting the spokespersons of either campaign.

And, lastly, I would probably be somehow remiss if I did not note that the Libertarians now have a candidate in the 9th District race. Eric Schansberg, an economics professor at Indiana University Southeast, will fill the Libertarian slot on the ballot. The Libertarians did right well for themselves in the last election, at least in the 9th District. They forced their way into the gubernatorial debate held at IUS and elbowed into the similar debate for the 9th District race held at IU's Bloomington campus.

Even so, there is something (certainly not absent of humor or sarcasm) to be said about an economist running on the Libertarian ticket, to say nothing of running for office at all. The recently-deceased John Kenneth Galbraith noted that "economics is extremely useful as a form of employment for economists." Now, it seems, they can be politicians during their vacation time too.

Tuesday, May 2, 2006

WaPo: 9th District 7th Most Likely to Change Parties

The Fix, the political blog over at the Washington Post, rates Indiana's 9th District to be the seventh most likely race to see a change in parties in November (up from ninth most likely last week). More citing of Baron Hill's "boost my chances and my fundraising" publicized polling, and the usual rote repetition of Mike Sodrel's close relationship with Mitch Daniels and George W. Bush as a negative. Seeing a pattern here?

John Hostettler, over in the 8th District, has moved from seventh most likely down to tenth. If Hostettler raised money like his competitors, that race would never even be competitive. But then, if John Hostettler raised that sort of money, he would sort of cease to be John Hostettler.

Remember, today is primary day. Be sure to take the time to vote, regardless of your party or inclination. The only thing that harms democracy in America is the indifference of the electorate.

Monday, May 1, 2006

A Trip Along the Ohio River, and a Talk with Mitch


Mitch contemplates a turbulent future.


The Rothenberg Political Report has a review of nine of the Congressional races along the Ohio River, including a paragraph about the 9th District race in Indiana.

The only early polling, so far, that indicates that Hill is leading is polling that has been leaked by Hill himself. Insofar as I have seen, no public polling has been done in the 9th District. Any poll leaked by a candidate has to be viewed in that light, particularly with the need by Hill to garner support in terms of fundraising by showing himself as a viable candidate again (to say nothing of Hill's pressing need to win a crushing victory in Tuesday's primary, in order to maintain momentum and support on the Bloomington left for November).

Beyond that, little more than the usual boilerplate rehash. Close race last time, close race this time. District leans Republican, but Republicans everywhere are in trouble.

Meanwhile, the Indianapolis Star has interviewed the governor and put out a timely article about the seething anger in the state towards incumbents in general. The sweater-clad Daniels looks surprisingly introspective and humble in the Star's photo accompanying the interview. It is a time for serious retrospection on Mitch's part, I think, so the picture is quite fitting.

It is a political maxim and truism in Indiana that Hoosier voters hate change. Mitch Daniels has given them change in spades, and then some. Indiana is not so much a Republican or a Democratic state as it is a conservative state (and not conservative in the Washington ideological sense either). It is unsurprising that his polling has declined as a result, even if voters themselves should be unsurprised that they got someone who actually did what they said they would do when they campaigned.

It is also unsurprising that the incumbents supporting change are now in peril, as are Democrats who have no plan to make anything better either. I found great amusement when the Democrats criticized Daniels for waiting sixteen months to unveil his economic plan. Not that the Democrats managed to have one for sixteen whole years. Voters tend to notice those sorts of contradictions. They are uncomfortable with the change that Daniels has brought, but (as the Star article notes) they do not like the alternative of simply turning back the clock offered by the Democrats.

Therein, I suppose, lies the opportunity for Mitch Daniels should he make up his mind to run for a second term. Perhaps it is time for a breather to consolidate some of the "gains" that have been made in the first two years of his governorship, work on smaller issues of improving state government, and maybe pass something sort of feel-good education program like full-day kindergarten while waiting for the (presumed) economic benefits of two years of hard-charging reform (and continued small-scale follow-on, like with the economic plan) to come home in the minds of Hoosiers.