International

E-Verify National ID System Threatens Americans’ Privacy

by David Bier on June 18, 2013 · 0 comments

in Features, Immigration, International, Labor, Privacy, Regulation

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“I’m not a criminal, so there’s really no reason for me to be in a criminal database.” That was James Shepherd, a Kentucky native and a roofer, after he was stopped by police under “suspicion of trespassing” at a Florida hotel. The officer on the scene asked to take his picture and ran it through Florida’s facial recognition database. Finding no matches, he uploaded Shepherd’s photo with the label “suspicious person.”

Florida is one of 26 states that use facial recognition software to verify identities of individuals who possess state ID photos or have their photos added by police, according a new report by The Washington Post. The Post report exposes how quickly systems created for one purpose can be coopted for other purposes. This should make those who support, in order to stop illegal immigration, the E-Verify national ID system contained in the Senate immigration bill consider what other applications authorities could find for the System.

E-Verify violates “a key principle of privacy”

 The Senate immigration bill would create a centralized database with photos of every legal U.S. worker or potential worker. It does this by combining the Social Security database – names, addresses and Social Security Numbers – with passport and state ID photos (p. 1317). The bill incentivizes states to provide photos by offering hundreds of millions of dollars in exchange for making them accessible to the federal government (p. 1377).

This much alone violates what Robert Ellis Smith, publisher of Privacy Newsletter, calls a “key principle of privacy.” As Smith explains, “The principle is that information gathered for one purpose ought not be used for an incompatible purpose without consent of the individual.” In this instance, Americans never conceived their Social Security accounts or driver license photos would be used for immigration enforcement, violating the premise under which they handed them over.

Federal law actually recognizes this principle under the Driver’s Privacy Protection Act, which strictly limits how states can use photos compiled under the auspices of motor vehicle regulation (18 USC § 2721). But this bill explicitly states the DPA doesn’t apply in this case.

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France Wants Culture Out of U.S.-EU Trade Agreement

by Fran Smith on June 14, 2013 · 0 comments

in Agriculture, Culture, International, Trade

A New York Times article yesterday points out some of the potential difficulties already evident in early talks on a trade agreement between the United States and the European Union. The possible trade pact, called the Trans-Atlantic Trade and Investment Partnership, is touted as a critically important step to getting the sluggish economies on both sides of the Atlantic moving.

Tariffs between the two parties are not likely to be a major issue, as both the United States and the EU have substantially lowered duties on most goods and services. The big bone of contention instead will be non-tariffs barriers, such as some sticky regulatory issues reflecting different approaches to risk as well as attempts to carve out “sensitive products” from the agreement.

Particularly in the agricultural area, the EU’s use of the “precautionary principle” in assessing the risk of genetically modified food products and of certain chemicals and processes is likely to conflict with the U.S. approach, which uses science-based risk assessment and looks at the safety of the product rather than how it was produced. In a prologue to the talks, the European Parliament’s inclusion of the precautionary approach in its list of negotiating objectives has already raised the ire of U.S. farmers.

Another big obstacle to the talks is France’s continued efforts to carve out a “cultural diversity” exception so audiovisual products and services would not be included in the agreement. France, Germany and several other countries supported a European Commission parliamentary amendment to allow films and other audiovisuals to be exempted.

Although an outright exemption would be the French choice, others have come up with so-called “red lines” that would effectively restrict what some French film directors and actors have called “a cultural invasion of Europe.” One would require EU broadcasters to provide the major share of time to domestic works. Another would retain the current film and audiovisual industry subsidies. The last red line would give the EU the right to revise laws to adapt to the digital environment.

Germany has since bowed out of its support, leaving France as the main country that would limit the amount of foreign films that would be allowed in the EU and continue to heavily subsidize the film and other AV industries.

France has said it would veto the agreement if films and AV materials are included. If that country has its way in asserting such a “cultural” exception, that would close out an important U.S. sector that is not likely to accept such a carve-out. It doesn’t seem plausible that the U.S. would accept such an exemption, even if some other sectors might see this as an opportunity for them to get their own “sensitive product” exemptions in return.

Obama Should Learn from Germany about Cape Wind

by Iain Murray on June 13, 2013 · 0 comments

in Energy, Environment, International

I have an op-ed online in USA Today today entitled “America should learn from Europe on wind power.” In it, I outline how Europe has begun to come to its senses about the unsustainable cost of wind energy:

However, wind power is expensive, and the growing size of the industry has meant that subsidies – and energy bills – have surged. The German subsidy is paid for by a surcharge on household electricity bills. The growth in wind power meant that in January the surcharge increased to over 5 cents (euro) per kilowatt hour, representing 14% of all electricity bills.

In Germany, Chancellor Angela Merkel, realizing that wind power is economically unsustainable, has proposed capping the subsidy until the end of 2014 and capping further rises to 2.5%, with the probability of further significant reform after the federal elections this year. It’s a similar story in Spain, where subsidies have been cut so much that the chairman of the country´s Association of Renewable-Energy Producers said recently: “Spain’s government is trying to smash the renewable-energy sector through legislative modifications.”

As it happens, President Obama has repeatedly said we should look to Spain and Germany as examples of how to handle renewable power. Indeed, and he should apply this thinking to the loan guarantee application for the Cape Wind project:

The project will cost $2.6 billion, and it has secured funding for $2 billion of that from a Japanese bank. But this is believed to be subject to the project gaining a loan guarantee from the U.S. Department of Energy. And there is every reason to believe that this would be as bad a bet as its loan guarantee to Solyndra.

The contracted cost of the wind farm’s energy will be 23 cents a kilowatt hour (excluding tax credits, which are unlikely to last the length of the project), which is more than 50 percent higher than current average electricity prices in Massachusetts. The Bay State is already the 4th most expensive state for electricity in the nation. Even if the tax credits are preserved, $940 million of the $1.6 billion contract represents costs above projections for the likely market price of conventional power. Moreover, these costs are just the initial costs, and like in Germany, they are scheduled to rise by 3.5 percent annually for 15 years.

In fact, one major Massachusetts employer estimates that each 1 cent increase in the cost of energy per kilowatt hour will cost the company $4 million, creating a major incentive to relocate, costing the state jobs and revenue.

When you consider that the Cape Wind project would also inflict environmental damage to cause Massachusetts residents and businesses to pay more for their energy, the case becomes a “no-brainer.” This is one case where the President could do with being a little more European in his outlook.

France’s Taxing Culture

by Charles Katebi on June 10, 2013 · 0 comments

in Culture, Economy, International, Trade

France has long feared foreign competition as a threat to its domestic producers. The nation has some of the most punitive taxes and labor regulations that make their products more expensive compared to foreign goods. Surprisingly, France has recently proposed to implement trade barriers in the same sector the French have constantly reminded the rest of the world that they have a comparative advantage in — culture.

In May, a 500-page government-commissioned report was released discouraging the viewing of non-French cultural content and encouraging the viewing of French cultural content. The French President Francois Hollande quickly expressed support for the report’s proposals. Out of 80 recommendations, the most stunning was a 4-percent tax on the sale of all devices, including gaming consoles and digital readers that allow access via the Internet to “cultural content.” The revenue generated from this tax would go towards subsidizing French music, television, and film. Titled Culture: Act II, the report’s recommendations were meant to counteract the influence American culture has had on the Internet, which the reports states “constitutes an immense threat to cultural diversity.”

Typically, protectionist policies are meant to protect weaker “infant” industries that governments wish were more developed. But France’s cultural industries, such as its music, architecture, paintings, and fashion have historically lead European trends for centuries. It is suspicious for policy makers to seek protection for an industry with such superior products.

Nevertheless, if French legislators indeed believe it is critical for French culture to be protected through trade barriers, they should have the political courage to state that French consumers prefer American content over French content because American films and music are of greater quality and value. I am sure French voters will appreciate the notion that the only thing that has kept French culture alive is the protective hand of government.

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France Needs a “Power-Up” When It Comes to Labor Reform

by Matthew Melchiorre on June 5, 2013 · 0 comments

in Economy, Employment, International, Labor, Regulation

In its annual country report released on Monday, the IMF turned up the heat on France for labor reform. The Washington-based lender called for a “powering up” of Hollande’s labor reforms to tackle the “significant rigidities hinder[ing] the economy’s capacity to grow and create jobs.”

Socialist President Francois Hollande, who has suffered since inauguration the largest fall in popularity of any French President in the past 50 years, has already been under considerable pressure from a citizenry fatigued from anemic and oftentimes negative economic growth and rising unemployment since 2008. Yet he still hasn’t delivered on reviving France’s flailing job market.

That’s because he’s too focused on devising government schemes, such as giving subsidies to small businesses who hire young people and retain older workers, to avoid making real changes to business-crushing labor regulations that have come to be entitlements within French society. Hollande’s changes to these laws thus far, in an attempt to draw attention away from his inaction on structural reform, are merely cosmetic, as I point out in a February CS Monitor article.

These reforms only increase flexibility during economic downturns, and they do nothing to change the employer’s fundamental and burdensome obligations to employees.

First, firms still cannot lay off workers to improve competitiveness when the business is healthy; they can only make economic dismissals to preserve competitiveness when already in financial straits. In France, it ought to be legal to fix small problems before they become big.

Second, businesses remain obligated to assist laid-off employees in finding other jobs and in retraining them for their new positions – a distinctly French phenomenon. For businesses with more than 1,000 employees, this limbo period before dismissal can last from four to nine months.

Third, reform merely reduces the period for laid-off employees to legally challenge their dismissal from five years to two. Some progress! Not only does 1 in every 4 French employees bring a case to court, but French labor courts are the least business-friendly in Europe, with employers losing 75 percent of cases, according to the Organisation for Economic Co-operation and Development.

The agreement also increases taxes and fees for hiring workers on temporary contracts. This hits businesses hard because 8 of every 10 new hires are on these contracts, according to French Labor Ministry estimates. This was a union demand to discourage the use of temporary work, which is a competitive threat to union-protected permanent contracts.

The reforms especially harm French youth, as more than half of those employed now jump from job to job under temporary contracts, according to Eurostat. Understandably, businesses don’t want to take the risk of hiring an employee they can’t dismiss later.

France needs to increase labor flexibility, not create government programs that add needless complexity to a labor market that is already difficult to navigate for businesses. Hollande is playing a losing game of charades. It’s time for him to roll up his sleeves and deal with the difficult political battle that real reform entails.

U.S.-EU Trade Talks — The Precautionary Principle Rears its Ugly Head

by Fran Smith on June 5, 2013 · 0 comments

in International, Precaution & Risk, Trade

Even before substantive negotiations have begun, a major problem has surfaced in talks on a U.S.-EU trade agreement. Last month, the European Parliament passed a resolution stating the EU’s objectives and positions on major issues relating to a proposed trade agreement. One provision in that resolution started an outcry by the U.S. agriculture, food, dairy, and meat producers. The provision deals with the “precautionary principle” and reads:

17.  Emphasises the sensitivity of certain fields of negotiation, such as the agricultural sector, where perceptions of Genetically Modified Organisms (GMOs), cloning and consumer health tend to diverge between the US and the EU; sees an opportunity in enhanced cooperation in agriculture trade, and stresses the importance of an ambitious and balanced outcome in this field; stresses that the agreement must not undermine the fundamental values of either side, for example the precautionary principle in the EU; calls on the US to lift its import ban on EU beef products, as a trust-building measure;

The precautionary principle is a concept invoked even when there is no scientific evidence that a product is harmful to human health or the environment. It is based on the hypothetical rather than the real. Thus, even when there is a lack of scientific evidence that products are likely to cause harm, the EU can take action to ban the import of those products.

In response to the European Parliament’s resolution, a coalition of 47 agriculture and food producers sent a strong letter May 20, 2013, to the U.S. Trade Representative (USTR) stating that the EU’s endorsement of the precautionary principle in the negotiations would be a form of protectionism hiding behind safety concerns and should be rejected by the U.S.:

At the core, the EU’s non-scientific notion of “precaution” has led to the adoption of many trade-restrictive measures that have resulted in several high-profile WTO disputes in which the EU’s defense of the precautionary principle has been ruled to be inconsistent with WTO rules. Such precautionary measures are often based on mere hazard identification – or worse, on public perception and political considerations – rather than proper, science-based risk assessments, as required by the WTO. And, even in cases where risk assessments are ultimately carried out, the EU has demonstrated an inability to lift unjustifiable measures because of domestic political pressures. “Precaution” in the EU has become a pretext for import protectionism under the pretense of consumer safety. As a result, U.S. exports have repeatedly paid the price.

In comments CEI submitted to the USTR on the proposed U.S.-EU Trade and Investment Agreement, CEI specifically called for the U.S. to reject the precautionary principle in the negotiations. The comments stated:

The precautionary principle is a one-way ratchet. It obsesses about imagined or potential risks of new technology or innovations while ignoring the real risks on the other side, the risks of restricting the development of technology. Both have to be considered and evaluated – the risks of change have to be balanced against the risks of stagnation. Generally, new technologies have reduced overall risk, and that fact is ignored in the precautionary principle.

Since the enshrinement of the precautionary approach in the Rio Declaration in 1992 by the United Nations Conference on Environment and Development, CEI has sought to demonstrate that applying this principle can lead to stagnation by focusing only on one side of the risk equation – and ignoring the risk of stifling new technology.

Graph: More Visas, Less Illegal Immigration

by David Bier on June 4, 2013 · 0 comments

in Immigration, International

The graph below comes from University of Pennsylvania economist Douglas Massey.

Graph Immigration Smaller

It depicts the three ways Mexican migrants have come to the United States–guest work programs, permanent residency visas, or illegally. You can see how low illegal immigration was during the 1950s, despite basically no border security—just a few thousand daily crossers. But as the Bracero program, which granted unlimited guest work visas to Mexican workers, was phased out, illegal entries begin to tick up, and after it is eliminated in 1965, they explode—fully replacing annual legal entries within a decade.

Later, you can even see a huge drop in illegal entries after the infamous 1986 legalization under Reagan. At the tale end of the graph, visas again increase under the Bush administration, and illegal immigration falls (even before the recession). Although not conclusive, all this evidence highly suggests that illegal immigration might go away if we freed up work visas, diverting would-be illegal immigration into legal channels.

Massey notes another important fact. It was only after Bracero was eliminated that people began to refer to Mexican migration as a “crisis,” “flood,” or “invasion.” Prior to 1965, Massey demonstrates, leading U.S. newspapers almost never used those terms in connection with immigration, despite high levels of Mexican legal immigration, but by 1979, after years of closed-border policies, there were almost three articles per month that included such descriptions. In other words, there was no immigration crisis, not even in people’s minds, until Congress created one.

Senate Bill: Better for Legal Immigration

by David Bier on June 3, 2013 · 1 comment

in Immigration, International

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Free market immigration advocates recognize that freeing up America’s legal immigration system creates economic benefits for Americans while simultaneously expanding their rights of association and contract. Increasing authorized immigration would also  help address illegal immigration by providing an outlet for potential legal immigrants who would chance coming to this country illegally simply because they have no realistic chance of winning the legal immigration lottery.

For these reasons, conservatives and libertarians should judge the prudence of the Senate’s proposed immigration reform partly by how much it increases the availability of visas, particularly employment-based visas. This isn’t a comprehensive look at the bill’s pros and cons, but here’s a summary look at how the bill would expand legal avenues for immigration:

  • Employment Visas: Current law allows just 140,000 employment-based (EB) green cards each year, visas for legal permanent residents (LPRs). The Senate bill would expand this number by exempting from the annual quota all EB-1 immigrants—persons with extraordinary abilities, outstanding professors or researchers, and multinational executives. This exemption will permit approximately 40,000 or so more green cards each year.
  • Doctors and STEM Researchers: The legislation also exempts doctors, STEM PhDs, and recent STEM master’s graduates from U.S. universities who have job offers, adding an additional 22,000 or so.
  • Investors and Entrepreneurs: The bill also creates 10,000 new green cards (EB-6s) for entrepreneurs, and an amendment by Sen. Leahy permanently authorized the EB-5 investor visa program, which was set to expire in 2015. EB-5s initially receive permanent residency conditional on their investment creating ten U.S. jobs. The Leahy amendment makes investing easier by allowing investors to count indirect job creation and requiring EB-5 visas be approved unless there is evidence of fraud or other misconduct. It also exempts derivative spouses and children of the conditional visa holder from the 10,000 visa annual quota, more than doubling its availability as well.
  • Exempt Employment-Based Visas: Importantly, the bill exempts all children and spouses of EB green card holders from the annual quotas. More than half the total EB visas are awarded to derivative beneficiaries of the initial card holder, meaning this exemption would more than double the EB green card quota from 150,000 to 300,000 plus 66,000 exemptions or so.
  • Merit-Based Visas: On top of these new EBVs, the bill creates 120,000 new merit-based permanent residency visas (MBVs), a number that can increase at a rate of 5 percent per year in any year where the quota is less than 75 percent of the number of applications and unemployment is less than 8.5 percent—up to 250,000. At this rate, it would take at least 15 years to increase the quota to 250,000.  Assuming unemployment stays low and application rates are high, 150,934 MBVs would be admitted per year over the next decade.
  • Eliminating the backlog: For the first four years, MBVs would be used to clear the backlog in the EB-3 category for professional, skilled, and low-skilled workers. In 2022 and 2023, allocations of MBVs will be made to clear the remaining backlogs in the 3rd and 4th family-based preference categories that date from before the bill’s enactment.
  • More Non-Employment Visas: The Senate proposal cuts non-EB immigration categories. Diversity green cards (55,000) for underrepresented countries, mainly Africa, would end within a year. Green cards for siblings and married children over age 31 would be eliminated, but at the same time, the legislation expands the immediate family category to include all children and spouses of LPRs, about 170,000 per year. Ultimately, this means that family-based immigration will increase by about 100,000 per year.
  • Guest workers: The bill also increases a variety of nonimmigrant visas (NIVs), such as the H-1B high-skilled temporary worker visa from 85,000 to 140,000 with the potential to increase to 210,000. New three year agricultural visas and temporary work visas will bring in more than 78,583 new guest workers over the next four years, a number that could increase to 282,000 thereafter. Smaller guest work visa programs for nurses (300), retirees, language teachers (up to 5,000), treaty country work visas (5,000), sub-Saharan Africans (10,600), Tibetans (5,000), victims of abuse (8,000), and an uncapped entrepreneurship nonimmigrant visa. These visas are temporary, but many immigrants (250,000 in 2011) marry U.S. citizens, which could result in many of these temporary immigrants becoming permanent.
  • Legalized immigrants: Lastly, the bill will grant registered provisional immigrant (RPI) status to any unlawfully present immigrant who has no criminal history (immigration violations are civil offenses) and has maintained continuous residence in the U.S. for the last year and a half (since 12/31/2011) or any deported immigrant who is also the child, parent or spouse of a U.S. citizen or LPR. All told, this might result in 12 to 15 million immigrants being legalized and granted work authorization status.

Free market conservatives should consider these new workers major assets to the economy. Many studies have found that new immigrants—both high and low-skilled—create huge economic gains for U.S. citizens. Free markets, by necessity, must transcend borders, and this bill makes modest strides toward making that possible.

European Skepticism of Minimum Wage Falls on Deaf Ears in America

by Matthew Melchiorre on June 3, 2013 · 0 comments

in Economy, International, Labor, Regulation

Spain’s central bank—operating within the European country with the highest rate of unemployment—just recommended to the government in Madrid a suspension of the minimum wage in certain industries. The bank wants to remove the law from being a “barrier” to hiring lesser skilled workers.

Say again? Our more left-leaning friends across the Atlantic just admitted that the minimum wage, a price floor for labor markets, creates unemployment. This simple economic logic is often denied by economists, pundits, and politicians in the U.S., and most recently by Barack Obama in pursuing his goal to increase the minimum wage to $9 per hour.

With more than half of all Spaniards under the age of 25 currently jobless, the welcome realization that minimum wage prices low-skilled and typically young workers out of lower-paid jobs they would gladly take comes at a high price.

Germans had this epiphany too at a time when they endured unemployment above that of their European peers. That’s why the Social Democratic government of the 2000s (yes, a bunch of center-left Europeans!) began implementing a “minijobs” program in 2003—as part of a larger package of labor liberalizations—for people who wanted to work a limited number of hours per week at a competitive and tax-free wage. Though Germany does not have an official minimum wage, most full-time wages are set through industry-level collective bargaining agreements, thereby creating the same price floor as a wage law. The minijob contract is exempt from these wage conditions.

According to the The Wall Street Journal, roughly two-thirds of minijob workers hold no other job—meaning that they would otherwise be unemployed. And one in every five working Germans has a minijob. As the Euro Area reported a record-high unemployment rate of 12.2 percent in April, German unemployment remained among the lowest in Europe, at 5.4 percent, and youth unemployment was similarly low, at 7.5 percent.

Labor flexibility creates jobs. Blanket regulation requiring higher wages creates unemployment. Spain and Germany found this out the hard way. With unemployment still stubbornly high at 7.5 percent, let’s hope America does not.

Senate Bill Won’t Stop Illegal Immigration Without More Work Visas

by David Bier on May 31, 2013 · 0 comments

in Features, Immigration, International

Post image for Senate Bill Won’t Stop Illegal Immigration Without More Work Visas

When the Senate “Gang of 8” released their immigration reform principles earlier this year, they made an important admission: that drastic restrictions on low-skilled work visas incentivizes illegal immigration. The principles called for “a humane and effective system” for the “overwhelming majority of the 327,000 illegal entrants” apprehended in 2011 “to prevent future waves of illegal immigration.” Unfortunately, although the Gang’s bill improves legal immigration options, it clearly doesn’t live up to this principle.

The Senate legislation deletes one option while creating two new ones—one for agricultural work and another for non-agricultural work. It allocates 112,333 ag visas (W-2/W-3 visas) per year for the first five years. But it replaces the H-2A farm visa program that already brought in around 80,000/year. This means the new ag visa program initially adds at most  just 32,333 net visas each year. For other employment (W-1 visas), the bill grants just 46,250/year over the first four years—meaning, the government would issue up to (no guarantees!) 78,583 new visas per year for the next four years.

In other words, the bill’s quotas are 250,000 below what the Gang claimed was necessary just a few months ago. Worse still, the actual shortfall is much greater than this because the Gang’s estimate of visa demand 1) excluded demand from would-be legal immigrants and 2) only included “apprehended” entrants 3) from a single year and 4) from a single border region.

1) Many more would-be legal immigrants would want to come if legal options open up; 2) the apprehension figure ignores all those avoided detection (about 350,000/year during the 2000s); 3) FY2011 had extraordinary few apprehensions—even in 2008 the number was twice as high (475,000/year over last five years); 4) these visas might primarily go to immigrants from Mexico and central America, the primary sending nations for border crossers, but other nations would also compete for the limited supply; 5) finally, the calculation ignores how increasing the availability of work visas to new sectors (dairy, meatpacking, etc.) and new job categories (employment longer than a year) might affect U.S. employer demand.

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