Better than nothing

The new U.S. immigration bill drafted by leading Democratic and Republican senators is a deeply political bargain that has been hammered out over months, and it shows: The result is a 380-page Frankenstein.

The bill aims to seal the nation’s leaky borders while enabling undocumented workers to regularize their status, and seeks to fill the low-skilled jobs that Americans no longer want to do by admitting migrant workers on a temporary basis. Permanent settlers would gain entry via a points system weighted toward applicants’ education and job skills rather than family ties.

The bill’s crafters have heralded it as a historic deal, a model of bipartisanship, a grand bargain that will bridge the United States’ immigration divide. But detractors of all ideological stripes, pitchforks and torches in hand, are waiting to tear this fragile compromise limb from awkwardly grafted limb.

Indeed, there is plenty to criticize. From the Maginot-like border fence to the bureaucrat-friendly points system, the senators have pulled together a grab bag of bad ideas. Still, as Sen. Dianne Feinstein urged in announcing the bill, it would be short sighted to allow the perfect to be the enemy of the (passably) good.

That’s because, for all the bill’s flaws, they pale in comparison to one thing: the proposal to allow the nation’s 12 million illegal residents to obtain legal status. It’s a victory for common sense that recognizes that these hard-working people, on whom Americans rely to pick fruit, clean dishes, and look after their children as well as their elderly parents, are here to stay, and that it is in everyone’s interests that they come out of the shadows and into mainstream life.

Now for the flaws, and they are many. The bill mandates that, before becoming legal residents, illegal immigrants must pay up to $5,000 in fines and fees and the head of the household must leave the country before applying to return. They may fear that they may not be able to get back to the United States if they do so. Returning home could prove particularly problematic for Chinese illegals, for instance, and the fine seems unduly punitive. The bill also recognizes that a continuing inflow of foreign workers is needed to fill low-skilled jobs, and proposes to offer 400,000 temporary-work visas a year to that end. But it requires that tighter border controls and more stringent workplace checks on employees’ identity and legal status be enforced before the regularization process and temporary-worker scheme can start. That could take years.

If the illegal immigrants are to be regularized, why prolong their agony? If the economy needs low-skilled foreign workers, why delay giving them visas? After all, if they can’t come legally, they will inevitably come illegally instead. (Even if you somehow believe that the new border controls—as many as 18,000 more border-patrol agents, 200 miles of vehicle barriers, and 370 miles of fencing along the 2,000-mile-long border with Mexico—will eventually succeed in stopping illegal migrant flows, they aren’t yet in place.) And since only those who arrived in the United States before 2007 will be entitled to regularize their status, any delay in setting up the temporary-worker scheme will create a new class of illegal migrants. Far better to issue the new temporary-work visas immediately. That would slash illegal immigration: Few foreigners would risk death, exploitation, or deportation if they could come and work in the United States legally instead.

The bill proposes that temporary workers be granted two-year visas that could be renewed twice provided migrants returned home in between. Those who didn’t leave when their visa expired would be permanently barred from reentering the United States. It seems unduly disruptive to require temporary workers to leave the United States between visa renewals, but given the opportunity to return to the United States legally, most would doubtless comply. But requiring them to leave for good after their visa has been renewed twice makes no sense. At that point, they would face the same dilemma that foreigners in the United States on a short-term visa do now: Overstay and work illegally, or lose the chance to ever work in the United States. Many would no doubt choose to remain illegally, creating a new shadow workforce a few years down the line. The proposed electronic ID checks in workplaces won’t prevent that: documents can be forged or stolen, and people can work illicitly. It would surely be better to allow foreign workers to keep renewing their visas indefinitely.

The proposed points system is also half-baked. This would grade prospective migrants according to a range of criteria, with most weight given to the perceived demand for their skills in the U.S. job market. Such points systems are in vogue: Canada and Australia employ one; Britain is introducing one; and other European countries are considering them. They appeal to conservatives who believe that highly skilled immigrants contribute more to the economy and make better citizens. And they reassure voters by fostering the illusion that the government is selecting the right people that the country needs.

But bureaucrats cannot possibly second-guess the requirements of millions of United States businesses, let alone how the fast-changing economy’s employment needs will evolve over time. In effect, the points system amounts to government officials picking winners—a notion that conservatives rightly criticize in industrial policy and elsewhere. Hayek must be turning in his grave.

Inevitably, workforce planners make costly mistakes. At the height of the dot-com boom, Australian officials scoured the world to attract IT specialists, many of whom ended up driving cabs when boom turned to bust. Indeed, Australia has pushed its selection system to such absurd lengths that bureaucrats have identified 986 separate occupations, 399 of which potentially qualify for a skilled-migrant visa.

Such absurdities wouldn’t happen in the United States of America, you say? Unfortunately, politicians tend to find the temptation to micromanage irresistible. Even before they had agreed on the new bill, senators were debating how many points should be awarded to a refrigerator mechanic with a certificate from a community college, according to the New York Times.

What’s more, a points system allows nothing for serendipity: that people end up contributing to society in unexpected ways. Who would have guessed, when he arrived from Taiwan as a child, that Jerry Yang would go on to cofound Yahoo!, or that a Kenyan student named Barack Obama who came to study in Hawaii would marry a Kansan woman and have a son who may become the next U.S. president?

Despite all of these failings, the bill is an improvement on the current mess, and perhaps the best that can be hoped for considering how hugely controversial immigration has become. It will be far easier to amend an imperfect law piece by piece than it would be to risk this fragile deal coming apart—dashing the hopes of 12 million hard-working people who want to become Americans. They are the reason why, all complaints aside, the U.S. public should give this Frankenstein a chance.

Trade at your own risk

Markets do not exist in a vacuum; they operate in a social, political, and legal context. That insight - obvious to thinkers such as Adam Smith and Karl Marx, but forgotten in the zeal to fashion economics into a science more like physics than sociology - lies behind the revival in recent decades of the academic discipline known as “international political economy” (IPE). But although IPE scholars are right to reject a vulgar economism, they often assert the primacy of politics so vigorously that they neglect economics.

This trend leads to unfortunate misconceptions: When the world economy is seen as ultimately a zero-sum power game, the crucial point that everyone can gain from market transactions is often lost. This approach is evident in the 10th anniversary issue of the Review of International Political Economy, a leading IPE journal edited by US and British scholars. In their introductory essay, two American editors, Mark Blyth of Johns Hopkins University and Hendrik Spruyt of Arizona State University, locate the journal’s inception alongside the emergence of what they term the “second Washington Consensus,” defined as “a new orthodoxy that entailed a particular view of globalization as predestination.” They contend that the six articles in the anniversary edition provide “numerous challenges to that view,” perhaps none more so than the essay by Robert Hunter Wade, a professor of political economy and development at the London School of Economics.

In “What Strategies Are Viable for Developing Countries Today?” Wade contends that poor nations have less and less ability to follow their own development paths. Why? Because international bodies, notably the World Trade Organization (WTO), increasingly lay down and enforce rules—at the behest of the United States and Europe—that constrain developing countries’ policy options.

Wade points to three big examples. First, WTO rules force developing countries to tighten their intellectual-property protection, thereby transferring an extra $19 billion per year in royalties to U.S. companies and making it harder for poor countries to develop by copying Western ideas. They also limit developing countries’ ability to nurture infant industries through measures such as requiring foreign investors doing business in poor nations to buy intermediate goods and services locally. And the WTO’s agreement on services allegedly compels governments to open up vital sectors such as banking, education, telecommunications, and water supply to unbridled foreign competition against which local firms stand little chance.

Worse, the United States and Europe have reneged on their side of the bargain. Even as they pry open developing markets and impose Western rules, they conspicuously fail to open their own markets to exports such as textiles from developing countries. In short, the WTO is a rich man’s racket that keeps the poor in their place.

That needs to change, Wade argues. Instead of sticking to a development prescription that boils down to “liberalize” and “integrate,” he believes developing economies should have greater discretion to choose industrialization policies that suit their needs and tastes—including “import replacement” (protectionism) and capital controls.

Wade is right to point out that nearly all governments negotiating at the WTO reflect the “exports-good, imports-bad” worldview. And since the United States and European Union are more powerful than developing economies—not least because companies everywhere want access to their huge domestic markets—the mercantilist bargains struck at the WTO often reflect the lobbying demands of powerful US and European firms. Sometimes that power results in deals that harm developing countries, as in the case of the WTO’s intellectual-property agreement. Moreover, the United States and Europe hardly practice what they preach about free trade, notably in agriculture. But even if they also benefit Western multinationals, WTO deals that liberalize markets in developing countries primarily help the poor themselves.

The larger point is that developing countries are not compelled to join the WTO, let alone sign on to its agreements. They are free to take the blind alley of import substitution if they so desire. But increasingly, eyeing the success of the Asian tigers and now of China, they decide that “liberalize” and “integrate” are essential planks of a successful development strategy. Nor are countries compelled to abandon their capital controls: Rightly, China has maintained them, and Malaysia reimposed them in 1998 during the Asian financial crisis.

We unquestionably live in a world of unequal power. Since development consists of increasing opportunities, developing countries by definition have fewer options than rich ones. Yes, the WTO is imperfect, its member governments deplorably mercantilist. All the more reason to celebrate that free trade makes all countries better off; poor countries that have embraced globalization are catching up with rich ones.