Saturday, April 24, 2010

Janet Brewer just signed an Immigration Law

There's been a lot of discussion and a lot of controversy surrounding the Immigration bill recently signed into law. I can't say I'm an expert nor can I say I'm very motivated to get through the entirety of the bill, parsing it line by line.

By I do have some general thoughts on immigration that I think are important to take into consideration at times like these:

Point One: Immigration brings vitality and strength to a free market economy

You don't believe me?

Off the top of my head, eBay, Google, Yahoo, Intel were all started by immigrants. I heard a statement recently, and I can't source it, but it made a lot of sense. One of the reasons our country has been so resilient and so prosperous over the years is because it's an immigrant nation. Immigrants tend to be the cream of another country's crop. They are more risk tolerant - already taken an unspeakable number of risks getting to a foreign land. In many respects, the same attributes that are required to start a business also are required to immigrate.

Point Two: Diversity brings prosperity

Just one argument on this point: innovation comes when you get as many people contributing in their communities, in their neighborhoods as possible.

The more homogeneous a certain population is, the less likely someone who doesn't fit into the mold will feel confident enough to make a strong contribution. And that missed contribution is innovation lost.

Point Three: Mexico brings its own challenges.

Is there another border in the world like the border between Mexico and the United States? The US is the wealthiest (by any measure) country in the world, Mexico is far from it.

Can you find any two countries that share a border as large as this one that has a greater economic disparity?

North and South Korea may be in the ballpark, which pretty much proves my point. I don't believe there's a lot of immigration between North and South Korea. But South Korea has a good portion of our army stationed there, and that is one of the most hostile, dangerous borders in the world. One war was already fought, we've been close to more. Immigration control is enforced primarily by North Korea, with a massive heavy hand to keep their citizenry inside.

Mexico, on the other hand, is a Democracy and our ally. They have massive problems with corruption and a drug economy that is by far their largest industry servicing customers primarily within our borders. The drug industry is choking its economy, driving many people across harsh desert lands into our country to find work.

Additionally, a significant part of their population comes here illegally to support vast and sophisticated drug networks.

Nothing we've done and nothing we will do will have much effect on drug trafficking. The profit margins for illicit drugs are too high, and there's just not the political will to do what it takes to stop it.

So, what's my opinion on this issue? First of all, I don't trust Russel Pierce or anyone else, probably, in the AZ legislature to create laws on this issue that will make sense. Ideally, we should trust our local police force and our border patrol to do their jobs. There are already laws on the books that deal with this issue. This debate is largely on enforcement of existing laws. But enforcement needs to be viewed holistically. We want our law enforcement to enforce all of our laws, and the most egregious crimes should take priority.

I've heard a lot of people argue that they just want our immigration laws enforced. But that's not enough of a statement. Do you want more time spent enforcing illegal entry to our country or illegal entry into your house? Car theft or illegally working at the neighborhood fast food restaurant? Kidnapping or lawn mowing?

Ok just one last point
I can understand that we should control our borders, I guess. But a part of me asks the question why we care so much. I can think of some historical examples of why we should be more accommodating:

  • During WWII, a lot of Jewish immigrants fled Germany to find refuge elsewhere. Certainly, this was a time when every country should have welcomed them in with open arms.

  • Our invasion into Iraq resulted in thousands (millions?) Iraqi refugees, refugees who have struggled finding work (some of them educated) elsewhere.

  • The earth quakes in Haiti resulted in untold catastrophe. Many of them could come here and elsewhere to work, send money back to the island to rebuild. This is a much more efficient and effective way to get money into the local population

  • Ok, I promise, only one more point
    I get why a lot of people simply can't tolerate immigrants from the countries to our south Growing up in Yuma and living now in Phoenix, you see run-down, poor, largely Hispanic neighborhoods and you assume they are filled with illegal immigrants. Nobody wants blight in their neighborhoods or cities. And it seems, illegal immigration brings blight.

    But it seems to me that the blight has been exacerbated by our efforts in recent years to crack down on immigration. We are a far cry from North Korea style border enforcement, so I'm sure, theoretically, its possible to get an almost complete control of our borders the way North Korea was able to do with theirs. But do we really want to live in a country like that, willing to do the kinds of things it seems to require to get there?

    I hope the answer is no, so its just a matter of how hard we want to crack down on it. But the more we do, the more this community is marginalized. They lose freedoms, they lose opportunities. Either they stay in their home country with little hope. Or they come here knowing (or they should know) that they will not have the backing of law enforcement. Crimes against the illegal population go largely unreported. They are not subject to workers protection. There exists an undercurrent of slavery among this population even in this country. When you marginalize a population or a community, you should not be surprised that rundown blight is the bi-product.

    It used to be, when we were completely lax about our borders, that Mexican workers would come and go. They would come for seasonal work on a farm (over a summer) and go back for the winter. Primarily only one bread winner would come while the rest of the family remained. At least so far, it seems that harder we make it for people to cross, the less likely they go back. Once they get here, there are strong incentives to stay put and just as strong incentives to bring the rest of their family over as well. So, harsher laws can actually increase the illegal population.

    Ok now the conclusion
    There are a lot of complexities to this issue, a lot of moving parts. I've only touched on a few at a very high level. Mainly I worry that laws like this one are being passed without a deep consideration of the many issues at stake. I think its important that we start having these conversations.

    Saturday, April 10, 2010

    13 Bankers - Hamilton verses Jefferson

    The real reason I wanted to post was to describe the conflict between Hamilton and Jefferson in regards to banking that is described in Simon Johnson's book.

    Thomas Jefferson is the hero of the libertarian movement, and lately the Republicans have adopted him as well. Its funny, by the way, how the party out of power suddenly becomes libertarian. Liberals and libertarians loved each other during Bush's presidency.

    And its true, libertarians and Thomas Jefferson have a lot of common cause. In reality, everyone else is a Hamlitonian. The difference, really, ideologically, between our two political parties are small. The differences seem larger than they are because the party out of power emphasizes and exaggerates these differences with the goal to get back into power.

    But Thomas Jefferson had some interesting views on banking:

    "Suspicion of large, powerful banks is as old as the United States, dating back at least to Thomas Jefferson - author of the Declaration of Independence, secretary of state under President George Washington, third president of the United States, and staunch proponent of individual liberty. Although Jefferson is one of the most revered founders of the republic, according to conventional wisdom he was not much of an economist. Jefferson believed in an agrarian society of decentralized institutions and limited political and economic power. He was deeply suspicious of banks and criticized them in vitriolic terms, writing, 'I sincerely believe, with you that banking institutions are more dangerous than standing armies.' In a letter to James Madision, Jefferson even suggested, quite seriously, that anyone who cooperated with a federally chartered bank was guilty of treason and should be executed."

    Hamilton, however, "favored a stronger federal government that actively supported economic development. In particular, Hamilton believed that the government should ensure that sufficient credit was available to fund economic development and transform America into a prosperous, entrepreneurial country. This would require the introduction of modern forms of finance opposed by Jefferson. This tension between Jefferson and Hamilton has endured to the present day."

    "When it came to basic economic issues, Hamilton was right. Economic development in the early United States depended heavily on the creation of a well-function financial system, as shown by modern scholars such as Richard Sylla and Peter Rousseau. The United States in the 1780s 'lacked nearly all the elements of a modern financial system, but by the 1820s had a financial system that was innovative, large and perhaps the equal of any in the world.' This was due not only to the Bank of the United States, but also to other financial reforms implemented by Hamilton..."

    "In retrospect, Jefferson's economic positions seem either cranky and uninformed or motivated by his distaste for the Northern commercial interest that he predicted would benefit from a strong central government and eventually undermine Southern plantation (and slave) owners such as himself."


    "But while Hamilton may have been right about the economics, that was not Jefferson's primary concern. His fear of large financial institutions had nothing to do with the efficient allocation of capital and everything to do with power. Jefferson correctly discerned that banks' crucial economic functions - mediating financial transactions and creating and managing the supply of credit - could give them both economic and political power. In the 1790s, Jefferson was particularly worried that the Bank of the United States could gain leverage over the federal government as its major creditor and payment agent, and could pick economic winners and losers through its decisions to grant and withhold credit. "

    We have largely become a Hamiltonian nation...

    "However our Hamiltonian inclinations - to seek out efficiency, to celebrate bigness, and to look favorably on anything that makes money - have been kept at least partially in check by the legacy of Jefferson."

    Jefferson lost the battle over the Bank of the United States, but he had 3 champions:

    1) "In the 1830s, Andrew Jackson's showdown with the Second Bank of the United States set back the development of the concentrated financial sector."

    2) "At the beginning of the twentieth century, the crusade against the industrial trusts begun by Theodore Roosevelt.."

    3) "Franklin Delano Roosevelt was finally able to break up the largest banks and constrain their risky activity".

    Read that again, Andrew Jackson, Theodore Roosevelt, and Franklin Delano Roosevelt were Jeffersonian.

    Reagan, Clinton, Bush were Hamiltonian.

    Obama, so far, has continued the Hamilton tradition. Right now, we really need a Jefferson.

    13 Bankers

    Ok, now I just started 13 Bankers co-written by Simon Johnson and James Kwak. Partly I wanted to read it because I knew it was going to invoke a lot of history to back up its central point. The central point I'm well versed on because I follow their blog, The Baseline Scenario. They believe that the United States has a sophisticated oligarchy, a small collection of elite that have enormous economic and political power - and this oligarchy operate our financial system. They are basically unaccountable (typically a business owner is accountable to their customers and their competition).

    "The Wall Street banks are the new American oligarchy - a group that gains political power because of its economic power, and then uses that political power for its own benefit. Runaway profits and bonuses in the financial sector were transmuted into political power through campaign contributions and the attraction of the revolving door."

    The revolving door implies that political appointees and elected officials eventually make bank when they leave the public sector to work for Goldman Sachs as a "consultant", then of course, they come back in to work for a new administration.

    "But those profits and bonuses also bolstered the credibility and influence of Wall Street; in an era of free market capitalism triumphant, an industry that was making so much money had to be good, and people who were making so much money had to know what they were talking about. Money and ideology were mutually reinforcing."

    "In the United States we like to think that oligarchies are a problem that other countries have. The term came into prominence with the consolidation of wealth and power by a handful of Russian businessmen in the mid-1990s; it applies equally well to other emerging market countries where well-connected business leaders trade cash and political support for favors from the government. But the fact that our American oligarchy operates not by bribery or blackmail, but by the soft power of access and ideology, makes it no less powerful. We may have the most advanced political system in the world, but we also have its most advanced oligarchy."

    The problem here is the Republicans like to blame Barack Obama completely for the Great Recession. But that's political gamenship, obviously, because the crash occurred during Bush's administration. He does get some blame for how the crisis was handled. The massive and deep and long lasting recession was inevitable - but failure to reform our banking industry so the next crisis is avoided is on Obama. But not just on Obama, on our entire political system. No way, Bush would have done things much different, or any other president.

    What should be done? Simon Johnson proposes:

    "The alternative is to reform the financial system now, to put in place a modern analog to the banking regulations of the 1930s that protected the financial system well for over fifty years. A central pillar of this reform must be breaking up the megabanks that dominate our financial system and have the ability to hold our entire economy hostage. This is the challenge that faces the Obama administration today. It is not a question of finance or economics. It is ultimately a question of politics - whether the long march of Wall Street on Washington can be halted or reversed. Given the close financial, personal, and ideological ties between these two centers of power, that will not happen overnight."

    Again, the Republican party is pretty much useless right now as a check on Obama. Ideologically, the want to roll back presidential power further. They want to block any and all reform of Wall Street. Over the last 30 years, ideology has, ironically, decreases governmental power. Our government, in my view, is probably is at its weakest its been in the last 100 years. This has given other powerful entities relatively more power, especially Wall Street.

    Ironically, what the Republican party is attempting to do, by their baseless accusations that Obama is trying to take us down the road toward socialism is to create the conditions that will grow oligarchies. Where private corporations have growing economic and political power, which in a much different way, destroy individual liberty.

    Obama is not guiltless in this, he ran on and is governing with a similar Republican (although more moderated) ideology.