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In most jurisdictions, local police departments typically conduct internal investigations of police officer shooting and misconduct complaints.[1] However, 79% of Americans would prefer that an “outside law enforcement agency take over the investigation” when an officer is suspected of criminal wrongdoing. Alternatively, 21% favor police departments conducting internal investigations of their own officers.

The proposal to have outside investigations of misconduct, rather than internal department investigations, enjoys broad public support. Overwhelming majorities across demographics and partisan groups, including majorities of blacks (82%), whites (81%), Hispanics (66%), Republicans (76%), independents (77%), and Democrats (83%), all favor outside investigations and prosecutions of officers accused of misconduct.

Find the full public opinion report here. 

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

 The Cato Institute/YouGov national survey of 2000 adults was conducted June 6–22, 2016 using a sample drawn  from YouGov’s online panel, which is designed to be representative of the U.S. population. YouGov uses a method  called sample matching, and restrictions are put in place to ensure that only the people selected and contacted by  YouGov are allowed to participate. The margin of sampling error for all respondents is +/-3.19 percentage points.  The full report can be found here, toplines results can be found here, full methodological details can be found here.

 

[1] USCCR, “Revisiting Who Is Guarding the Guardians? A Report on Police Practices and Civil Rights in America,” U.S. Commission on Civil Rights, November 2000, http://www.usccr.gov/pubs/guard/main.htm.

In December, Russia, Turkey, and Iran began high-level talks to work toward a political settlement of the brutal civil war in Syria. Much to the chagrin of Washington officials and commentators, these countries have deliberately excluded the U.S. from the negotiations.

One broad sketch of their approach to a settlement, according to some reports, is to first achieve a cease-fire on the ground, as best they can, and then negotiate a division of Syria into three separate regions in which Assad’s Damascus-based Allawite sect would share power in a federal structure. Assad himself would step down at the end of his current term. The plan is in its infancy, subject to change, and would of course require agreement from the regime and opposition forces, before ultimately seeking buy in from the Gulf states, the U.S., and the European Union.

There is no indication that this latest push is going to be any more successful than previous diplomatic efforts to resolve the Syrian civil war. Nationalism is a powerful force and, as recent history suggests, plans to simply divide war-torn states into federated systems get tossed into the trash bin pretty quickly, as happened with Iraq and with Bosnia and Herzegovina. That said, the players have clear interests at stake. Russia has real leverage with the Syrian regime and has now staked its prestige on mitigating the conflict on favorable terms. Turkey borders Syria and has not only borne the brunt of the spillover effects with regard to refugees and militancy, but also has a strong national interest in preventing the Kurds from carving out territory along the border so as to keep a lid on its own Kurdish separatist movement. And Syria is Iran’s only Shiite ally in the region and has proven a strategic asset for Iran on several fronts, not least in its proximity to Lebanon’s Hezbollah. When the stakes are high for the negotiating parties, they tend to take care in constructing a settlement.

While I’m hopeful for a peaceful settlement, I wouldn’t put good money on the prospects for success in these negotiations. But they at least demonstrate that the United States does not necessarily need to take the lead in trying to solve every problem in the world. Other countries with clearer interests at stake and more local knowledge than America can do the heavy lifting. And perhaps do it much more effectively.

Much of the handwringing in Washington over Russia’s leadership in the negotiations centers on a fear that America might be demoted in its status as the indispensable nation if a geopolitical competitor like Russia successfully negotiates a resolution to one of the world’s worst conflicts while the U.S. sits it out. This concern is misplaced for at least two reasons. First, status and prestige are overrated assets in international politics. They can play an important role at certain times, but they pale in comparison to more material security and economic interests. Rooting against the success of peace talks just because we don’t want Russia to regain a modicum of the great power status it once had betrays a rather unbecoming lack of self-esteem that is wholly unfair to the millions of Syrians that would benefit from even a brief hiatus in daily violence and besiegement.

Secondly, one wonders what benefits the U.S. has derived from all its leadership (such as it is) in the greater Middle East. I’m inclined to agree with Andrew Bacevich that the sum of our dominant role in the region since the 1980s has been mostly failure. As he writes, through our “naivety, short-sightedness, and hubris, we have actually made things worse — at very considerable cost to ourselves and to others.” If our record of embarrassingly stalemated diplomacy, costly failed wars, troublesome allies, and elective military envelopment in the Middle East is anything to go by, Americans shouldn’t be overly covetous of Russia’s latest attempt to steal our thunder in Syria – a conflict, I might add, which our “leadership” to date has mostly made worse

Although Americans are divided in their perceptions of how police do their jobs, majorities across demographic and partisan groups agree on what law enforcement’s top priorities ought to be.

A newly released Cato Institute/YouGov survey of 2,000 Americans finds that when people are asked to select their top three priorities for the police they choose the following:

  1. Investigating violent crime like murder, assaults, and domestic violence (78%)
  2. Protecting individuals from violent crime (64%)
  3. Investigating property crime and robbery (58%)

Notably, only 30% think police should make enforcing drug laws a top three priority. Some may find these results surprising, given that police made more arrests for drug abuse violations (1.6 million) than they did for violent crimes (498,666) in 2014. The estimated number of violent crimes committed that year was 1.2 million.

Find the full public opinion report here.

Nineteen percent (19%) say police should make enforcing traffic laws a top priority. In other words, Americans de-prioritize the task leading to the most common interaction individuals have with the police—receiving a traffic ticket.[1]

Another 18% think police should prioritize going beyond traditional law enforcement responsibilities by “providing guidance and social services to troubled young adults.” And another 12% say police enforcing public nuisance laws is most important. 

Black, white, and Hispanic Americans, Democrats and Republicans prioritize the same top three tasks for law enforcement. However, groups differ in their intensity of support. African Americans and Hispanics (45%) and Democrats (51%) are less likely than white Americans (63%) and Republicans (63%) to prioritize the police investigating property crime and robbery. (Although this difference largely dissipates among individuals above the median income.) African Americans, Latinos, and Democrats (27%) are about twice as likely as whites (15%) and three times as likely as Republicans (9%) to say the police should prioritize “providing guidance and social services to troubled young adults.”

No racial group is more likely to prioritize the police enforcing drug laws—30% of whites, Hispanics, and blacks each say it should be a top priority. Even partisans generally de-prioritize fighting the drug war. Thirty-five percent (35%) of Republicans and 27% of Democrats say it should be a top three priority.

Despite these modest differences, Americans across partisanship and demographics agree that the police should prioritize fighting violent and property crime and protecting people from being victims of violence. 

For public opinion analysis sign up here to receive Cato’s upcoming digest of Public Opinion Insights and public opinion studies.

The Cato Institute/YouGov national survey of 2,000 adults was conducted June 6–22, 2016 using a sample drawn from YouGov’s online panel, which is designed to be representative of the U.S. population. YouGov uses a method called sample matching, and restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of sampling error for all respondents is +/-3.19 percentage points. The full report can be found here, topline results can be found here, and full methodological details can be found here.

[1] Christine Eith and Matthew R. Durose, Contacts between Police and the Public, 2008, edited by Bureau of Justice Statistics (Washington, D.C.: U.S. Department of Justice, 2011), https://www.bjs.gov/content/pub/pdf/cpp08.pdf.

In his press conference last month, President Barack Obama sternly voiced concern about “potential foreign influence in our election process.”

The goal may be a valid one, but it cloaks hypocrisy of staggering proportions. The United States has been assiduously intervening in foreign elections for decades—perhaps even for centuries.

The central issue in the 2016 election was with some hacked emails, published by Wikileaks, indicating that some top members of the Democratic National Committee were rooting for Hillary Clinton to win their party’s nomination for president. This seems to have been the extent of the “interference,” and there has been a concerted effort to suggest that Russian hackers were the source of the information, a contention Wikileaks has strongly and repeatedly denied.

The revelations can scarcely have come as much of a surprise to anybody following the campaign, and it seems highly unlikely that they swung many votes—my guess, erring on the high side, would be perhaps six or seven.

The American record in election interference (always, of course, with the best of intentions) is much more extensive.          

Exhibit number one is surely the Italian election of 1948 in which the CIA furnished a million dollars to congenial parties and may have published forged letters designed to discredit leaders of the Communist Party. Meanwhile, there was a concerted effort to get Italian-Americans to write home urging relatives and friends to vote the right way.

In more recent times, I remember talking with a member of the political opposition in Serbia in 2001 who expressed his appreciation for funds that had been supplied the year before by agencies of the U.S. government—“we never would have been able to launch such an extensive campaign without it.”

As a public service, Michael Brenner of the University of Pittsburgh, has, with a little help from his friends, provided a list of countries where the United States has intervened in elections (he points out that the U.S. has also participated in a number of coups, but these are not included).

Going back a few decades, his list includes Greece, Turkey, Italy, France, and Portugal. More recently there have been Macedonia, Serbia, Albania, Bosnia, Ukraine, Russia (especially Yeltsin’s 1995-96 campaign), Algeria, Lebanon, Palestine, Cyprus, Iraq, Pakistan, Afghanistan, Kyrgyzstan, Tajikistan, Yemen, Vietnam, Indonesia, Japan, South Korea, Philippines, Congo and several other countries in Africa, and, in Latin America, every country multiple times including within the last fifteen years Haiti, Dominican Republic, Honduras, Panama, Nicaragua, Venezuela, Columbia, Paraguay, Peru, Ecuador, Bolivia, Brazil, and Argentina.

Brenner’s list is an ongoing project. It does not include Canada, and just possibly there are some Canadians who might find that omission to be unjustified.

The federal government owns 28 percent of the land in the United States, including about half of the land in the 11 westernmost states. Federal agencies are poor land managers in many ways, and the government’s top-down regulations on land use are frustrating to many Westerners, as I discuss in studies here and here.

Much federal land would generate more value if it were owned by the states or the private sector. Economic and environmental needs would be better balanced by local policymakers than by the unaccountable bureaucracies in faraway Washington. Increased federal control over lands does not automatically benefit the environment, as liberals seem to think. Instead, it usually creates disincentives for sound environmental management.

The good news is that the House took a step toward devolving federal lands yesterday, as reported by the Washington Post:

House Republicans on Tuesday changed the way Congress calculates the cost of transferring federal lands to the states and other entities, a move that will make it easier for members of the new Congress to cede federal control of public lands.

Many Republicans, including House Natural Resources Committee Chairman Rob Bishop (R-Utah), have been pushing to hand over large areas of federal land to state and local authorities, on the grounds that they will be more responsive to the concerns of local residents.

But…

Rep. Raul Grijalva (Ariz.), the top Democrat on the Natural Resources Committee, sent a letter Tuesday to fellow Democrats urging them to oppose the rules package on the basis of that proposal.

“The House Republican plan to give away America’s public lands for free is outrageous and absurd,” Grijalva said in a statement. “This proposed rule change would make it easier to implement this plan by allowing the Congress to give away every single piece of property we own, for free, and pretend we have lost nothing of any value.”

Rep. Grijalva gets it backwards. Devolving ownership would increase the value of federal lands to Americans, not reduce it. And far from being “outrageous and absurd,” devolution was the general policy of the government for much of the nations’ history. The federal government privatized 792 million acres of land between 1781 and 1940, and it transferred 470 million acres of land to the states.

President-elect Donald Trump and his nominee to head the Department of the Interior apparently lean against devolving federal lands. But I hope they reconsider, as there are 640 million acres of diverse lands we are talking about here. I am not saying that we should privatize Yellowstone. But what about the Bureau of Land Management’s 250 million acres, which is mainly used for cattle grazing?

Today, artificially low federal grazing fees encourage overgrazing. Federal ownership also makes ranchers insecure about their tenures, such that they have an incentive to overstock grazing lands and a disincentive to make long-term investments to improve the lands. Privatizing grazing lands would create more secure property rights, and thus encourage ranchers to improve their stewardship of the lands. That would benefit the economy and the environment.

A good first step for the Trump administration would be to create a detailed inventory of federal land holdings. Then the administration should work with Congress and the states to identify those parcels that might be better managed by state and local governments, nonprofit groups, and businesses.

 

I wrote yesterday to praise the Better Way tax plan put forth by House Republicans, but I added a very important caveat: The “destination-based” nature of the revised corporate income tax could be a poison pill for reform.

I listed five concerns about a so-called destination-based cash flow tax (DBCFT), most notably my concerns that it would undermine tax competition (folks on the left think it creates a “race to the bottom” when governments have to compete with each other) and also that it could (because of international trade treaties) be an inadvertent stepping stone for a government-expanding value-added tax.

Brian Garst of the Center for Freedom and Prosperity has just authored a new study on the DBCFT. Here’s his summary description of the tax.

The DBCFT would be a new type of corporate income tax that disallows any deductions for imports while also exempting export-related revenue from taxation. This mercantilist system is based on the same “destination” principle as European value-added taxes, which means that it is explicitly designed to preclude tax competition.

Since CF&P was created to protect and promote tax competition, you won’t be surprised to learn that the DBCFT’s anti-tax competition structure is a primary objection to this new tax.

First, the DBCFT is likely to grow government in the long-run due to its weakening of international tax competition and the loss of its disciplinary impact on political behavior. … Tax competition works because assets are mobile. This provides pressure on politicians to keep rates from climbing too high. When the tax base shifts heavily toward immobile economic activity, such competition is dramatically weakened. This is cited as a benefit of the tax by those seeking higher and more progressive rates. …Alan Auerbach, touts that the DBCFT “alleviates the pressure to reduce the corporate tax rate,” and that it would “alter fundamentally the terms of international tax competition.” This raises the obvious question—would those businesses and economists that favor the DBCFT at a 20% rate be so supportive at a higher rate?

Brian also shares my concern that the plan may morph into a VAT if the WTO ultimately decides that is violates trade rules.

Second, the DBCFT almost certainly violates World Trade Organization commitments. …Unfortunately, it is quite possible that lawmakers will try to “fix” the tax by making it into an actual value-added tax rather than something that is merely based on the same anti-tax competition principles as European-style VATs. …the close similarity of the VAT and the DBCFT is worrisome… Before VATs were widely adopted, European nations featured similar levels of government spending as the United States… Feeding at least in part off the easy revenue generate by their VATs, European nations grew much more drastically over the last half century than the United States and now feature higher burdens of government spending. The lack of a VAT-like revenue engine in the U.S. constrained efforts to put the United States on a similar trajectory as European nations.

And if you’re wondering why a VAT would be a bad idea, here’s a chart from Brian’s paper showing how the burden of government spending in Europe increased once that tax was imposed.

In the new report, Brian elaborates on the downsides of a VAT.

If the DBCFT turns into a subtraction-method VAT, its costs would be further hidden from taxpayers. Workers would not easily understand that their employers were paying a big VAT withholding tax (in addition to withholding for income tax). This makes it easier for politicians to raise rates in the future. …Keep in mind that European nations have corporate income tax systems in addition to their onerous VAT regimes.

And he points out that those who support the DBCFT for protectionist reasons will be disappointed at the final outcome.

…if other nations were to follow suit and adopt a destination-based system as proponents suggest, it will mean more taxes on U.S. exports. Due to the resulting decline in competitive downward pressure on tax rates, the long-run result would be higher tax burdens across the board and a worse global economic environment.

Brian concludes with some advice for Republicans.

Lawmakers should always consider what is likely to happen once the other side eventually returns to power, especially when they embark upon politically risky endeavors… In this case, left-leaning politicians would see the DBCFT not as something to be undone, but as a jumping off point for new and higher taxes. A highly probable outcome is that the United States’ corporate tax environment becomes more like that of Europe, consisting of both consumption and income taxes. The long-run consequences will thus be the opposite of what today’s lawmakers hope to achieve. Instead of a less destructive tax code, the eventual result could be bigger government, higher taxes, and slower economic growth.

Amen.

My concern with the DBCFT is partly based on theoretical objections, but what really motivates me is that I don’t want to accidentally or inadvertently help statists expand the size and scope of government. And that will happen if we undermine tax competition and/or set in motion events that could lead to a value-added tax.

Let’s close with three hopefully helpful observations.

Helpful Reminder #1: Congressional supporters want a destination-based system as a “pay for” to help finance pro-growth tax reforms, but they should keep in mind that leftists want a destination-based system for bad reasons.

Based on dozens of conversations, I think it’s fair to say that the supporters of the Better Way plan don’t have strong feelings for destination-based taxation as an economic principle. Instead, they simply chose that approach because it is projected to generate $1.2 trillion of revenue and they want to use that money to “pay for” the good tax cuts in the overall plan.

That’s a legitimate choice. But they also should keep in mind why other people prefer that approach. Folks on the left want a destination-based tax system because they don’t like tax competition. They understand that tax competition restrains the ability of governments to over-tax and over-spend. Governments in Europe chose destination-based value-added taxes to prevent consumers from being able to buy goods and services where VAT rates are lower. In other words, to neuter tax competition. Some state governments with high sales taxes in the United States are pushing a destination-based system for sales taxes because they want to hinder consumers from buying goods and services from states with low (or no) sales taxes. Again, their goal is to cripple tax competition.

Something else to keep in mind is that leftist supporters of the DBCFT also presumably see the plan as being a big step toward achieving a value-added tax, which they support as the most effective way of enabling bigger government in the United States.

Helpful Reminder #2: Choosing the right tax base (i.e., taxing income only one time, otherwise known as a consumption-base system) does not require choosing a destination-based approach.

The proponents of the Better Way plan want a “consumption-base” tax. This is a worthy goal. After all, that principle means a system where economic activity is taxed only one time. But that choice is completely independent of the decision whether the tax system should be “origin-based” or “destination-based.”

The gold standard of tax reform has always been the Hall-Rabushka flat tax, which is a consumption-base tax because there is no double taxation of income that is saved and invested. It also is an “origin-based” tax because economic activity is taxed (only one time!) where income is earned rather than where income is consumed.

The bottom line is that you can have the right tax base with either an origin-based system or a destination-based system.

Helpful Reminder #3: The good reforms of the Better Way plan can be achieved without the downside risks of a destination-based tax system.

The Tax Foundation, even in rare instances when I disagree with its conclusions, always does very good work. And they are the go-to place for estimates of how policy changes will affect tax receipts and the economy. Here is a chart with their estimates of the revenue impact of various changes to business taxation in the Better Way plan. As you can see, the switch to a destination-based system (“border adjustment”) pulls in about $1.2 trillion over 10 years. And you can also see all the good reforms (expensing, rate reduction, etc) that are being financed with the various “pay fors” in the plan.

I am constantly asked how the numbers can work if “border adjustment” is removed from the plan. That’s a very fair question.

But there are lots of potential answers, including:

  • Make a virtue out of necessity by reducing government revenue by $1.2 trillion.
  • Reduce the growth of government spending to generate offsetting savings.
  • Find other “pay fors” in the tax code (my first choice would be the healthcare exclusion).
  • Reduce the size of the tax cuts in the Better Way plan by $1.2 trillion.

I’m not pretending that any of these options are politically easy. If they were, the drafters of the Better Way plan probably would have picked them already. But I am suggesting that any of those options would be better than adopting a destination-based system for business taxation.

Ultimately, the debate over the DBCFT is about how different people assess political risks. House Republicans advocating the plan want good things, and they obviously think the downside risks in the future are outweighed by the ability to finance a larger level of good tax reforms today. Skeptics appreciate that those proponents want good policy, but we worry about the long-run consequences of changes that may (especially when the left sooner or late regains control) enable bigger government.

P.S. This is not the first time that advocates of good policy have bickered with each other. During the 2016 nomination battle, Rand Paul and Ted Cruz proposed tax reform plans that fixed many of the bad problems in the tax code. But they financed some of those changes by including value-added taxes in their plans. In the short run, either plan would have been much better than the current system. But I was critical because I worried that the inclusion of VATs would eventually give statists a tool to further increase the burden of government.

“Trump’s pick for SEC chair criticized U.S. anti-bribery enforcement in 2011 as too zealous,” gasps one tweet reacting to President-elect Donald Trump’s selection of Sullivan & Cromwell attorney Jay Clayton to head the Securities and Exchange Commission. In a subhead, the WSJ says Clayton “criticized SEC and [Department of] Justice handling of Foreign Corrupt Practices Act as overly aggressive.”

Good! Clayton is right to voice such criticisms. As I’ve argued in this space, the 1977 FCPA “is a feel-good piece of overcriminalization that oversteps the proper bounds of federal lawmaking in at least four distinct ways, any of which should have prevented its passage”: it is extraterritorialvicariouspunitive, and vague. It is not clear that a more carefully drafted law would have been a good idea; my Cato colleague Jeffrey Miron writes that while curtailing Americans’ involvement in overseas corruption may be a well-intentioned goal, FCPA “discourages U.S. companies from doing business abroad in the first place,” is readily circumvented in many situations, fails to distinguish between the most corrosive forms of bribery and those in which favors to officials are “an attempt to get around laws that make little sense in the first place”—such as restrictions on entering markets—and leaves some countries to welter in poverty if they cannot fix a local culture of baksheesh.

All of this was made worse by the Obama administration’s decision to step up the pace of FCPA prosecution, which ran into a series of rebukes from federal judges throwing out high-profile cases. Allegations of FCPA violations led to a great furor about Wal-Mart’s operations in Mexico that mostly fizzled later, while other prosecutions have been based on purported corruption oddly reminiscent of practices that go on right here in the U.S. without anyone prosecuting, such as Western banks’ alleged practice overseas of hiring young relatives of influential persons, something that has been known to happen in politics and the media here in Washington, D.C.

Don’t back down, Mr. Clayton.

Antonio Buehler was arrested in Austin, Texas, after recording a woman he believed was getting abused by police. The officer even threatened other innocent bystanders with arrest if they didn’t stop paying attention to what was going on. The officer later said that he arrested Buehler for spitting on him, but the video and independent witnesses dispute this and a grand jury refused to indict him for it. The grand jury did, however, indict Buehler for failure to obey the officer in putting his hands behind his back—but even on this charge he was found not guilty.

Now Buehler is trying to sue the police because he believes his arrest, along with two earlier arrests, were in retaliation for his video recording—a First Amendment-protected activity. The Austin Police Department moved for summary judgment on this lawsuit, claiming that the police should not be liable even if Buehler’s account is correct because he was indicted—and that indictment is conclusive evidence of the probable cause justifying his arrest. The federal district court granted this motion, dismissing the case, and the U.S. Court of Appeals for the Fifth Circuit affirmed that result.

Cato, joined by the National Press Photographers Association and five other media organizations, has filed an amicus brief asking the Supreme Court to take this case and give Buehler his chance to prove that the facts underlying the grand jury indictment were false. Instead of taking the grand jury determination as conclusive, the Fifth Circuit should have relied on the Supreme Court’s holding in Hartman v. Moore (2006) that probable cause “is not necessarily dispositive,” and even if it was that the plaintiff need only “plead and prove its absence.” Buehler has pled the absence of probable cause and seeks only to prove it.

Considering the facts that he has pled, where the officer explicitly told him after he was arrested that “it would have been so much easier if you would just pay attention to your own selves,” it’s reasonable for a jury to infer that this was the real reason for the arrest.

Sadly, Buehler’s travails aren’t isolated happenstance. Police around the country have been trying to put the technological genie back in the bottle by harassing those who are just trying to record what the police do. Even credentialed journalists have not been immune and many have been arrested on trumped up charges.

It’s for this reason that it’s critically important that the Court takes this case, not just to secure justice (or even a day in court) for Mr. Buehler, but to help all people like him who are pretextually arrested by police just because they choose to record what these law-enforcement agents do. Everyone deserves the opportunity to prove that the facts underlying one’s arrest aren’t true and to be awarded compensation for the government’s violation of our rights.

The Supreme Court will decide later this winter whether to take Buehler v. Austin Police Department.

Senator Tom Cotton (R-AR) recently penned an op-ed for the New York Times in which he calls for a large reduction in legal immigration, something he believes will raise American wages. It’s nice when immigration restrictionists are honest about their intention to cut legal immigration, but Senator Cotton would be disappointed if his policy ever came to fruition. Senator Cotton does make some cursory arguments for expanding high-skilled immigration—a positive policy—but I will focus here on his argument to restrict it. I will respond to a few of Senator Cotton’s comments below. His will be in block quotes while my responses will follow. 

Higher wages, better benefits and more security for American workers are features, not bugs, of sound immigration reform. For too long, our immigration policy has skewed toward the interests of the wealthy and powerful: Employers get cheaper labor, and professionals get cheaper personal services like housekeeping. We now need an immigration policy that focuses less on the most powerful and more on everyone else.

Senator Cotton argues that skilled native workers are complementary to low-skilled immigrants, meaning that the former’s wages rise rather than fall when more of the latter arrive. This is because low-skilled immigrants and higher skilled workers don’t compete for the same jobs but instead work together, expanding productivity and compensation for both parties. These complementarities do exist, but there is also much evidence that lower-skilled American workers are actually complementary with low-skilled immigrants. Economists Gianmarco Ottaviano and Giovanni Peri found that immigration had a small positive relative effect on the wages of native workers with no high school degree (between +0.6 percent and +1.7 percent) and a small positive effect on average native wages (+0.6%) from 1990 to 2006. Immigrants are complementary to native workers but substitutable for other immigrants who experienced a substantial relative negative effect (−6.7 percent) from immigration. It should not be surprising that new immigrants compete with older immigrants who both share similar skills while native-born American workers benefit overall.

Language differences are a major reason why immigrants and natives with the same skill level are complementary according to economists Peri and Chad Sparber. Low-skilled immigration incentivizes low-skilled natives to specialize in jobs that require communication in English. Meanwhile, immigrants specialize in jobs that are more manual-labor intensive and require less English-language proficiency. Communication jobs are more highly compensated than manual-labor jobs. This complementary task specialization reduces the downward wage pressure because natives react by adapting and specializing in more highly paid occupations, not by dropping out of the job market or accepting lower wages. This effect decreases wage competition between lower-skilled natives and immigrants by around 75 percent. Economist Peter Henry also found that low-skilled immigrants to an area induced natives to improve their school performance so that they wouldn’t have to compete with lower-skilled immigrants. Immigrants tend to push Americans upward rather than downward.

More low-skilled workers incentivize more Americans to enter the labor market. A good example of this is provided by economists Patricia Cortes and Jose Tessada, who found that skilled American women with young children reentered the workforce faster when they lived in cities with many low-skilled immigrants who could work as nannies. In this case, an immigrant with a job increases the number of working skilled American women. 

After all, the law of supply and demand is not magically suspended in the labor market. As immigrant labor has flooded the country, working-class wages have collapsed. Wages for Americans with only high school diplomas have declined by 2 percent since the late 1970s, and for those who didn’t finish high school, they have declined by nearly 20 percent, according to Economic Policy Institute figures.

Senator Cotton rightly tells us to pay attention to the law of supply and demand but then promptly ignores demand. Immigrants boost demand by buying goods and services, which create more jobs than are occupied by the immigrant workers themselves according to research by Gihoon Hong and John McLaren. If immigrants are removed from an area they take their purchasing power, and the jobs that their purchases support, with them. An example will help explain this. Let’s say you own a small local business. One day the government rounds up half of your customers, some of whom are your employees, and deports them. As a business owner, would you be eager to hire more workers at a higher wage to replace those who were deported or would you refrain because your revenues are about to take a substantial hit? The answer is obvious. Now multiply that by 11 million unauthorized immigrant consumers.

Some will claim that money sent abroad by immigrants in the form of remittances, about $135 billion in 2015, does nothing to help the U.S. economy. First off, most of that money wouldn’t have been made had it not been for immigrants earning it—the economy is not a fixed pie. Secondly, that money eventually returns to the United States in the form of exports or foreign investment.

There is not a fixed number of jobs in the economy, so an employed immigrant does not automatically force a native out of the job market. Immigrants “taking” jobs from natives, also known as displacement, is a minor phenomenon when it exists at all. One prominent study found that an increase in the foreigner share of a population by 10 percent reduces native employment by 0.2 to 0.7 percent, a result exacerbated by labor market regulations. Many of those Americans displaced by immigrants tend to get better-paid jobs that exist due to the complementarities described above. David Card and Ethan Lewis found that most of the workers displaced were actually immigrants themselves, although this was confined to just a handful of cities.

The wage decline figures provided by the left-wing Economic Policy Institute have been soundly rebutted when proper deflators are used.  A forthcoming Mercatus Center paper by Scott Winship, a visiting fellow at the Foundation for Research on Equal Opportunity, finds that wages for workers in the 20th percentile who are most likely to be only high school graduates have increased slightly since 1970. Wages for workers with less than a high school degree have likely fallen somewhat since 1970.

However, the U.S. workforce is a lot more educated than it was in 1970. In that year, there were 47.2 million native-born American high school dropouts who were 25 years or older. They comprised 46.4 percent of the native population in that age category. In 2015, there were only 16.8 million native high school dropouts in the same age range and they comprised a mere 9.4 percent of the natives. Both the absolute and percentage of native-born Americans with less than a high school degree has crashed since 1970.

The number of natives who are at least 25 years old with only a high school degree increased from 43.5 million in 1970 to 51.1 million in 2015, but their percentage of the population dropped from 42.8 to 28.6 percent. Native high school dropouts and those with only a high school degree numbered almost 91 million in 1970 and comprised 89 percent of natives who were at least 25 years old. In 2015, they numbered 67.9 million and a mere 38 percent of natives in the same age range. Even if Senator Cotton’s figures were correct (they aren’t) the percentage and number of native-born Americans who suffer is much reduced from 45 years ago.

Interestingly, workers with only a high school degree might be the most complementary to those with less than a high school degree. There is some evidence that Miamians with less than a high school degree suffered wage declines after the Mariel Boaltift dropped about 125,000 mostly low-skilled Cubans in Miami in 1980. However, the wages for native-born Miamians with only a high school degree shot up afterward and likely overwhelmed the wage decline for those with less than a high school degree. If these results are generalizable (a huge if) then halting immigrants with less than a high school degree could stop wage growth for high school graduates. That’s disincentives climbing the skills ladder.

It’s been a quarter-century since Congress substantially reformed the immigration system. In that time, the population of people who are in this country illegally has nearly tripled, to more than 11 million. We’ve also accepted one million legal immigrants annually — and a vast majority are unskilled or low-skilled.

If controlling immigration to the United States was as easy as flipping a policy switch, then there would be no debate over immigration reform. There would be no illegal immigrants and the system would behave as its designers intended. In the real world, people respond to incentives and are not passive objects that just accept government laws. When laws, like our heavily restrictive immigration laws, erect legal barriers to voluntary exchange then the result is a vast black market represented by 11 to 12 million illegal immigrants. More restrictions are unlikely to reduce the size of the black market. Assume, for the sake of argument, that Senator Cotton is correct that wages for Americans with less than a high school degree will rise if millions of illegal immigrants are deported and the future legal flow is halted. Foreigners will then have even more of an incentive to sneak in illegally to work, overstay visas, or find other ways to circumvent American labor market regulations. More comprehensive enforcement will just raise wages, which will attract more illegal immigrants, who will then lower wages again, which in turn will be countered by better enforcement—and so on in a familiar and predictable cycle. All is not hopeless, however: there is a way out.

The only times in American history when our immigration laws were largely obeyed was when the Great Depression turned off the “jobs magnet,” a world war prevented the crossing of borders, and a large-scale guest-worker program funneled would-be illegal immigrants into the legal system (the Bracero program). Since 1964, we have not had a Great Depression (thank God), world war (double-thank God), or a functional guest-worker visa program for lower-skilled workers. As a result, we have a large problem with illegal immigration that enforcement cannot halt except by triggering a world war or economic depression. Foreigners want to sell their labor to Americans and Americans want to buy it. The law does dent that flow but there will always be a large black market so long as the government tries to enforce laws that conflict so much with reality. A functional legal immigration system can prevent or substantially reduce illegal immigration far more cheaply and effectively than expanding an already vast border bureaucracy.

Immigration produces a net-benefit for Americans. Economist David Card called research on the topic “the elusive search for negative wage impacts of immigration.” Although some noted economists like George Borjas at Harvard do find relative wage declines for some groups of American workers, even his work shows that wages for native-born Americans benefit overall, although by a small amount. An honest discussion of immigration policy must consider the known economic benefits of immigration as well as the costs.

Inside U.S. Trade reports that there may be a confirmation hearing for President-elect Trump’s pick for Commerce secretary, Wilbur Ross, “as early as next week.” Here are some questions I would ask him. Some of these are designed to poke him a bit on inconsistent statements he has made, but for others, I’m just curious to see what exactly the Trump adminstration has in mind for its trade policy.

Regional vs. Bilateral Trade Agreements

You have been critical of regional trade agreements, and supportive of bilateral ones, and in this regard you once said, “The problem with regional trade agreements is you get picked apart by the first country. Then you negotiate with the second you get picked apart. And you go with the third one. You get picked apart again.”

But you also praised the CAFTA-DR, a regional agreement, and criticized the bilateral US-Korea trade agreement. Doesn’t your praise for CAFTA-DR and criticism of the US-Korea agreement contradict your view that regional trade agreements are bad deals?

Also related to this point, other countries seem eager to negotiate regional deals. If they can engage in regional trade negotiations without getting picked apart, why can’t the U.S.?

And finally, with regard to your praise for CAFTA-DR and criticism of the US-Korea FTA, these two agreements are based on the same model, and have very similar provisions. In your view, what were the substantive differences between the two agreements that led to different results?

Renegotiating NAFTA

You have talked about a NAFTA renegotiation on Day 1 of a Trump Presidency. Can you tell us some of the specific provisions in NAFTA you don’t like and would want to see changed, and some of those you like and think should be maintained?

The TPP

In May of 2016, you said that you did not agree with Donald Trump on the TPP,  saying that you “like[d] the TPP.” But now you are opposed to it. What changed your mind?

A US-UK Trade Agreement 

There has been a lot of recent talk about a US-UK trade agreement. Do you support such an agreement? If so, would you hope to start these trade negotiations right away, or would they have to wait until after the UK completes its exit from the EU? 

Foreign Investment Treaties

Trade gets most of the attention, but foreign investment is important too. The U.S. and China have been negotiating an investment treaty for many years. Would you continue this effort? If so, what topics would you want to see included? What is your view of the investor-state dispute mechanism that is a key feature of U.S. investment treaties?

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