Unlimited Immigration is the Enemy of Freedom and Prosperity

The most recent winner of the Nobel Prize for Economics is Angus Deaton, a British-American Princeton economist known for his focus on data to explain sources of economic growth.  In his book, The Great Escape, he attempts to explain why some nations escaped the grinding poverty that has been the condition of most of mankind since the dawn of history.  In my opinion, part of the trick is asking the question properly, not "Why are so many nations so poor?" but "What sets the rich nations apart that they escaped poverty?"  In The Great Escape he summarizes the answer:

Perhaps the best answer is that poor countries lack the institutions—government capacity, a functioning legal and tax system, security of property rights, and traditions of trust—that are a necessary background for growth to take place.

Ronald Bailey notes in his review that this explanation, while well supported by the facts, doesn't explain why some countries have these institutions; just that they are important.  I believe that the European culture which combined both Greek and Christian tradition provided the societal stability and freedom of inquiry to produce a stable society that valued the innovation adequately to reap its benefits.  Whether or not I am correct, we can still look at the world and see which countries have adopted or are adopting similar cultural values to ours which allowed us to escape poverty.

This matters to the immigration and refugee questions.  As a nation, it is our right to ask for and the duty of our leaders to implement policies that benefit the citizens of our nation.  Unrestricted immigration from countries that don't share our values undermines our prosperity.  When I look at the so-called "Syrian" refugee crisis; I see two key sets of facts.  First, the refugees seem to be neither Syrian nor refugees, in large part.  Second, even when legitimate, they come from a society that doesn't share our values.  Contra Obama, there are no shared universal values.  If there were, there would be democracies all over the Arab world.

With regards to immigration from Latin America; the main sources of migrants continue to be from countries with little respect for the rule of law.  It is not coincidental, that as Mexico has improved its internal governance through reform, the number of migrants from Mexico has declined.  Now, dictatorships trans-shipping people through Mexico are increasingly the problem.

On twitter, someone compared the so-called Syrian refugees to the Jews we admitted during World War II.  For brevity, my response was that the Jews were culturally European and therefor worthy of admission.  In other words, they were ready to support and understand our institutions, security of property rights and "traditions of trust" in ways that Syrians are sadly incapable of.

We should limit immigration based on country of origin in order to not dilute the cultural underpinnings of our society.

Will an Improving Economy Save Obama?

I have been pessimistic about the lack of economic recovery, but despite the President's best efforts, there are signs that the economy might be showing some signs of life. Consider some of the good news:

• Record low natural gas prices are propelling manufacturing. The EPA couldn't react fast enough to restrict fracking to kill of this particular goose laying golden eggs and it got too close to the election, so Obama watered down proposed EPA rules. This fact [low natural gas prices] has unleashed the biggest US manufacturing boom in decades. Take for example the US steel industry. Reuters News reported that, "America’s steel industry, for decades a symbol of industrial decline, is betting on natural gas to make it more competitive against foreign producers.
• U.S. oil production on private land is way up, particularly in North Dakota, far outstripping Obama's shutting down of Gulf oil production and closing off federal lands, later re-opened. From the WSJ: The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry.
• Manufacturing in the U.S. is making a comeback. From the Carpe Diem blog: More than 17% of U.S. job growth this year has been in manufacturing, even though that sector represents less than 9% of total payrolls. Further, manufacturing jobs that have gone to China have been returning to the U.S. U.S. manufacturing has become attractive for some companies as Asian wages have surged over recent years and the wage gap between the U.S. and China has narrowed. The drop in the dollar over the past decade has also made U.S.-produced goods more competitive. And higher oil prices have increased the cost of shipping goods across oceans, making domestic manufacturing more appealing.
• The Gallup survey of Economic Confidence has hit a new high. The Gallup Economic Confidence Index broke through a barrier last week, surpassing -17 for the first time in the four-plus years of Gallup Daily tracking in the United States. The index now stands at -16 for the week ending May 20, up from -18 in each of the prior two weeks in May, and from -21 in late April. However, the index is still negative.
  

The open question is whether this good news will lift the U.S. economy and if Obama will get any credit. I contend that he should not, because the health care law, his energy policies and refusal to deal with federal spending have all harmed the economy. The American people are pragmatic and tend to give the leader credit when things are going well.

Uncertainty over health care and the regulatory climate are still holding back a full recovery. It's an open question as to whether economic bulls or bears will triumph.

False Choices or Growth?

John H. Cochrane, The Grumpy Economist, proposes a set of economic policies that I think the tea party should support. He dispenses with the false choices of austerity vs stimulus that has plagued the debate over economic policy. Stimulus has clearly failed and failed the world over. Austerity isn't fairing much better. Why not, Cochrane asks, just choose policies that allow growth?

“Growth Now.” Forget about “stimulating.” Spend only on what is really needed. We could easily stop subsidies for agriculture, electric cars or building roads and bridges to nowhere right now, without fearing a recession. Most "spending" is in fact transfer payments, which even Keynesian economics recognizes are not very stimulative, not the mythical (and curiously carbon-intensive) roads and bridges, and most of that goes to people who are relatively well off.

Rather than raise tax rates further on “wealth” and the “rich,” driving the underground, abroad, or away from business formation, fix the tax code, as every commission has recommended. Lower marginal rates but eliminate the maze of deductions. In Europe, eliminate the fears of wealth confiscation, euro breakup and currency devaluation that are driving saving and investment out of the south.

Most of all, remove the profusion of regulation and (increasingly) direct government management of the economy.

Exactly. I would add to end the uncertainty in this country about how regulation, especially in the area of health insurance will impact business in the future. Lower marginal rates while eliminating deductions will increase the tax haul from the rich, but more importantly will grow the economy as the distorting effects of the tax code are removed.

A tea party growth plan would have these elements:

• Eliminate loopholes, deductions and credits for a low flat tax rate below 19%.
• Tax all sources of income at the same low rate.
• Eliminate subsidies to all industries, no matter how "green." This includes all the hidden subsidies in the tax code.
  
• Tax profits in accordance with the same accounting principles that corporations use to report their earnings. This will eliminate stupid arguments over things like depletion allowances and simplify the tax code.
• Repeal Obamacare. Start over on health insurance reform using principles of economic freedom.
• Halt the application of new regulations and require a review of all existing regulation for economic cost benefit analysis.
• Repeal Dodd-Frank. End too big to fail by simply increasing capital requirements for the largest financial institutions in proportion to their market share.

That should get us started.