Coyote Blog

This Tuesday, Arizona's death penalty goes into effect for businesses that knowingly hire workers who have not been licensed to work by the US Government.  Employers must use the e-Verify system the Federal government has in place to confirm which human beings are allowed by the federal government to work in this country and which people businesses are not allowed to employ.  Businesses that don't face loss of their business license (in itself a bit of government permission to perform consensual commerce I should not have to obtain).

There are any number of ironies in this law:

• The Arizona government has resisted applying the same tight standards to receipt of government benefits, meaning the state is more comfortable with immigrants seeking government handouts than gainful employment.
• The state of Arizona resists asking for any sort of ID from voters.  This means that the official position of the state of Arizona is that it is less concerned about illegal immigrants voting and receiving benefits than it is about making sure these immigrants don't support themselves by working.  This is exactly the opposite of what a sane proposal would look like. (and here)
• In the past, we have used Arizona drivers licenses to verify citizenship.  By implementing this law, the Arizona Government has said that an Arizona driver's license is not sufficient proof of citizenship.  Unable to maintain the integrity of their own system (e.g. the drivers license system) the state has effectively thrown up its hands and dumped the problem on employers
• The e-verify system, which the law requires businesses use, currently disappears in 11 months.
• The law requires that the e-Verify system be used for both current and new employees.  It is, however, illegal under federal law to use the e-Verify system on current employees.
• In fact, the e-Verify system may only be used within 3 days of hire -- use it earlier or later, and one is violating the law.  In a particular bit of comedy, it is illegal to use the e-Verify system to vet people in the hiring process.  The government wants you to entirely complete the expensive hiring process before you find out the person is illegal to hire.
• There are apparently no new penalties for hiring illegal immigrants at your house (since there is no business license to lose).  State legislators did not want to personally lose access to low-cost house cleaning and landscaping help.  We're legislators for God sakes -- we aren't supposed to pay the cost of our dumb laws!

I have criticized the AZ Republic a lot, but they have pretty comprehensive coverage on this new law here and here.

Update:  Typical of the government, the e-Verify registration site is down right now.

Update #2:  It appears Arizona is taking a page from California's book.  California often passes regulations that it hopes businesses will follow nationally rather than go through the expense of creating different products or product packaging for California vs. the other states.  Arizona may be doing something of the same thing, since the terms of use for e-Verify require that if a business uses e-Verify, it must use if for all employees.  Therefore, a business that has any employees in Arizona is technically required to use this system for all employees nationwide.

Update #3:  By the way, I guess I have never made my interest in this issue clear.  We do not hire any illegal immigrants.  Since most of our positions require employees to live on site in their own RV, it is seldom an issue since the average illegal immigrant does not own an RV.  We have always done all of our I-9 homework, even though the government stopped auditing I-9's about 8 years ago.  We have in fact been asked about five times by foreigners to hire them under the table without having the licenses and papers they need from the US government -- all of them have been Canadian.

Frequent readers will know that I am a strong supporter of open immigration.  I don't disagree with McQ at Q&O when he writes "Open Borders or Welfare State: Pick One," but I don't think that this is the logic of most folks who are anti-immigration.  It may be their public stance, but if more folks really thought this way, there would be serious discussion of tiered citizenship or guest worker models similar to what I have proposed on several occasions.

However, I am tempted to become a close-the-border proponent if the left continue to use numbers skewed by immigration to justify expansions of taxation and the welfare state.  Whether they are illegal or not, whether they should be allowed to stay or not, the fact is that tens of millions of generally poor and unskilled immigrants have entered this country over the last several decades.  These folks dominate the lower quintile of wage earners in this country, and skew all of our traditional economic indicators downwards.  Median wages appear to be stagnating?  Of course the metric looks this way -- as wages have risen, 10 million new folks have been inserted at the bottom.  If you really want to know what the current median wage is on an apples to apples basis back to 1970, take the current reported median wage and count up about 10 million spots, and that should be the number -- and it will be much higher. 

Income distribution numbers are the same way.  I showed in a previous post how these numbers are deceptive, when we compare them to Europe, because though European poor have a higher percentage of the median wage in their country, it is a higher percentage of a lower number.  When you correct for that effect, the US poor look pretty equal.  But immigration exaggerates this effect even more.  Instead of having income distribution numbers comparing, say, a lawyer and a blue collar worker, they are now comparing a lawyer and a non-English-speaking recent unskilled immigrant.  Of course the disparity looks worse!

The folks using these numbers have to be smart enough to understand this issue, so it can only be hugely disingenuous that they simultaneously promote immigration (which I support) while at the same time using immigrant-skewed numbers to say that the average US worker is somehow worse off.  If they keep this tactic up, even I may be tempted to close the borders.

Italian Daniele Capezzone writes in the WSJ($):

This situation is especially dire in Italy. The
government has capped spending on pharmaceuticals at 13% of total
health-care expenditures while letting expenses for infrastructure and
staff skyrocket. From 2001 to 2005, general health expenses in Italy
grew by 31% while expenditure on medicines increased a mere 1.7%.
Italian patients might well have been better off if the reverse was the
case, but the state bureaucrats who make these decisions refuse to
acknowledge the benefits of advanced drugs....

Part of the problem is that regional authorities
manage most of Italy's health-care spending. A strike by health-care
personnel has an immediate impact on the region, but the consequences
of cutting the budget for medicines are only felt in the long term and
distributed across the nation. Hence, local authorities continue to
focus on personnel and infrastructure in an age when medical research
has become the most efficient way to improve public health.

Gee, government officials more concerned about raising government salaries than performance?  Couldn't possibly happen in the US, could it?  This is classic government management -- freeze or reduce expenses that actually provide customer service, and raise administrative costs and salaries many times faster than inflation.  This is exactly what has happened in public schools, as infrastructure and teaching aid investments have been deferred in favor of raising salaries and adding untold number of vice-principals and administrators to every school.

But the government is focused on the long-term while greedy old for-profits are short-term focused.  Right?

Unfortunately, most of today's cutting-edge research is conducted
outside Europe, which was once a pioneer in this field. About 78% of
global biotechnology research funds are spent in the U.S., compared to
just 16% in Europe. Americans therefore have better access to modern
drugs. One result is that in the U.S., the annual death rate from
cancer is 196 per 100,000 people, compared to 235 in Britain, 244 in
France, 270 in Italy and 273 in Germany.

Update:  Ronald Bailey points out that drug re importation is just a way to impose drug price controls in the US, effectively applying the most aggressive price-control regime for each drug worldwide to US prices.  Right now, drug companies tolerate price controls set as much as 2/3 under US prices or more because they can still make money at the margin, because the marginal cost of drug production is so much lower than the total cost with R&D, etc. included.  However, they cannot survive at these prices applied to US demand.  Remember, drug companies have profits margins averaging in the 18-20% range.  Perhaps you might argue they should only be making 10%, but that only gives you room for an imposed 10% price cut, not the huge cuts politicians would like.  And you would get that only at tremendous costs in terms of lost freedoms and demolished incentives for new drug development.

Jane Galt takes on some of the more common anti-immigration talking points.  Just for example:

5. There were ethnic newspapers, but nothing like today's ethnic media.

This is just ridiculous. Immigrants in 1900 could get all the
entertainment that was then available in their own language; for
example, by 1918, New York City boasted 20 Yiddish theaters.
The idea that Latin American immigrants are somehow uniquely unable to
assimilate because they can now watch soap operas and the Venezuelan
version of Eurovision in their very own language seems to me
self-evidently absurd; an immigrant at home watching television in
Spanish is immersed in her own culture no more thoroughly than was the
typical resident of an ethnic neighbourhood who shopped, worked, went
to services, and partied entirely with their compatriots.

I am working on some research right now -- immigration opponents are claiming that "yes, immigration may have been OK in the past, but its different now."  I am in the process of putting together anti-immigration quotes from the late 19th and early 20th century that cover all of the same ground -- they're lazy, they breed too fast, they have disease, they don't integrate, they have divided loyalties -- but aimed at Irish and Italians.