Following Up: Mercury News Treats H1B Debate as Non-News

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Following Up, H1B, immigrants, Immigration, journalism, Mercury News, Neil Chase, Norman Matloff, Ro Khanna, Silicon Valley, tech, tech workers, workers

The story of the video of a major debate on U.S. immigrant tech worker policies that earlier this week looked like it was being kept under wraps now looks like the story of a video that never was – due to some astonishingly unenterprising journalism from the Mercury News, Silicon Valley’s main newspaper and therefore a leading source of information on the technology industry.

As RealityChek regulars know, the story began with a June 1 debate in Silicon Valley centering on the controversial H1B immigrant visas. Squaring off were the Valley’s new Democratic Member of Congress, Ro Khanna and Norman Matloff, a professor of computer science at the University of California, Davis. (A tech entrepreneur took part in the event, too, but in a minor way.)

Technology companies claim that the H1B and similar programs are crucial to accessing the world’s best talent. Critics charge that they’ve overwhelmingly been used to cut their costs by replacing native-born U.S. workers with much cheaper foreign counterparts. Khanna favors relatively modest changes to H1B policies; Matloff believes major surgery is needed.

Matloff, who’s become a valued friend of mine, has written that the event marked  the first time a debate has been held between an elected official and a researcher on the topic, a major event in that sense. (Khanna has not disagreed.) Matloff also noted that a videographer from the Mercury News was present and apparently recording the proceedings.

Yet the Mercury News failed to cover the debate and never posted a recording on its website. Matloff asked a reporter on the paper to find out why, and was told that a recording existed, but that “it was essentially scrapped as a standalone report, but there’s apparently a possibility that parts of it will be used in coverage of Rep. Khanna. Not sure the reason(s) for this…” Matloff then speculated that the paper failed to make the video public because Khanna performed poorly – leading the Mercury News, which editorially has sided with the tech industry on H1B and related issues, to consign it to non-event status.

I emphatically agreed that the video’s import deserved to see the light of day, and last Sunday urged the Mercury News to post it both to perform a public service on a major technology policy area and to affirm its journalistic chops. Gratifyingly, the post and follow-up tweets prompted Khanna readily to agree, and to call openly for the video’s posting. (For the record, he contends that it was Matloff who was highly ineffective.)

Two days later, Matloff and I got answers from Mercury News editor Neil Chase. In the version he sent Matloff, he wrote, “We had a photographer there who captured some still photos and some video for use with a future story, but we didn’t attend with the intention of taping the full debate and did not.”

Based on information Matloff had shared with me and my own journalistic experience, yesterday, I sent Chase the following email. I had hoped to get a response from him in time to prepare this post, but no such luck yet:

Dear Neil,

Many thanks for your comment to my blog and my apologies for the short delay in responding.  

I must confess, though, that the response leaves me somewhat mystified on two counts.

First, the statement that the Mercury News videographer did not “record the whole event” doesn’t track with an email from one of your reporters, Ethan Baron, to Matloff.  Baron said, in response to the latter’s query re the video’s availability, “it looks like the video was essentially scrapped as a standalone report, but there’s apparently a possibility that parts of it will be used in coverage of Rep. Khanna.”  Granted he’s conveying some uncertainty here. But Matloff also has written in his blog that “the videographer seemed to be taping continuously.”  In addition, Matloff noted that “the video cam [was] on a high tripod, seemingly much for an occasional clip.”

Similarly, it sounds odd, as your email indicates, to give the videographer the responsibility for choosing the portions of the debate to be shot.  Was this the case?  If so, what were the criteria used to determine what was captured?  Or were they simply taken to get a bit of file footage of each participant, irrespective of what they were saying at the time?  

Second, I certainly don’t mean to tell you how to do your job.  But as someone with a journalistic background, I’m hard pressed to understand the paper’s seemingly offhand attitude toward this event.  After all, the H1B issue has been described as crucial by the dominant industry in the region served by the Mercury News, and it’s surely of comparable importance to all your tech worker subscribers.  The new Congressman from your area, Rep. Khanna, has been touted by several national publications as a rising star in the Democratic party, and possibly all of national politics.  To his credit, he was willing to appear in public with an outspoken, prominent critic of the H1B and related programs – a rare event at the very least, according to Matloff.  And of course, H1B and other immigration issues have become even greater controversies nationwide since the last presidential campaign heated up.  So from all appearances, the leading paper of Silicon Valley would be expected to view the debate was highly newsworthy from the get-go.  And yet it seems from your email that no coverage was ever planned.  

Now it’s clear that some fur was flying at the event, and that Rep. Khanna and Matloff are begun feuding in public over what was said and over their qualifications to claim expert status on the issue.  I.e., because of this aftermath, their debate has become by any reasonable definition even more newsworthy.     

So I respectfully make the two following requests:

1. Would you check whatever video archive you have – including whatever the videographer might possess – to determine conclusively whether a full recording of the debate is indeed available?  (If not, I would hope to find out how it was disposed of, and why.)

2. Would you assign a reporter to cover this emerging Khanna-Matloff dispute — in which a local Congressman who’s increasingly prominent nationally has publicly gone after a critic on an issue that’s one of his top legislative priorities, and a major national concern?  The Mercury News would get an excellent scoop, and perform a valuable public service at the same time.  

Thanks for your consideration, and I look forward to your reply.

Sincerely,

Alan

As per the email, I’m still hoping that the Mercury News finds a recording and shares it, and that it reports on the differences between Khanna and Matloff, which cut to the heart of the debate on H1B and broader questions and arguments concerning the future of the domestic workforce in an age of rapid innovation. At a time when Fake News abounds, it would amount for welcome coverage of some real news.

Following Up: Progress in Freeing the Mercury News H1B Debate Video

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Following Up, H1B, Immigration, Mercury News, Norman Matloff, Ro Khanna, Silicon Valley, social media, tech workers, Twitter

What a day it’s been for RealityChek on Twitter today! Yesterday, I posted on the peculiar failure of the Mercury News, the top newspaper in technology industry center Silicon Valley, to post a video it made of a landmark and apparently heated recent debate on the H1B visa program. Under this controversial feature of U.S. immigration policy, American employers can secure foreign workers they can demonstrate are needed because they boast special talents that generally can’t be found in the U.S. workforce.  

Thanks to this item, and to some tweets today, I seem to have persuaded the most prominent participant, Rep. Ro Khanna (D.-Cal.) to ask the paper to release the full version.

Another participant in the event, University of California, Davis computer science professor Norman Matloff, had already made such a request, but got a “Thanks, but no thanks”-type answer.

So this morning, I decided, via Twitter, to ask Khanna to join the campaign. It was great to see him respond, and after a few tweets back and forth, at about 1:45 PM EST, he declared, “I have told them [the Mercury News] I would welcome the release of the tape if they have one. I would love for this to be public. I’m all for transparency.” So let’s hope that a request from a Member of Congress will do the trick. And let’s also hope that the paper still has the video!

I’ve asked Khanna to let me know the Mercury News‘ answer as soon as he can, and of course, I’ll pass the word on to you – ideally with a link – right away. And FYI, you can get in on this kind of action first-hand yourself by following me at @AlanTonelson. As with RealityChek, feedback is always welcome, and that includes heavy doses of snark!

P.S. Just for a bit of context, a major point of contention between Khanna and Matloff is a bill sponsored by Democratic Senator Dick Durbin of Illinois and Republican Senator Chuck Grassley of Iowa that attempts to address H1B-related problems.  Khanna is another sponsor of the legislation; Matloff considers its remedies inadequate.

Following Up: Britain’s May is Moving – Though Too Slowly – to Define the Real Terrorism Problem

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Barack Obama, Following Up, Islam, Islamism, London Bridge attacks, Manchester bombing, multiculturalism, Muslims, Susan Rice, terrorism, terrorists, Theresa May, This Week with George Stephanopoulos, travel ban, Trump, United Kingdom

British Prime Minister Theresa May’s remarks following Saturday night’s London Bridge attacks include one of the most forthright, perceptive, and necessary statements from an international leader (excepting President Trump) about the difficulties free societies face in combating terrorist acts committed by Muslims.

Specifically, these comments appear to recognize that these abominations are not simply the product of individuals having nothing whatever to do with their co-religionists, or with the supposedly peaceful, law-abiding, thoroughly assimilated – in other words, utterly unexceptional – communities they comprise. That is, May has closely approached stating that something is decidedly, and often dangerously, abnormal in too many of the Islamic neighborhoods and congregations found in the non-Islamic world, and particularly in the United Kingdom and in the rest of Europe.

As the Prime Minister declared, “While we have made significant progress in recent years, there is – to be frank – far too much tolerance of [Islamist extremism] in our country. So we need to become far more robust in identifying it and stamping it out – across the public sector and across society. That will require some difficult and often embarrassing conversations, but the whole of our country needs to come together to take on this extremism – and we need to live our lives not in a series of separated, segregated communities but as one truly United Kingdom.”

That last clause is extraordinarily important. As I wrote in the wake of last month’s suicide bombing in Manchester, the United Kingdom has officially glorified multiculturalism to such a degree that it has encouraged in many ways the emergence of Muslim population clusters with considerable degrees of autonomy from even the legal system – let alone the values – that holds in the rest of the country.  

May unmistakably has now attacked those policies, and by extension the assumption behind them:  that many of the core teachings of Islam are no better and no worse than those developed in the British Isles throughout their long history. They are simply different. As a result, if certain Muslims living in Britain wish, say, to govern family life with the precepts of their faith rather than British law, they should enjoy ample freedom to do so. Indeed, denying them these rights in the absence of clear and present dangers to – to what, it’s not entirely clear; certainly not the freedoms enjoyed in Britain by other individuals, like women – would be the antithesis of liberty and tolerance.

Yesterday, May strongly suggested that in practice, this segregation has created major dangers at least to national security and public order. And she deserves immense credit for recognizing that, however “difficult and embarrassing” pluralistic democracies like her country may find creating a more united United Kingdom, a concerted effort must not only be made – it must succeed.

Nevertheless, I worry that May herself is still a bit too embarrassed to identify the main problem. For along with describing the enemy belief system as “Islamist,” she also insisted that “It is an ideology that is a perversion of Islam.” Which, if you view as legitimate her alarm at segregated Muslim communities, is a little too neat.

After all, if extremist Islamism indeed “perverts” Islam, presumably this offense would be readily apparent to the vast majority of Muslims themselves. And not only would these segregated communities refuse to tolerate it, and be joining with the national authorities in “identifying it and stamping it out” (May’s own words, as per above). An outraged Muslim majority would be taking the lead in these matters.

But nothing could be more obvious than the general failure of Muslims anywhere to fit this description. Instead, as the Prime Minister herself complains, there has been “too much tolerance,” and the most dangerous manifestations are in those communities whose segregated nature produces Islam in a form relatively un-polluted by British and other non-Islamic values (whatever you suppose them to be).

So May has a ways to go before the clarification of thought that necessarily precedes any course of action with a reasonable hope for success. But she’s clearly much further along than much of the American leadership class. Take Susan E. Rice, national security adviser to former President Obama. On ABC’s This Week with George Stephanopoulos, she was asked about President Trump’s proposal to suspend travel to the United States from a handful of majority Muslim countries that the Obama administration itself viewed as either overrun with terrorists or ruled by terrorist-sponsoring regimes. She explained her continued opposition (which is also shared by her former boss) in part this way:

“[I] think there’s a very real risk that by stigmatizing and isolating Muslims from particular countries and Muslims in general that we alienate the very communities here in the United States whose cooperation we most need to detect and prevent these homegrown extremists from being able to carry out the attacks.”

Leave aside your views on the travel ban proposal for or against. First of all, I’ve never been comfortable with the suggestion just made above (and by so many others) that there’s something fundamentally acceptable about residents of the United States (and especially citizens) conditioning their cooperation with law enforcement authorities that are combating violence on whether or not they feel stigmatized in some way by Washington, or any level of government. Are you? And remember – nearly all Muslims resident in the United States live here legally, so it’s not as if they need fear deportation like so many illegal Hispanic residents, or Hispanics here legally here with illegal friends or relatives.

But more important is Rice’s obliviousness to a glaringly obvious implication of her statement: Why, in the first place, are Muslim communities “the very communities here in the United States whose cooperation we most need to detect and prevent…homegrown extremists from being able to carry out the attacks”? It’s because so many of the actual attackers and attacker wanna-bes are coming from those communities. Obviously something about them has gone seriously wrong.

I’m not saying I know exactly what needs to be done domestically on top of existing efforts, and how new programs can be squared with essential Constitutional protections. It’s also clear that the United States doesn’t have the kind of related assimilation-segregated communities problems plaguing the United Kingdom and so much of Europe. But I do know that the more solidly the more extreme versions of multiculturalism take root in America, the larger these problems will grow. And the sooner the British more explicitly acknowledge major problems among their compatriots who practice mainstream Islam, the faster they’ll restore acceptable levels of safety to their concert halls, historic bridges, and the rest of their country.

Following Up: The Establishment’s Pro-Mass Immigration Bias Goes On and On and…

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crime, deportations, drunk driving, Ed O'Keefe, Following Up, ICE, illegal immigration, Immigration, Immigration and Customs Enforcement, Maria Sacchetti, The Washington Post

Last Thursday, I wrote about how a combination of Trump Derangement Syndrome and a determination to uphold America’s current mass immigration policies had apparently driven no less than the U.S. Supreme Court to equate committing war crimes with speeding tickets. Two days ago, the Washington Post made appallingly clear that its hard news staff, including its editors, also ranks mass immigration – in this case, illegal immigration – uber alles. Specifically, in an article purporting to show how unreasonable the Trump administration’s deportation policies have been, the paper decided that drunk driving should not be considered a serious crime.

The article’s tone was set by the headline: “ICE data shows half of immigrants arrested in raids had traffic convictions or no record.” And in case you doubt that the piece’s aim was to demonstrate that President Trump’s policies are squandering precious immigration enforcement funds on residents of the country who are clearly no danger to their communities, here’s the lead written by reporters Maria Sacchetti and Ed O’Keefe:

“About half of the 675 immigrants picked up in roundups across the United States in the days after President Trump took office either had no criminal convictions or had committed traffic offenses, mostly drunken driving, as their most serious crimes, according to data obtained by The Washington Post.”

Obviously disgraceful, right? Except the Post account could only get even close to this conclusion by belittling the importance of drunk driving. Here’s how. The article analyzes the backgrounds of immigrants rounded up in early February by agents from regional offices in Los Angeles, Chicago, Atlanta, San Antonio and New York, and contends that the records reveal 139 to have been convicted of assault or involvement with “dangerous drugs.” That’s over 20 percent of the total. Only about 26 percent of those rounded up (177 individuals) had no criminal convictions on their record, though 66 of them (more than 37 percent) had charges pending (“largely immigration or traffic offenses).

Sacchetti and O’Keefe went on to write that “The largest single group — 163 [were] immigrants convicted of traffic offenses….” Kind of trifling, right? We all speed or something to that effect now and then. But it turns out that more than 90 percent of these traffic convictions were for drunk driving – which outside the Mainstream Media is surely and rightly viewed as anything but trifling.

In fact, just to remind, during the last full year for which data is available (2015), 10,265 Americans died in “alcohol-impaired crashes” – 300 more than in 2014. And from what we already know, 2016 will see an even higher toll.

So of the 675 immigrant pickups analyzed by the Post, it looks like 139 were convicted for crimes that even the Post evidently considers serious, and at least 147 (90 percent of 163) were drunk drivers. So more than 42 percent had been convicted of crimes that any thinking person would consider serious. And then there were 66 more currently being charged with “traffic offenses” (mainly drunk driving?) or immigration offenses (which could well include such unmistakably serious matters as reentering the United States after being deported or lying on an immigration form).

If only half of the 66 belong in the serious crime category (which seems to be low-balling the issue, based on the other data we have), then more than 47 percent of the pickups looked at by the Post were, by any reasonable standard, menaces to public safety.

But the article’s original claim indicates that this number is actually much higher. After all, Sacchetti and O’Keefe contend that “About half of the 675 immigrants picked up in roundups across the United States in the days after President Trump took office either had no criminal convictions or had committed traffic offenses, mostly drunken driving, as their most serious crimes….”

In other words, a substantial share of the immigrants picked up could have been convicted of crimes perhaps less serious than drunk driving, homicide, assault, or dangerous drug involvement, but still legitimately seen as major offenses. Unfortunately, the piece itself was so poorly written (and edited) that it’s simply not possible to tell. But in a tweet on the article, the Post itself cleared up the mystery, stating that the share of the 675 pickups with no criminal convictions at all was only about 25 percent.

So it’s plain as day that this article’s real message is that the great majority of the individuals being picked up by the Trump administration have taken or endangered American lives, and would remain in positions to do so without federal intervention. The rest, even if they’re simply “undocumented,” have violated the nation’s laws. And that’s a record to condemn?

Following Up: Healthcare’s Outsized Job Creation Reported in The New York Times

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Affordable Care Act, Chad Terhune, Employment, Following Up, healthcare, healthcare services, Jobs, Obamacare, private sector, productivity, subsidized private sector, The New York Times, Trump

Well this is pretty cool! A new New York Times op-ed piece has spotlighted a trend that RealityChek has long covered: how strongly the creation of healthcare services employment has dominated recent American job creation, and how this trend has been especially noteworthy since the financial crisis and Great Recession broke out nearly a decade ago.

At the same time, author Chad Terhune, who reports on the healthcare industry for Kaiser Health News and the California Health Care Foundation, explains a major dilemma being created by outsized healthcare job creation for the Trump administration: Because so many of the new jobs in the sector have been driven by the build-out of Obamacare, the president’ promise to abolish this vast new structure could endanger his broader promise to jump-start feeble U.S. economic growth and stagnating incomes.

Even worse, according to Terhune, any effort to make healthcare more affordable, or even keep it at its current affordability levels, will significantly weaken the healthcare job-creation engine.

As the author sees it, healthcare hiring got a major boost “as coverage expanded in 2014 under the [Affordable Care Act] and new federal dollars flowed in. The law gave hospitals, universities and companies even more reason to invest in new facilities and staff. Training programs sprang up to fill the growing job pool. Cities welcomed the development — and the revenue.”

Sharpening the healthcare jobs conundrum faced by the president: “rising health spending has been good for some economically distressed parts of the country, many of which voted for Mr. Trump last year.” And Terhune cites specific examples from West Virginia to Pennsylvania to Ohio and Missouri.

Just as important, the author convincingly shows that American healthcare’s success in creating employment – which clearly predates Obamacare’s passage – also largely explains its inefficiency. In Terhune’s words, because of the system’s

“redundancy, inefficiency and a growing number of jobs far removed from patient care….[l]abor accounts for more than half of the $3.4 trillion spent on American health care, and medical professionals like health aides and nurse practitioners are in high demand. But the sheer complexity of the system has also spawned jobs for legions of data-entry clerks, revenue-cycle analysts and medical billing coders who must decipher arcane rules to mine money from human ills.”

And although Terhune doesn’t make the point explicitly, this labor-intensivity means that the sector of the economy fueling so much of its output and hiring is pathetically unproductive. In other words, the more outsized growth and employment healthcare creates, the less able the entire economy will be to raise living standards on a sustainable basis.

Moreover, one big reason for this low productivity is a feature of the healthcare system – both under Obamacare and before it – not mentioned by Terhune, either, but that’s vital to recognize: As I’ve observed, although this gigantic industry is officially (and no doubt popularly) considered a part of the private sector, its scale owes largely to subsidies from the public sector, which is renowned for low productivity.

As always, RealityChek readers – and others – need to understand that placing healthcare (and similar industries, like the for-profit educational system and social assistance agencies) outside the “real private sector” is not the same as questioning its fundamental value. After all, no truly civilized society would ever reduce public policy to a quest for productivity to the exclusion of all other goals, whether economic or non-economic. Moreover, as some readers have alertly pointed out, the steady aging of the American population is bound to mean continued healthcare sector growth.

But Terhune’s article is a badly needed reminder that the economy’s heavy reliance on the current healthcare system’s employment power has major downsides. As its title indicates, it’s a “costly addiction,” and its price is bound to rise without a major overhaul of some kind.

Following Up: Link to Today’s CNBC Interview

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American Enterprise Institute, Bill Griffith, CNBC, Following Up, G20, James Pethokoukis, Kelly Evans, Trade, Trump

I’m pleased to present the link to the video of my appearance today on CNBC discussing the Trump administration’s precedent-breaking performance at this past weekend’s big global economic summit.  Click here to see a great discussion of this possible landmark event, and its possible implications, among anchors Kelly Evans, Bill Griffith, James Pethokoukis of the American Enterprise Institute, and yours truly.

And keep checking back with RealityChek for notices of upcoming media appearances and other news.

Following Up: That Latest (Disgraceful) Court Decision on Trump’s Immigration Order

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Congress, Constitution, due process, Elena Kagan, executive order, Following Up, Immigration, Muslim ban, national security, presidency, refugees, Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer, Supreme Court, terrorism, travel ban, Trump, U.S. Court of Appeals Ninth Circuit, visas, Washington State

The decision last Thursday by a federal appeals court to uphold blockage of President Trump’s recent Executive Order on immigration and refugee policy exemplified the challenge I noted when I started blogging here at RealityChek: “So much nonsense out there, so little time….” Just as I often struggle each day to decide which outrage in the public policy world against fact-based, adult thinking should be addressed, I’ve struggled to decide which sad excuses for a legal argument made by three appellate judges in the Ninth Circuit to focus on in this post.

But two groups of contentions stand out as especially dangerous and disingenuous. Both decisively influenced the judges’ determination to keep the Executive Order from being enforced on procedural grounds pending a further judicial decision on the merits of the case.

The first is the panel’s unanimous ruling on how much due process to protect Constitutionally guaranteed rights is legally deserved by foreigners outside America’s borders who have not been awarded legal resident status. That is, how many boxes do the relevant U.S. officials need to check in order to reach a legally valid decision to deny a refugee applicant admission? In these refugee cases, the Supreme Court has held that the only such obligation is providing a “facially legitimate and bona fide” reason for a judgment reached by a State Department consular officer.

The Ninth Circuit panel, however, claims that this standard (and the already established appeals process) is insufficient when refugee applicants “have a relationship with a U.S. resident or an institution that might have rights of its own to assert.” And it has ruled that the Trump Executive Order failed to meet this standard.

Even leaving aside the convincing argument that existing law denies judges jurisdiction over immigration policy (which the panel rejected in a “preliminary” sense), just consider the precedent this conclusion would set. It would mean that unless a terrorist connection could be proved conclusively, a suspected ISIS fighter or adherent who applies for refugee or other immigration status from Iraq or Yemen or wherever could be entitled to enter the United States if he or she was a relative of a non-citizen legal U.S. resident. What would conclusive proof be? Heaven knows, since the case referenced by the Ninth Circuit panel only alleged that the rejection in question wasn’t sufficiently “detailed.” And who would decide how much detail is enough? Perhaps a U.S. court? Perhaps after looking over intelligence findings that are often unavoidably judgment calls? It’s hard to imagine a better way to start turning making a sieve of screening procedures vital in an age of transnational terrorism for protecting national security.

Think I’m kidding? Here are the actual circumstances of the immigration denial decision that the Ninth Circuit apparently finds so objectionable (and which was upheld in 2014 by the Supreme Court): An Afghan-born legal resident of the United States petitioned for her husband’s entry from Afghanistan, and asserted he deserved “priority (and judicially reviewable) status” like other “immediate relatives.”

And the basis for her claim that this application was unjustly turned down – i.e., that her petition was denied due process because the rationale wasn’t sufficiently detailed? A consular official told her husband that he would be kept out of America because by his own admission, he had been an official in Afghanistan’s former Taliban government, and that U.S. law aims to exclude foreigners who have engaged in “terrorist activities” – a description that certainly applies to the Taliban.

It gets better: The federal court that did decide that a former admitted Taliban official’s application deserved (unspecified) further consideration, which resulted in the case being appealed to the Supreme Court? It was the Ninth Circuit. And four Supreme Court Justices (Stephen Breyer, who wrote a dissent, and Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor, who joined with him) agreed.

The second especially disturbing aspect of the appellate court’s decision was the panel’s claim that it had, in accordance with “an uncontroversial principle that is well-grounded in our jurisprudence,” paid “substantial deference to the immigration and national security policy determinations of the political branches” – that is, the presidency and the Congress. The only such deference apparent in this decision is at the level of brazen tokenism.

Specifically, the three judges claimed to agree that “the Government’s interest in combating terrorism is an urgent objective of the highest order.” But they also stated that the judiciary has a responsibility to balance this interest with other legitimate considerations, namely the public’s interest in “free flow of travel, in avoiding separation of families, and in freedom from discrimination.”

The “freedom from discrimination” threat of course pertains to repeated charges – also made in court by plaintiff Washington State – that the Executive Order’s refugee provisions create a “Muslim ban.” The Order’s failure to include most countries with Muslim majorities renders that charge inexplicable. Moreover, as my previous post observed, religious persecution is one of the forms of persecution that must be demonstrated by successful refugee applicants. But what’s simply jaw-dropping is the nature of the specific balancing act the appellate court identified involving national security concerns on the one hand, and freedom of travel and keeping families together on the other.

Because here’s what the three-judge panel asserted could nullify national security judgments made by the president and Congress (in the 2015 law identifying the seven countries subjected to the travel ban as “countries of concern” requiring special screening). And P.S.: It’s also what the judges agreed (in line with claims by Washington State and Minnesota) constituted enough “damage” to the State’s “economy and public universities” even to rise to the level of adjudicability in the context of immigration policy:

>”two visiting scholars who had planned to spend time at Washington State University were not permitted to enter the United States”:

>”three prospective employees from countries covered by the Executive Order for visas [for whom the University of Washington] had made plans [to arrive] beginning in February 2017”;

>”two medicine and science interns who have been prevented by the Executive Order from coming to the University of Washington”; and

>”an unspecified number of “students and faculty at Minnesota’s public universities [who] were similarly restricted from traveling for academic and personal reasons.”

If this is a balancing act, it’s one with a heavy Ninth Circuit thumb giving critical mass to laughably marginal considerations – even assuming that any of these temporarily inconvenienced students and teachers have any preexisting right to crossing American borders.

It’s true that lawyers and judges often insist that “no issue is decided finally until it is decided correctly.” But the Trump Executive Order’s treatment so far in the judiciary, and the current make-up of the Supreme Court, tell me that national security could suffer greatly until this result is finally reached.

Following Up: No Reasonable Doubt Left that Trump is Right as Rain on NAFTA and Offshoring

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Bill Clinton, exports, Fiat Chrysler, Following Up, globalization, Manufacturers Alliance for Productivity and Innovation, manufacturing, Mexico, NAFTA, North American Free Trade Agreement, offshoring, Robert Samuelson Stephen Gold, Sergio Marchionne, tariffs, Trump

Could America’s globalization cheerleaders finally admit that the debate over U.S. manufacturing trade with and investment in developing countries like Mexico is now over and done – including whether President-elect Trump has a handle on it? And that supporters of current American globalization policies like the North American Free Trade Agreement (NAFTA), including many Trump critics, have been completely wrong?

The cheerleaders’ position has long been summarized by the phrase “emerging markets” – claiming that third world giants like Mexico have been valued by American businesses overwhelmingly as exciting new consumers for their products. More recently, in the wake of Mr. Trump’s attacks on massive auto investment in Mexico, NAFTA and globalization defenders have claimed that these new factories have been built not mainly to “export back to the United States, as the President-elect argues. Instead, according to Stephen Gold of the Manufacturers Alliance for Productivity and Innovation – quoted uncritically by Washington Post columnist Robert Samuelson in a piece about the President-elect’s NAFTA statements and actions – “Our members locate abroad, because that’s where the growing markets are. Companies need to be close to their customers.”

These claims were first debunked by no less than former President Bill Clinton, who admitted back in 1997 that NAFTA had been “about factories moving there to sell back to here.” But granted, that was back in 1997. Maybe something has changed?

According to no less than Sergio Marchionne, chief executive of Fiat Chrysler, not even close.  As he just stated, if Mr. Trump imposes high enough tariffs on the vehicles it makes in Mexico for export to the United States, “it will make production of anything in Mexico uneconomical and we would have to withdraw.”

Marchionne continued, “The reality is the Mexican auto industry has been tooled up to try and deal with the US market,” Mr Marchionne said. “If the US market were not to be there, then the reasons for its existence are on the line.”

Moreover, the data – which have finally started to appear prominently in public – reinforce Marchionne’s claim. Every vehicle producer operating in Mexico exports the overwhelming share of its output – for Fiat Chrysler, it was 94 percent in 2014. And last year, some 77 percent of the cars exported by these companies from Mexico were sold in the United States.

These statistics also thoroughly debunk another explanation made – more recently – for corporate auto investment in Mexico. That it’s lured south of the border because Mexico has so many trade agreements with countries aside from the United States. In fact, these deals have been described as achievements that make Mexico a more attractive vehicle export platform than the United States itself. But apparently, the companies themselves haven’t gotten the word.

Finally, it’s crucial to point out that the automotive industry in Mexico isn’t just any old industry, or any old export industry. It comprises fully six percent of the country’s gross domestic product and 18 percent of its manufacturing production – making it the country’s second largest economic sector (after food processing). And P.S. – it’s the country’s biggest generator of foreign reserves, topping even oil. 

Of course, many legitimate questions surround the issues of Mr. Trump’s trade policy plans and his ambition to reshore big chunks of manufacturing. But there can be no legitimate questions left regarding his contention that U.S. tariffs would devastate the paramount incentive businesses have been receiving since NAFTA went into effect to set up operations in Mexico. Anyone doubting that nearly all have been targeted at the U.S. market must either be unable to read – or unwilling.

Following Up: More on Why Tariffs Can Bring Back Much U.S. Manufacturing

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Andrew Grove, China, Defense Science Board, exports, Following Up, Foxconn, globalization, innovation, Intel, manufacturing, offshoring, reshoring, subsidies, tariffs, Trade

What a shame that David Barboza’s New York Times article on all the help from government in China that powerfully shaped Apple’s investment decisions was published during the holiday week – when so many Americans are paying so little attention to the news . A Pulitzer-worthy piece of reporting, it also adds to the abundant evidence debunking two critical claims often made about the globalization of manufacturing.

First, the article makes clear how much offshoring of American industry has taken place due to foreign government decisions that clash violently with the idea of “free trade.” And second, it exposes further weaknesses in a related, though more recent, claim that most offshoring during the 21^st century has stemmed not from foreign tariffs and similar interventionist economic policies, but from technological innovations that enable effective management over far-flung international manufacturing operations. This second claim is especially important, since it’s also been used to demonstrate that American tariffs will be unable to reverse this offshoring significantly.

Apple’s chief manufacturing partner in China, Foxconn, claims that the government supports it receives in the PRC are “no different than similar tax breaks all companies get in locations around the world for major investments.” And Barboza mistakenly seems to confirm this argument, characterizing China’s various market-distorting practices as “not unlike” those “in other countries, “including the United States, where states and cities vie for companies” – except that they are much greater in scale and much more secretive.

But the author himself provides key examples to the contrary. For instance, the Chinese province in which Apple’s manufacturing is concentrated is actively encouraging Foxconn to export. And when the company meets these targets, it gets hefty bonuses. Exports were also fostered via rebates for the value-added tax Foxconn would otherwise pay for at least the first five years of its operation.

Nor was China’s central government simply a bystander. Of course, the value of its currency was manipulated – which artificially lowered the price of goods China exported (including those from factories affiliated with foreign companies like Apple) and raised the price of imports for Chinese individual and certain business consumers. But there was also this scheme described by Barboza:

“Since China began opening its economy to the outside world in the 1980s, the government’s policies have encouraged manufacturing and exports with the creation of special economic zones. But those same policies have discouraged domestic consumption of overseas brands.

“Most products made in China by big multinationals had to be physically shipped out of the country and then brought back so that they could be taxed as imports — hence, the U-turn employed by many companies.”

Revealingly, these arrangements stayed in place well into the 21^st century, and similar export-focused zones can still be found all over China.

Barboza’s reporting also bears out arguments I made in a post last week on this subject – that technological change has been a necessary, but not sufficient, condition for the export of advanced manufacturing capacity, and that much offshoring was encouraged by the guarantees of wide-open access to the U.S. market provided by trade policy decisions like backing China’s entry into the World Trade Organization.

As the author notes, “When Apple first moved into China, the country was largely a low-cost production site.” That was in the late-1990s. He also quotes a former long-time executive for Wal-Mart and other multinationals as stating that most of these firms’ China investments represented “supply chains good at making things in the East and selling them in the West.”

China’s domestic market has of course developed impressively since then. But as I observed last week, the continuing importance of exports to these firms’ business models has been spotlighted by their loud protests of Donald Trump’s plans to erect trade barriers against production they aim at American customers.

But it’s also crucial to point out that this initial offshoring of production set in motion a dynamic with huge future implications for America’s economy and for today’s claims about “knowledge-based” offshoring of scientific and technical knowhow – and jobs – that supposedly are immune to trade policy overhaul. Simply put, the offshoring of production made the export of manufacturing’s more knowledge-based activity inevitable in case after case.

The two main reasons: First, super low-cost developing countries are full of smart, people that are highly educable, and trainable by multinational corporations; and second, manufacturing production and innovation rarely exist in isolation. Their relationship is typically interactive, and fueled by continuing and close contact between the researchers and engineers and product designers etc who come up with new products and processes, and the production supervisors and other workers who need to translate their ideas into real world products.

And don’t take my word for it. Listen instead to the late Andrew Grove, founder of Intel. Or Hank Nothhaft, retired Chairman and CEO of Tessera Technologies. Or former Allegheny Technologies executive Jack Schilling. Or the Defense Science Board (both quoted in this 2010 study).

In other words, Apple has found success in locating its manufacturing “brain work” thousands of miles from its production work.  But that formula appears to be the exception, not the rule, in manufacturing, including in advanced manufacturing.  And interestingly, this tech giant has recently announced it’s building its first two research and development centers in China.  

So the United States has a fundamental choice ahead of it.  It can keep listening to multinational companies and their hired guns, pretend that the keys to long-term prosperity move around the world purely or even largely due to market forces, and run ever greater risks of sliding into second-class status.  Or it can finally recognize Washington’s immense potential power over globalization, and use it to make sure this process works for its own citizens and domestic producers as well.    

Following Up: Reexamining Obama’s Private Sector Jobs Legacy

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Following Up, Great Recession, healthcare, Jobs, Labor Department, Obama, private sector jobs, recovery, subsidized private sector, The Economist

This morning, we looked at some pretty glaring omissions in President Obama’s article for The Economist magazine on the state of the U.S. and world economies and their outlooks. But there’s one more that deserves mention, and it should be familiar to RealityChek regulars: his claim that during his watch, the American private sector has created 15 million net new jobs.

As I’ve been writing for years, many of those jobs don’t deserve the label “private sector” at all, because their strength (and therefore much of their ability to hire) depends heavily on government spending, not mainly on the market forces that we’re told are the best guarantors of sustainable prosperity. So I’ve been calling these jobs – which are found mainly in the healthcare industry – “subsidized private sector” jobs. Last Friday’s September U.S. jobs report conveniently enables an update of how big a role they’ve played in the nation’s employment recovery.

A single month’s data is almost never definitive, but the new figures provide a good introduction to the subject. According to the Labor Department, in September, the total American non-farm sector (Labor’s U.S. employment universe) saw its net payrolls rise by 156,000, and private sector jobs conventionally defined increased even more strongly – by 167,000. (The public sector lost 11,000 workers on net.)

If the private sector is defined more realistically, however, and the government-subsidized jobs are stripped out, its employment gains were only 138,000 – because those subsidized industries boosted employment by 29,000.

Although this difference looks pretty big, the subsidized sector actually played a fairly modest role that month in the hiring picture by recent standards. During the first nine months of this year, the subsidized private sector generated 26.36 percent of total 1.601 million net new non-farm jobs created in America, and 28.90 percent of the 1.460 million conventionally defined private sector jobs.

Breaking a recent pattern, the subsidized private sector’s share of total U.S. jobs created from January through September of last year was actually a little higher (26.96 percent). So was the subsidized industries’ share of conventionally defined private sector jobs (28.30 percent). But these figures were both much higher than they were in 2014 – when the subsidized private sector produced 17.03 percent of new total non-farm jobs during its first nine months, and 17.46 percent of employment increase in the conventionally defined private sector. And the numbers were even lower in 2013: 15.03 percent and 14.58 percent.

Another way to look at the subsidized private sector’s burgeoning role is to examine its share of employment on a standstill basis at various key points in recent economic history. Here’s the picture in December, 2007, when the Great Recession began:

 

Conventional private sector share of total non-farm jobs: 83.83%

Subsidized private sector share of total non-farm jobs: 13.63%

Subsidized private sector share of conventional private sector jobs: 16.26%

“Real” private sector share of total non-farms jobs: 70.19%

 

Here’s where matters stood in June, 2009, when the current recovery began:

 

Conventional private sector share of total non-farm jobs: 82.77%

Subsidized private sector share of total non-farm jobs: 14.97%

Subsidized private sector share of conventional private sector jobs: 18.09%

“Real” private sector share of total non-farms jobs: 67.88%

 

And here’s the situation as of last month:

 

Conventional private sector share of total non-farm jobs: 84.68%

Subsidized private sector share of total non-farm jobs: 15.75%

Subsidized private sector share of conventional private sector jobs: 18.60%

“Real” private sector share of total non-farms jobs: 69.05%

 

To me, the big takeaways are that (a) the real private sector share of total non-farm employment is still lower than it was when the recession broke out; (b) the subsidized private sector’s share is nearly five percentage points higher; and (c), the subsidized private sector’s share of the conventional private sector has continued to grow even as the latter’s share of the economy-wide total has expanded because government hiring is still depressed.

Again, Mr. Obama seems to view his major economic legacy as “a more durable, growing economy.” The outsized growth of the government subsidized private sector indicates that his successor might come to feel differently.