"If we increase the number of H-1B visas that are available to U.S. companies, employment of U.S. nationals would likely grow as well. For instance, Microsoft has found that for every H-1B hire we make, we add on average four additional employees to support them in various capacities."
Bill Gates,
Testimony before the Committee on Science and Technology, US House of Representatives,
March 12, 2008.
For more information or to schedule an interview, members of the press should contact Jacob Grier at jgrier@cato.org or (202) 218-4613.
2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998
December 21, 2007
Cato Scholar Comments on WTO Decision on Internet Gambling
Sallie James, trade policy analyst:
"Antigua must be disappointed about the relatively low level of damages awarded by the Arbitrator. The $21 million dollar figure falls far below the amount it sought in compensation for the United States' restrictions. However, by acknowledging the difficulty and economic harm that would ensue from following the normal route in collecting damages from trade partners -- i.e, increasing tariffs -- the Arbitrator exposed a fundamental flaw in the WTO dispute settlement system: that increasing tariffs in an attempt to "punish" a violating member is in fact economic nonsense. Hopefully, lobbying by U.S. intellectual property rights holders will assist the government in seeing that their restrictions on the rights of adults to gamble in their own homes using their own money are misguided. Bringing their policies in line with the WTO rules -- not to mention common sense -- would be the best decision for Antigua, for U.S. citizens wishing to gamble online, for U.S. owners of intellectual property, and the world trading system itself."
November 8, 2007
TRADE BRIEFING PAPER
Trade Adjustment Assistance no longer serving any purpose
Study advocates ending a flawed welfare program
WASHINGTON – The expiration of the current Trade Adjustment Assistance program at the end of this year is an ideal opportunity to sunset a misguided policy, according to a study released today by the Cato Institute.
"It is not clear that Americans overall should be especially concerned about trade-related unemployment, especially when unemployment is so low," writes author Sallie James. "Since 1996, the American private sector has added a net 15 million jobs, hardly evidence of a national crisis necessitating a federal response."
In "Maladjusted: The Misguided Policy of ‘Trade Adjustment Assistance,’" the author examines the various arguments advanced by supporters of special assistance for workers who are laid off because of competition from imports and finds that current circumstances are especially unfavorable for reauthorization, let alone expansion, of the program.
"Unemployment creates hardship for all laid-off workers and their families, no matter what the cause. What, then, explains the different treatment in favor of trade-affected workers?” writes James. Moreover, TAA promotes the fallacious idea that trade creates "victims" that are special. "While some workers will lose more than they gain from trade liberalization, at least in the short term, their numbers are small. Other factors—domestic competition, and changing tastes and technology—are a far more important source of change."
The study also finds that the political reasoning behind the program is no longer relevant. The author concludes: "Through much of the post-war era of trade liberalization, trade adjustment assistance was a compromise between organized labor and free-traders: lower tariffs would be accompanied by welfare benefits for people who lose their jobs because of import competition. This deal, however, is no longer effective at mollifying the opposition, as the Democratic majority continually stalls on trade agreements, or refuses outright to pass them."
The study can be found at http://www.freetrade.org/pubs/briefs/tbp-026es.html.
October 25, 2007
Media Contact: (202) 789-5200
Expanding trade has benefited American jobs and raised standards of living
Study debunks anti-trade myths
WASHINGTON -- Expanding trade, far from adversely affecting American workers, has improved jobs and living standards in the United States, according to a study released today by the Cato Institute.
“Opponents of trade liberalization have sought to indict free trade and trade agreements by painting a grim picture of the economic state of American workers and households,” writes author Daniel Griswold. This study finds that “by any reasonable measure, American workers and families are better off than during comparable periods in the past, and expanding engagement in the global economy has played an important role in the ongoing, upward trend in American employment and living standards.”
In “Trading Up: How Expanding Trade has Delivered Better Jobs and Higher Living Standards for American Workers,” the author explores the various arguments advanced by trade critics and finds that the facts do not support them.
Trade has not caused a net loss of jobs in the U.S. economy, and accounts for only 3 percent of annual job displacement. Further, the study shows that “between 1997 and the first half of 2007, the U.S. labor market did in fact shed a net 3.3 million manufacturing jobs, but that has been overwhelmed by a net gain of 11.6 million jobs in sectors where the average wage is higher than in manufacturing.”
Critics claim that the “average real wage” has declined since the 1970s, but this study shows that the average real wage is a flawed measure. A more accurate measure of earnings is “real hourly compensation,” which takes into account not only wages but benefits. “In the decade since 1997, as the U.S. economy has become more globalized, real compensation per hour for American workers has risen by 22 percent.”
The study also finds that household income has been rising and middle-class families have been moving up the income ladder. The real median net worth of U.S. households has risen 31 percent in the past decade while the share of income needed to finance debt has remained stable.
The author concludes: “To promote further progress for American workers and households, Congress and the administration should pursue policies that expand the freedom of Americans to participate in global markets.”
This report can be found at http://www.freetrade.org/pubs/pas/tpa-036es.html.
September 6, 2007
Trade Fears are all Smoke
When Congress reconvenes, committee leaders are expected to begin marking bills that are antagonistic toward our trade partners or outright protectionist, inspired in large measure by the myth of American manufacturing decline, says Daniel Ikenson, associate director of the Center for Trade Policy Studies at the Cato Institute.
But U.S. manufacturing is not in decline; it is thriving. By historic standards and relative to other countries' manufacturing sectors, U.S. manufacturing is firing on all cylinders:
Those who speak of American deindustrialization often cite the decline in manufacturing employment. But declining employment in a sector that is producing record output is hardly credible evidence of doom, says Ikenson. In fact, the two indicators taken together are evidence of soaring labor productivity, which is the source of long-term increases in living standards.
The much larger threat to manufacturing is the proclivity of meddling policymakers to fix what isn't broken. Spreading myths about the precariousness of U.S. manufacturing and laying the blame on trade policy may score political points with the unions, says Ikenson. But if Congress passes legislation that compromises the access of U.S. producers to international markets, there will be real problems to solve.
Source: Daniel Ikenson, "Trade Fears are All Smoke," Cato Institute, August 29, 2007.
August 28, 2007
U.S. Manufacturing Breaking Performance Records
Thriving Sector Needs No Protection from Congress
WASHINGTON -- Protectionist measures currently being considered on Capitol Hill fail to take into account that the nation's manufacturing sector, far from ailing, is in fact booming, according to a new study released today by the Cato Institute.
"The year 2006 was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector," according to the study "Thriving in a Global Economy: The Truth about U.S. Manufacturing and Trade" by Daniel Ikenson, associate director of Cato's Center for Trade Policy Studies.
But when Congress returns from its recess after Labor Day, it will begin considering some of nearly two dozen antagonistic or protectionist trade bills which are predicated, in large measure, on the presumed precariousness of U.S. manufacturing.
"Despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world's most prolific manufacturer-producing two and a half times more output than those vaunted Chinese factories in 2006."
"Trade is an important part of [the manufacturing sector's] success story: greater access to raw materials and components has helped control costs of production, while greater access to foreign markets has been crucial to surging sales revenues," says Ikenson.
For more information, or to schedule an interview with Dan Ikenson, please contact: Laura Osio, media relations manager, 202-789-5200; losio@cato.org.
To learn more, take the Manufacturing Quiz.
July 11, 2007
United States Dairy Policies are "Milk Madness"
Regulations drive up prices and stifle innovation
WASHINGTON - As part of this year's farm bill, Congress will consider reauthorizing dairy programs that are expected to cost taxpayers at least $600 million over the next decade. According to a new Budget Bulletin from the Cato Institute, these expensive programs are ripe for repeal.
In "Milk Madness," Chris Edwards, director of tax policy studies at the Cato Institute, documents the many ways U.S. dairy programs transfer money from consumers and taxpayers to the dairy industry. Edwards finds that marketing order regulations raise prices, income supports encourage overproduction, tariffs keep out lower-cost imports, and export subsidies shift our glut of dairy products onto other markets.
The net effect of these policies is that consumers end up paying more for dairy products than they would in a free market. Edwards reports that milk products carry a 26 percent implicit tax because of these interventions. Furthermore, Edwards notes that innovators who try to operate outside the system and sell milk for a lower price are quickly stymied by federal lawmakers.
"U.S. dairy programs are Byzantine in their complexity and create the most rigidly controlled of all agricultural markets," Edwards concludes. "In this year's farm bill, the Democrats have a chance to repeal the special interest giveaways of prior Republican farm bills, including the regressive 'milk tax.'"
Tax and Budget Bulletin no. 47: http://www.cato.org/pubs/tbb/tbb_0707_47.pdf
For more information or to schedule an interview with Edwards, please contact:
Jacob Grier, manager of media relations, 202-789-5200; jgrier@cato.org
June 12, 2007
Pass Immigration Reform Now!
This afternoon, President Bush attended the Senate Republican Policy lunch on the Hill to persuade lawmakers of his immigration plan. Daniel Griswold, director of the Cato Institute's Center for Trade Policy Studies, comments on today's meeting:
"The American people should not be forced to wait for another Congress and another president before we fix the problem of illegal immigration. Congress should pass comprehensive immigration reform in 2007. To work, reform needs a robust and practical temporary worker program to meet the labor force needs of a growing U.S. economy and a path to legalization for undocumented workers already here. Doing nothing or spending billions more to enforce a fundamentally broken law are not responsible options."
Griswold has authored several studies on the need for comprehensive immigration reform:
Please feel free to call or email me if you'd like to speak to Dan today about the immigration reform bill and its chance for success. Have a nice day!
May 21, 2007
FREE TRADE BULLETIN
The Fiscal Impact of Immigration Reform: The Real Story
by Daniel Griswold
In a new Free Trade Bulletin, the Cato Institute's Daniel Griswold examines the criticism that comprehensive immigration reform would impose a burden on U.S. taxpayers by increasing the number of low-skilled workers. Drawing on the best available research, Griswold shows that such fears are exaggerated and fail to consider the broader economic benefits of a more market-based immigration system.
Citing major studies by the Congressional Budget Office and the National Research Council, Griswold concludes that legalization of low-skilled immigrants would not impose a net burden on federal taxpayers. Increased costs for state and local governments are modest and are dwarfed by gains in economic activity. The Cato study also found that low-skilled immigrants are not responsible for alleged overcrowding of roads, public schools or hospital emergency rooms. As for an alleged increase in crime, Griswold notes that a doubling of the undocumented immigrant population since 1994 has been accompanied by a 34 percent drop in our nation's rate of violent crime. Griswold concludes: "Misplaced apprehensions about the fiscal impact of immigration do not negate the compelling arguments for comprehensive immigration reform, nor do they justify calls for more spending on failed efforts to enforce our current, dysfunctional immigration law. If the primary goal is to control the size of government spending, then Congress and the president should seek to wall off the welfare state, not our country." For a PDF version of the new Free Trade Bulletin No. 30 please click here. May 17, 2007
Immigration Reform Compromise Heartening
Deal provides an opportunity to reinforce American ideals and strengthen economy
WASHINGTON -- This afternoon, the Senate reached an historic compromise on immigration reform that has the potential to affect positively the American workforce. Daniel Griswold, director of the Cato Institute's Center for Trade Policy Studies and author of the recent study "Comprehensive Immigration Reform: Finally Getting It Right," is available for comment on immigration reform and its implications for America's economy.
"Today's breakthrough on comprehensive immigration reform marks a giant step toward a more rational and functional system," says Griswold. "The compromise announced today has all the elements of successful reform: legalization of the millions of workers already contributing to our economy, a temporary worker program to meet our growing need for additional workers, and common-sense enforcement provisions. The devil still lurks in the details, but we may finally be on the cusp of solving the vexing problem of illegal immigration.
"We know from experience that immigrants and employers alike want a workable, legal system of immigration that reflects our economic needs and our values as a nation. We also know that throwing more enforcement dollars into a broken system is doomed to fail. If congressional leaders in both parties fail to seize this opportunity for true reform, the number of illegal immigrants in the United States will only continue to grow," he concludes.
To schedule an interview with Griswold, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
In a new Free Trade Bulletin, the Cato Institute's Daniel Griswold urges Congress and President Bush to enact a comprehensive immigration reform that would create a temporary worker program to allow "a sufficient number of foreign-born workers to enter the United States legally to fill the growing gap at the lower rungs of the labor ladder." Griswold's new study, "Comprehensive Immigration Reform: Finally Getting It Right," documents the economic and demographic trends driving low-skilled immigration to the United States, and the failures of the current immigration system to accommodate the realities of a growing U.S. economy. Griswold recommends 400,000 to 500,000 temporary worker visas annually, maximum flexibility and minimum red tape for the visas, and a path to legalization for the 12 million undocumented workers now in the United States. "Large-scale illegal immigration will end only when America's immigration system offers a legal alternative. If foreign-born workers are allowed to enter the country through a safe, orderly and legal path, the number choosing to enter illegally will drop sharply," Griswold concludes. For the full PDF version of the new Free Trade Bulletin No. 29 please click here. May 11, 2007May 16, 2007
FREE TRADE BULLETIN
Comprehensive Immigration Reform: Finally Getting It Right
by Daniel Griswold
New Trade Provisions Worrying
WASHINGTON -- Yesterday, the Bush administration acquiesced to Congressional Democrats' demands that pending trade accords include provisions for environmental and labor standards. The administration's accession to these demands bodes poorly for potential U.S. trade partners around the globe.
Dan Ikenson, associate director of the Cato Institute's Center for Trade Policy Studies, comments on yesterday's deal:
"To the person who feels more than he thinks, yesterday's agreement between Congressional Democrats and the Bush administration to require stricter labor and environmental provisions in trade agreements must sound like progress. What's not to like about forcing business to be nicer to workers and more respectful of the environment?
"But there's less there than meets the eye. The deal constitutes a political victory for Democrats in Congress, who compelled the administration to swallow U.S. union demands, but is unlikely to lead to any new trade liberalization (another union wish). Forging trade policy is a balancing act: the more an agreement is limited to reflect domestic political demands, the less likely prospective trade partners are to see the benefit of agreeing. With respect to the three Latin American agreements, those countries will now have to reopen debate in their legislatures, which might reject the terms.
"The elusive Doha Round of multilateral trade negotiations, which this new pact is supposed to advance, will be much more difficult than it already is because most of the countries negotiating have articulated their opposition to stricter labor standards backed by the threat of sanctions."
Sallie James, policy analyst with the Center for Trade Policy Studies, comments:
"This new agreement is troubling. Not only is it asking FTA countries, all of whom are poorer than the U.S., to adopt labor standards that might not be appropriate, but the agreement specifically says that lack of resources or other priorities are not a valid excuse for lack of enforcement. Similarly, breaches in labor or environmental standards are subject to the same penalties as other FTA obligations. In other words, the U.S. could raise tariffs on imports if the FTA country does not live up to the required standards. The section on government procurement allows U.S. Federal and state governments to condition government procurement contracts on 'acceptable' conditions of work and wages. Depending on how that principle is reflected in the final drafting language, it is a worrying development.
"The best way to raise standards in developing countries is to open our markets to their products and allow them to grow."
The Cato Institute is a nonpartisan public policy research foundation dedicated to broadening policy debate consistent with the traditional American principles of individual liberty, limited government, free markets, and peace.
To schedule an interview with Ikenson or James, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
May 7, 2007
FREE TRADE BULLETIN
Growing Pains: The Evolving U.S.-China Trade Relationship
by Daniel Ikenson
In the first four months of 2007, the United States lodged three formal complaints against China in the World Trade Organization, and for the first time in 22 years it applied countervailing (anti-subsidy) duties to imports from China. The actions have been met with incredulity and anger in China and the United States, fueling speculation that a trade war is imminent.
In a new Cato Free Trade Bulletin, Daniel Ikenson puts recent actions into context by suggesting they "are not extraordinary actions demanding extraordinary conclusions." Ikenson offers a defense in principal, arguing that the "three recent U.S. WTO actions are all about encouraging China to open its market further in accordance with its commitments."
Explaining why he believes a trade war is unlikely, Ikenson writes, "Under [WTO rules], members can retaliate in response to an action or inaction of another member only when such a course has been authorized by the Dispute Settlement Body, and only in measured proportions."
To schedule an interview with Ikenson, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
The full version of the new Free Trade Bulletin #28 (or PDF version).
April 16, 2007
TRADE POLICY ANALYSIS
Freeing the Farm: A Farm Bill For All Americans
WASHINGTON -- U.S. farm programs have cost American consumers and taxpayers over $1.7 trillion over the last 20 years, and have damaged the trading interests of agricultural-exporting developing countries. With the current farm bill set to expire in September, it is time for the government to stop interfering in rural America, and to let free agricultural markets flourish, according to a new study from the Cato Institute's Center for Trade Policy Studies.
In the new trade policy analysis, "Freeing the Farm: A New Farm Bill For All Americans," Sallie James, trade policy analyst, and Daniel Griswold, director of Cato's Center for Trade Policy Studies, provide a pragmatic solution to the current policy's many failures. In a fresh take on eliminating farm subsidies, James and Griswold propose a one-time buyout payment to farmers who currently benefit from subsidies and trade protection with guarantees against any future taxpayer funding for production or import protection.
"The cost of the U.S. farm program is a significant drain on the economy," they write. "Reforming it unilaterally, by removing import barriers, domestic price supports, and the institutional infrastructure for continuing taxpayer-funded agricultural support, is a policy that is overwhelmingly in the wider national interest. A new farm bill should guarantee that Americans will not be on the hook for another $1.7 trillion or more during the next two decades."
To schedule an interview with James or Griswold, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
March 12, 2007
FREE TRADE BULLETIN
Are Trade Deficits a Drag on U.S. Economic Growth?
by Daniel Griswold
An almost universal consensus prevails that the record U.S. trade deficit for 2006 was a drag on U.S. economic growth. But the consensus on trade deficits and growth ignores the actual record of the U.S. economy in recent decades and the positive correlation of imports to domestic production, according to a new report from the Cato Institute's Center for Trade Policy Studies.
Comparing annual changes in the current account balance to economic growth since 1980, trade center director Daniel Griswold found that a "worsening" deficit is typically associated with faster economic growth, and an "improving" deficit with slower growth. According to Griswold's research, in those years in which the current account deficit actually shrank as a share of GDP, real GDP growth averaged 1.9 percent; in those years in which the deficit grew modestly, between 0.0 and 0.5 percent, GDP growth averaged 3.0 percent; and in those years in which the current account deficit expanded by more than 0.5 percent of GDP, real GDP growth grew by an average of 4.1 percent.
"In other words," Griswold writes, "economic growth has been more than twice as fast, on average, in years in which the current account deficit grew sharply compared to those years in which it actually declined. If trade deficits dampen growth, somebody forgot to tell the economy."
The bulletin also found a positive correlation between economic growth and rising levels of imported goods and services since 1980, contradicting another commonly espoused assumption about trade deficits and growth.
To schedule an interview with Griswold, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
January 26, 2007
FREE TRADE BULLETIN
Expand Visa Waiver Program to Qualified Countries
by Daniel Griswold
The United States is unnecessarily costing itself millions of dollars and sorely-needed goodwill with an overly cautious visa waiver policy. In the absence of a visa waiver, which allows citizens of friendly countries to enter the U.S. without visas for short periods, prospective travelers from non-waiver nations are put through a burdensome, bureaucratic process. Many foreigners hoping to visit the U.S. decide it's not worth the wait, and the economy suffers accordingly. Dan Griswold, director of the Cato Institute's Center for Trade Policy Studies, proposes a new strategy to streamline America's visa process in Free Trade Bulletin #26.
"Congress and the Bush administration should consider a prudent expansion of the list of visa waiver countries," asserts Griswold. "The visa-waiver program has been a boon to the U.S. economy by promoting tourism and business travel. Visitors under the program generate between $75 billion and $100 billion in economic activity in the U.S. each year through travel and spending. On average, visa-waiver visitors spend $2,253 per visit in the United States compared to $1,274 by non-waiver visitors." In addition to the economic impact of foreign visitors, Griswold also notes the impact extending the visa waiver program will have on America's image abroad. "At a time when the U.S. is seeking not only to attract more global customers for its goods and services but also to build stronger ties to our allies, expanding the visa waiver program to eligible countries offers a power tool to further both objectives." Griswold concludes: "Extending the visa waiver program to a small and select group of countries would not compromise the ability of the U.S. government to protect the American homeland from terrorists and others who would do us harm." Should this become a concern in the future, however, he states that "As a final safeguard, the U.S. government can promptly terminate a nation's participation in the program if the nation threatens U.S. economic or national security interests." To schedule an interview with Griswold, please contact the Cato media department by calling (202) 789-5200, emailing pr@cato.org, or filling out our scholar interview request form.
Trade, growth: Weep not for Doha
China's Energy Woes
Trade, They SED
Worried About a Recession? Don't Blame Free Trade
Support the Cato Institute
1000 Massachusetts Avenue, N.W. Washington D.C. 20001-5403
Phone (202) 842-0200 Fax (202) 842-3490
All Rights Reserved © 2006 - 2008 Cato Institute