Media Highlights 2006

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2007

Dan Griswold discusses U.S.-China currency issues on Bloomberg TV.
December 19, 2006.

Bloomberg TV Host: "Is this report even relevant at this moment in time? Should we even care what the Treasury Department says about China and whether or not it is a manipulator?"
Dan Griswold: "I think the report is relevant. I think it walks a very responsible line. I think we all agree that China needs to move towards a more flexible currency; but, the definition of a currency manipulator is just pulling something out of a hat and you got a definition. Who knows. The IMF hasn't determined that China is a currency manipulator. Half the countries in the world have fixed exchange rates of some form or another. Look at what effect it is having on the U.S. economy. We have a relatively strong growth, full employment, and our manufacturing is expanding at a healthy clip. According to this treasury report, the world economy is growing at the fastest rate in thirty years. I think the biggest danger is a protectionist Congress, not China's currency regime."

Bloomberg TV Host: "Well, let me ask you about that Dan [in reference to the threat of protectionist legislation following May 2007 treasury report]. We heard from Senator Baucus, the incoming Chairman of the Finance Committee, that this report is no longer relevant and it is time perhaps, to look at legislation someway, to look at this issue in a different way that perhaps carries a slightly bigger stick. There is talk that he and Senator Grassley may get together on legislation, with Senator Schumer and Senator Graham, for something that would change the playing field. What do you think about that?"
Dan Griswold: "I just don't think there is a crisis here. I do think we need to continue to put pressure on China to make its currency more flexible and we have made progress. As Frank pointed out, it has appreciated six percent, they are undergoing structural reforms, and they have reformed other parts of their economy. The average tariff in China on imported goods from the United States--manufactured goods are the most important here--has dropped from twenty-five percent to seven percent. They don't seem to get any credit for this in Congress. Manufacturing output here in the United States is up fifty percent since the Yuan was fixed in 1994. That is a good thing. We basically have full employment. I think Congress is ginning up a crisis here that doesn't exist. Again, the biggest threat is tariffs against Chinese goods, which will raise prices for US consumers. It will jeopardize U.S. exports to China, which have been growing twenty to thirty percent a year. So I think the biggest danger here is that Congress will get in and muck up the very mutually beneficial trade relationship we have with China."

Bloomberg TV Host: "Where do you think the Chinese currency is a year from now?"
Dan Griswold: "It has been appreciating pretty steadily. I wouldn't be surprised if it appreciated another five or six percent. But, there is a kind of myth out there that this is some magic bullet. The U.S. currency has depreciated significantly since 2002. It has depreciated more than twenty percent against the Canadian dollar and the Euro and yet our bilateral deficits with both those trading areas have gone up by more than fifty percent. This is not going to cure the bilateral deficit with China. I think we need to realize that our trade relationship with China is hugely beneficial and not make mistaken steps that would jeopardize that relationship."

CNBC Host: "Dan, what do you think?" [In reference to the export of U.S. Nuclear technology to China]
Dan Griswold: "I agree with Bill that high tech exports to China need to be watched closely, on a case by case basis. But look, this is purely a commercial deal. This is light water nuclear technology that has virtually no military implications. China has been a nuclear power for thirty years. They don't need this for a nuclear program. They need it for electricity for their growing economy. This is widely available technology; if they don't buy it from the U.S., they will buy it from France or Russia, which are also bidding for this contract. I would rather have the contract come to Westinghouse. It is an $8 billion contract that is going to support 5,000 good paying design, engineering, and manufacturing jobs here in the U.S. This is a good deal all around."

CNBC Host: "Dan, what do you say to those folks who are concerned about giving the store away--that the technology that the U.S. has been developing all these years in that arena? 5,000 jobs, that is a great deal. That is good for those 5,000 people. But, isit not too big price to pay for those 5,000 jobs?"
Dan Griswold: "No, I don't think so. Why did we develop the technology? The nuclear market here is relatively stable. Where is the growth? It is in places like China."

CNBC Host: "Yes, it is pretty much not existing in this country."

Dan Griswold: "Yes. They are planning to build 30 new plants over the next 15 years. People like Bill want to have it both ways. They complain that China is not buying enough U.S. products, even though our exports to China are up 30%, year over year and, on the other hand, they are complaining that we are selling this technology. This is an $8 billion contract. This is what America is competitive in global markets and if we cannot sell to a growing market, like China, we are just tying one hand behind our back. This has no national security and no military implications. It is a purely commercial deal. Let's let the companies get on with it."

CNBC Host: "Sallie do you share that view?" [In reference to comment on China talks accomplishing little]
Sallie James: "I think it was a success, actually. To the extent that the issues facing the two economies are long term problems and this meeting establishes a long term dialogue, I think it was a success. I think, unfortunately, maybe the size and the stature of the delegation maybe raised some peoples expectations about what could have been achieved."

CNBC Host: "What is your view Sallie of those who argue for protectionism, isolationism, that we are damaging our economy by allowing China to trade with us in an unfair manner?"
Sallie James: "Well if this is a damaged economy, I'd like to see a healthy one. We've got, you know, very low unemployment at the moment, inflation is fairly tame. China is in fact the fastest growing export market for the United States. As I have said many times before, protectionism is absolutely not the right way to go. I think engagement with the Chinese to the extent that there are legitimate trade and specific trade concerns there is the WTO process to go through."

CNBC Host: "Dan, you say their [China's] participation already in the WTO is a blessing, why are you not more aggressive with wanting to have a heavier stick with which to try to coerce them into a fairer playing field?"
Dan Ikenson: "I don't think we need sticks. This week marks the five year anniversary of China's accession into the WTO. Just look at how the United States has faired and China and the global economy has faired in those five years. The U.S. exports to China are up 180% in that five year period. Imports are up about 70-80%. China's market is very open. It is not like the Japanese market of the 1980s, which was the favorite pieata of policy makers back then. China's market is very open; they have made a lot of progress implementing the vast commitments to reform that they agreed to in 2001. They have a ways to go. They are falling short in some areas.

"I think if the United States has problems, if particular industries have problems, with some of those commitments, then the United States should gather the evidence and bring the cases. There have been only two cases brought against China in the WTO in five years, both of them by the United States, and we are waiting to see what happens in this auto parts case. I suspect that the United States is likely to bring another case in the near future, perhaps on intellectual property rights."

CNBC Host: "Do you think we are forfeiting basic manufacturing and even intermediate level sophisticated manufacturing markets to other countries?"
Dan Ikenson: "I really don't. I turn to the economic statistics and I am glad Mr. Wood referred to them. Rather than looking at the trade deficit--policy makers tend to look at as if it is a score board--in reality, the U.S. economy has expanded for 19 consecutive quarters since China acceded to the WTO. Unemployment has gone from 5.7% in December 2001 to 4.5%.

CNBC Host: "But to correlate that to China seems a bit unfair. In other words, there are a lot of reasons for unemployment to come down, whether China is in WTO or not."
Dan Ikenson: "Well Lloyd seems to imply that there is a correlation between the growth of China and U.S. importation and a decline in U.S. manufacturing; when in fact, U.S. manufacturing output has increased 18% in the past 5 years, revenues 38% and productivity has increased every year.

CNBC Host: "Sallie, sounds like a good case for protectionism?" [after comments were made about currency manipulation]
Sallie James: "To me, it doesn't. Certainly, I agree with Mr. Hawkins that there may be areas that the Chinese are perhaps not complying with their WTO obligations and if that is the case then the best thing for the United States to do is to gather the evidence and to bring a case to the WTO. I think a punitive tariffs such as those proposed by Mrss. Schumer and Graham will obviously impose huge costs on millions and millions of American consumers, not to mention import using American businesses. I don't think that is in the interest of the US economy at all."

CNBC Host: "In order to fight some of the things people take offense with, in terms of the way China does business internationally, absent the stick or the threat of some sort of protectionist act here, how would leverage them to get what you want?"
Sallie James: "Well, to be quite honest with you, I think the approach the administration is taking is actually a very good one. I think sending such a large delegation, such a high ranking delegation, I think that shows that the administration is conscious of the importance of this relationship and how mutually beneficial it is.

"I think we should give that process time. Because to be quite honest with you, the problem here is the sort of things that are going to kind of improve the imbalances are things like more robust consumption internally in China, more developed capital markets, in China, and that is going to take time. Unfortunately politicians, on two year terms or six year terms, if they are senators, are not always known for their patience. I think that is a fundamental issue here."

Marketplace Host Dan Grech: "Tomorrow the U.S. and Colombian officials will sign a free-trade agreement. It will be little more than a show. The Cato Institute's Dan Griswold says Congress is unlikely to ever write the deal into law."
Dan Griswold: "These two maturing democracies have put a lot of significant commitments in writing to open their economies. And yet Congress seems on the verge of saying, 'No thanks.' Now with Democrats controlling Congress, with organized labor feeling its oats, the atmosphere for these trade agreements has gotten chillier, and the hill has gotten steeper."

Marketplace Host Dan Grech : "Democrats think the Bush Administration went too easy on environmental and labor concerns. Other critics say they kowtowed to U.S. pharmaceutical and farming interests. But Griswold says these trade skeptics miss the point. These deals are about more than spreading goods around the world. He says they're about spreading democratic, free markets."
Dan Griswold: "These agreements, modest as they are, are building blocks in this broader project. And by rejecting them, I think Congress not only will be making an economic mistake but also, I think, forfeiting American influence and, yes, our broader moral purpose in the world."

Marketplace Host Dan Grech: "He says by abandoning these trade deals, the U.S. risks leaving a vacuum in Latin America. A vacuum that leftist leaders like Venezuela's Hugo Chavez and Bolivia's Evo Morales would be eager to fill. I'm Dan Grech for Marketplace."

PBS Host Ray Suarez: "So what's in store for U.S. trade policy? It was called a routine measure, but the president went to Asia without that Vietnam free trade measure in his pocket. Was that a significant setback?"
Daniel Ikenson: "I think it's a setback from a public relations perspective. The United States has been dealt several blows in the public arena. We seem to be perceived as hypocritical on trade. We preach the virtues of opening markets, but at the same time we don't necessarily practice what we preach. We've engaged in all sorts of protectionist measures in order to advance the trade agenda.

"But ultimately, this agreement, PNTR, permanent normal trade relations for Vietnam, will be passed. A majority of House members supported it. They have the supermajority necessary. It would be not in the interest of the United States if we didn't pass PNTR because Vietnam has joined the WTO. And as a member of the WTO, Vietnam has to open its market to all members on an equal basis. The United States won't get that equal access to the Vietnamese market unless we pass PNTR and grant them the same access to ours."

PBS Host Ray Suarez: "Looking forward to the next Congress, does that mean trade proposals, trade deals are going to get a different kind of scrutiny?"
Daniel Ikenson: "I don't think the election had much to do with trade whatsoever. I mean, trade was important in a few districts; some candidates ran on an explicitly anti-trade message, Sherrod Brown, for example, in Ohio. But on the list of attributes that voters worry about, trade is not really high up there.

"But I will say this: The Congress is going to be different. There's going to be a shift in emphasis from negotiation and accommodation to prosecution and enforcement, litigation and enforcement.

"The Democrats in particular have been vocal about their concerns that what they believe to be the Bush administration's failure to enforce the agreements we had if place, particularly with respect to China. Our growing bilateral deficit with China is viewed by many policymakers in both parties, but particularly in the Democratic Party, as a failure.

"Exports are good, imports are bad. We have a trade deficit, so we're losing at trade. We're losing at trade because our trade partners are cheating; therefore, we need to enforce more." I'm all for holding China's and other country's feet to the fire, making sure that they live up to their obligations in the WTO. But we can't take unilateral action, which is what I'm concerned about.

"When the Republicans controlled Congress, there were a lot of bad ideas that got bottled up in committee. Some of them might come to the fore. The Schumer-Graham bill, which the two senators have backed away from, it called for a 27.5 percent tariff across the board on Chinese imports. Other ideas like that are germinating within the Democratic Party and could make it out."

PBS Host Ray Suarez: "Let's talk a little bit more about China, because not only is there that massive trade deficit -- that is, we buy much more from China than they buy from us -- but China's also a very large holder of American debt instruments."
Daniel Ikenson: "Sure."
PBS Host Ray Suarez: "And today the new Democratic majority in the coming Congress elected one of the most staunchly Chinese-skeptical members of the House of Representatives, Nancy Pelosi, to be speaker of the House."
Daniel Ikenson: That's right. That's true. I think policymakers need to take a step back and recognize that the trade deficit is not a function of trade policy; it's not for failure to enforce. It's a function of fiscal policy. And in that regard, they're very responsible.

"We spend too much money at the federal government level. We spend too much money perhaps at the consumer level, whereas the Chinese and the Japanese and the Koreans and other of our trade partners save a lot more than we do that. That is what needs to change, and it is beginning to change."
The more we engage with China -- which is our fastest-growing export market, by the way -- the wealthier they're going to become, and the more they're going to spend, and that is what's going to diminish the trade deficit.

"The flip side of the trade account is the capital account. The Chinese are buying our government debt. I wish the government didn't spend as much money as it did, but there's also foreign direct investment. Americans work for -- millions of Americans work for foreign-owned companies. That is the flip side of the trade deficit."

PBS Host Ray Suarez: "Dan Ikenson, when people talk broadly of pro-trade and anti-trade, does that really get to it, or is it really more, as Lori Wallach expresses, the terms of trade, the rules of the game?"
Daniel Ikenson: "I disagree with Lori's characterization of it. Trade has been demonstrated to be an important generator of growth in countries throughout the world. This idea that there's a race to the bottom is really a myth.

"The Democrats are interested in inserting more stringent labor and environmental provisions in these agreements because they're following this myth that, without them, investment will flow to countries where labor can be exploited, where the environment can be exploited.

"But the fact is, is that Western investment, when it goes to the developing world, tends to raise the wage rate, tends to raise working standards."

PBS Host Ray Suarez: "To a level still far below that of the United States in many cases?"
Daniel Ikenson: "Of course, but they are raising the average wage rates in those economies. They want to attract the best workers in those economies."

Daniel Ikenson discusses steel import restrictions on
Bloomberg TV Money & Politics.
October 17, 2006.

Bloomberg Host: "Why is it that these tariffs need to go down?"
Daniel Ikenson: "Well the steel industry is fantastically profitable now. These duties have been in place for about 13 years. Relative to its own historical record, the steel industry is doing much, much better. Operating profits have been above 10% for the past two and a half years. And they are doing much better relative to manufacturing overall. The prolonging of the duties does nothing for the industry, it's ready to compete. And by the way, this only accounts for a small portion of the duties that are in effect to protect the steel industry from allegedly unfair competition. There are many more duties that need to come off, and we need to start with this one."

Bloomberg Host: "Does any other industry get preferential treatment with regard to trade?"
Daniel Ikenson: "There are about 300 anti-dumping and countervailing duty measures in place. The steel industry accounts for about 160 of them. The anti-dumping law was retro-fitted really to serve the purposes of the steel industry and the steel industry and its lobby mastered the game. This isn't about who is profitable and who isn't, but statutorily it is.

"The dumping law is designed to protect industries that are materially injured. With over 10% operating profits for 3 straight years, the industry is clearly not injured. Mr. Straub (the other interviewee) also relies on the Commerce Department's determination that there will likely be a flood of dumped imports returning to the market is based on a real problem in the statute.

"The Commerce Department's analysis says, well we have had dumping duties in place since 1993. What was the behavior of these foreign firms before that?' Well before that, before there was an order in place, they were found to be dumping between 10-36%. So the commerce says, 'well, if the orders are lifted, that's exactly what's going to happen.' But the industry has changed dramatically in the United States as well as abroad. It's much more consolidated. Steel produces have a lot of market power now.

"For the first time in history they are really able to control prices in response to declining demand they can hold-back output. They are in a great position really. And there is nothing wrong with that. I think the US steel industry should be situated like that. It's probably an optimal structure. But we cannot continue to subsidize them with trade barriers to boot."

Bloomberg Host: "Will the steel industry prevail despite your suggestion that they shouldn't?"
Daniel Ikenson: "I think the deck is stacked in favor of continuation. First of all, ratification requires 4 votes out of the 6 commissioners. Continuation only requires 3. There have been around 360 so-called sun-set reviews over the past 8 years. About 25% of them, there's been no interest the domestic industry has not been expressing interest and they were revoked. But out of all the remaining ones, the Commerce Department every single time has said that revocation will lead to a continuation of dumping. But the International Trade Commission has revoked about 25% of the time. The problem is that they are required to look into a crystal ball and gauge wild speculation as to what the market will look like down the road. What should happen is that these orders should be terminated, and if in fact there is a resurgence of dumping, or injury, the industry should have recourse to an expedited process."

Daniel Griswold discusses immigration reform on CNBC Power Lunch.
July 26, 2006.

CNBC Host: "Dan, you support this compromise from Hutchinson & Pence? Why?"
Daniel Griswold: "Well I think it's a constructive and potentially brilliant compromise for what separated the House and the Senate. The Bill recognizes that the US economy, important sectors of the US economy, continue to create hundreds of thousands of jobs each year in construction, retail, hospitality, the services industry. And the pool of Americans willing and happy to take those jobs continues to shrink as we get older and better educated and yet there is no legal channel in our immigration system for a peaceful, hard-working person from Mexico or Central America to come in to our country and take these jobs.

"This bill would create that legal channel. It would replace an illegal flow of immigration with a legal flow, taking pressure off the border. And those that are here illegally, would voluntarily leave if they could enter legally, and enjoy the privileges of being here legally and working and contributing to our economy."

CNBC Host: "How do you do that when you have 10-12 million people in this country, illegally?"
Daniel Griswold: "Well I think they would have a powerful incentive to return to their country if they were assured that it wouldn't be a long delay. Congressman Pence is talking about a week or so. 60% of those that have been here illegally have been here for 5 years or more. They are parts of their community and their workplaces.

"I think they would have a good chance of getting back in, and I think they would leave. You know we have 30 million people enter the United States each year 700 thousand a day entering the United States. I think we can handle this administratively. My biggest concern is the delay. I don't think you can secure the border unless you have comprehensive reform along with it."

CNBC Host: "How do you decide who goes and when, and all that?"
Daniel Griswold: "I mean if those 10 million people got up next Tuesday afternoon and went home it would be a disaster for the US economy. But I think it would have to be some kind of phased program. They'd have to have a year or some time to go. I think you'd see a staggered leaving the country and re-entering. I think a lot of them would like to visit their home country. And in effect our enforcement only approach has stranded millions of people here. They are afraid to cross the border to their home country because they won't go in, the risk of crossing back in is too great.

"So, I think it can work, we need to iron out the details, but I think in broad outlines the Pence & Hutchinson proposal is a constructive step forward"

Daniel Griswold discusses U.S.-China relations on CNBC Morning Call.
July 12, 2006.

CNBC Host: "How can we compete with a country that is so hungry for growth and has all that cheap labor?"
Daniel Griswold: "Well, there is no question that intellectual property is a challenge in China as it is in many other developing countries and Russia as well, but US companies are managing to sell in China. One of the items in this mornings report is that US exports to China are up 36% compared to the same period last year and of course what that stuff that we import from China is making the lives of tens of millions of Americans better every day [...] more electronics, shoes, toys, clothing, furniture, laptop computers; these are things that are making our lives better every day and we are benefiting from trade with China. China is our number 4 leading export destination so they are letting in a whole lot of US stuff and intellectual property as well."

CNBC Host: "Do you think China is ever going to get serious about protecting intellectual property?"
Daniel Griswold: "I do and they have been making progress. But let me just say a word about manufacturing. Unfortunately I think that Ted exaggerates the pictures somewhat. Most US manufactures do not compete head-to-head with China, they specialize in the lower to middle range stuff ... our manufactures are getting increasingly more sophisticated. The imports from China aren't so much replacing stuff we make in large numbers here but replacing imports from other East Asian countries.

"You know when you look at US manufacturing output the volume of stuff that our manufacturers produce is up 50% in the last decade during the time of China's fixed currency, and we're running a large surplus with the rest of the world in the kind of engineering services and sort of outsourcing type services to the rest of the world. So it is Trade 101. We're specializing in what we do best, the Chinese are specializing what they do best. We are all prospering."

Daniel Griswold discusses immigration issues on MSNBC The Best.
May 10, 2006.

MSNBC Host: "What do you think will change the most in American life given this change?"
Daniel Griswold: "In about 40 years I think we are scheduled to reach that which is quite a ways off, but really in a sense nothing has changed. We've always been a diverse nation not always racially but ethnically ... you know 100 years ago when the Italians, Poles, and the Jewish Russians were coming here, they were considered a separate race, and yet we've managed to assimilate them ... you know the Hispanics have become a part of the fabric of the American economy and the American culture. They embody the same values that immigrants brought to this country in the past of faith, and family, and a strong work-ethic. They serve in the military, they serve in important jobs in our economy and in the political process. This isn't something to be worried about; this is just business as usual here in Amerca and they are helping us maintain a fairly moderate, steady growth rate in our population of about 1% which as been the historic average."

MSNBC Host: "What do you think can happen with the language issue?"
Daniel Griswold: "This has been an issue in America for a long time, we are known as the grave yard of languages because English has such a powerful effect. The first generation always struggle with the language but by the second generation - forget it - they are invariably fluent in English ... those Hispanic children who are born here in the United States even the immigrant parents are invariably fluent in English.

"I think it's a side-show about the national anthem. Hispanic Americans are as patriotic as anybody else and they are learning English and they are dispersing around the country, it isn't just concentrated in southern Florida or California but now Hispanics immigrants are moving to North Carolina, Minnesota, and Nebraska and places like that and are becoming part of the fabric of America."

MSNBC Host: How do you think these numbers might fold into the immigration debate?
Daniel Griswold: "They send a couple messages. One, the Hispanic population is here to stay and that is a good thing for the United States. I'd rather have them come and stay legally. We need to change our immigration system so that can happen. And, two, it sends a signal to politicians. There are a lot of Hispanic voters out there that are watching the immigration debate ... if the Republican Party puts a harsh face on their attitudes towards immigrants and by implication Hispanics ... I think that will have consequences at the polls."

Daniel Ikenson discusses U.S. trade with China on CNBC Power Lunch.
April 18, 2006.

CNBC Host: "Mr. Ikenson, what do you think about the Schumer-Graham Bill, if they don't let their currency float, by many estimates it is vastly undervalued, the Chinese currency relative to the dollar? How about those tariffs, would that be the solution to all of this?
Daniel Ikenson: "Well absolutely not. It's is a very silly idea. It would violate our WTO commitments, it would raise the cost of products to many Americans, it would inspire retaliation from China, and it would encourage other WTO members to re-nag on their own their own WTO commitments. China's growth has not come at American's expense contrary to the rhetoric floating around Washington and the country. Our economies are largely complimentary. There should be some disputes as the world accommodates the emergence of its most populous country. But if there are disputes they need to be resolved within the WTO dispute settlement system, and not unilaterally with silly sanctions like that."

CNBC Host: "Lets face it, they are at a great advantage trade wise when they allow their currency to remain as artificially low as it is right now."
Daniel Ikenson: "First of all, the $200 billion trade surplus that China has with the United States is reflective of a shift in production to China from other Asian countries. Our trade balance with other Asian countries has gone positive over the past 15 years. In fact the trade deficit with Asia has remained stable for the past 15 years because of the shift in production. The currency issue is completely overblown. China has a $100 billion trade surplus with the whole world, $200 billion with the United States which means that it has a $100 billion deficit which means it imports a lot of products. If you want the Yuan to be valued upward, all of those imports that China purchases would be cheaper and they would be able to lower their cost of production and therefore their prices for export which could possibly negate the effect of the currency adjustment being pushed."
Well look at the fact that US exports to China have more than doubled in the four years since its been in the WTO. China is our fastest growing export market, exports there have grown 5 times faster than US exports to the rest of the world."
China is an emerging economy. There is a growing middle class there. They are continuing to buy more and more products from the United States and elsewhere as evidence to buy our growing exports there. I think they will continue to do that. There has been a focus in the Chinese economy on the export sector over the years. That focus has been changing towards domestic consumption and infrastructure development ... that bodes well for US exports and that is going to ultimately bring the deficit down."

Daniel Griswold discusses immigration reform with Jim Lehrer on PBS The NewsHour.
March 31, 2006.

Ray Suarez, PBS Host: "Now, the impact on jobs. As part of his push for legislation, the president has often made the case that illegal immigrants are filling an important gap in the American job market and economy. He talked about that idea today during a news conference at the summit in Cancun, Mexico."

George W. Bush: "An important part of securing the border and enforcing our laws is to recognize there are people in our country doing work that Americans will not do, and those people ought to be given a chance to have a tamper-proof card that enables them to work in our country legally for a period of time."

Ray Suarez, PBS Host: "So is it true? Are there jobs that Americans aren't willing to take? Is the President right that illegal immigrants are taking jobs that Americans will not do?
Daniel Griswold: "The President is right and companies can't just raise wages willy-nilly. They are restrained ultimately by what customers are willing to pay on the other end. If wages go up customers will turn away from the higher prices and those industries will shrink.

"There are two fundamental forces - long-term forces driving low-skilled immigration. One is continued demand in the US economy for lower-skilled workers. We are creating hundreds of thousands of low-skilled jobs. We're creating more better-paid jobs but low-skilled jobs in the restaurant industry, the hotel/motel industry, agriculture, construction; At a time when the supply of Americans willing and happy to take those jobs continues to shrink.

"Basically, Americans without high school education are the ones competing against these workers. And they've been declining as a share. Believe it or not 40 years ago half of adult Americans in the work force did not have a high school degree. Today that is 10% and dropping. There are 1 million fewer of those workers today than even 5 years ago.

"You know, where is the line of Americans waiting to pick lettuce in the new day sun all day or to scrub toilets all night at a discount store. They are just not there. This is honorable work but its hard work and I think we should allow immigrants to come in and take those jobs that Americans simply don't want."

Ray Suarez, PBS Host: "Dean Baker mentioned meat and poultry plants. You yourself brought up construction. There's also landscaping, as you mentioned, hotel and motel. A lot of these jobs are jobs that, before this large-scale immigration, paid not fabulously well, but paid well enough to raise a family, were often protected by collective bargaining agreements."
Daniel Griswold: "I think that's a small part of it. They pay less because we're becoming a sophisticated, high-tech economy that increasingly rewards education and job skills.

"And if you are an adult American without a high school degree, and you're trying to make it in this economy, you're going to be getting it from all sides, primarily from technology. You just don't have the skills.

"And the other thing is those are unpleasant jobs. You know, working in a meat-packing factory, sitting out on a roof in northern Georgia all day pounding shingles, that's unpleasant work.

"And increasingly, Americans are becoming better educated. We have better options with our time. This other work is honorable, but the pool of Americans who can take those jobs is just shrinking, and the immigrants are coming in and basically filling the vacuum being left by Americans moving up the skill ladder."

Ray Suarez, PBS Host: "What we should do to illegal workers in the U.S. already? Should we send them home? Scarcity will increase wages, won't it?"
Daniel Griswold: "So would prices. And demand would fall off, and these industries would shrink.

"Look, it's easier for a high-skilled worker to get into the United States than a low-skilled worker if you don't have family connections. We have five H-1B workers at Cato, so I could be replaced by a foreign worker.

"But if you are on the lower end of the scale, really the only group of Americans that competes really directly with these workers are Americans without a high-school degree. The answer is not to restrict immigration.

"The market is sending a very large, loud signal to Americans. If you are in school, if you're a young American in school, stay in school. Get your degree, you get a premium for having your degree - better yet go on to college and get some skills there. If you are an older American without a high school degree, go back and get your degree, upgrade your skills. Let's not artificially restrict immigration into the United States. We can all win, this is not a zero-sum economy. Americans can move up the skill-latter, increase their pay, and we can also offer opportunities for immigrants, hard-working peaceful immigrants from Mexico and other countries."

Ray Suarez, PBS Host: "You have agreed with President Bush and his premise that these are jobs that Americans won't do. One of the options available both in the legislation and to the public is to put these people on the road to becoming Americans. Once they regularize their status or become citizens will they not want to do these jobs either?"
Daniel Griswold: "You know we legalized 2.6 million people in the 1980's. What we learned from that experience ... we shouldn't really do it that way ... we should do it differently. But, what we learned is when they became legal wages immediately went up; they invested more in their job and language skills because they could plan for the future. So I think that you would see immigrants moving up. We could have other immigrants come in and take the lower skilled jobs. This is the American experience ... it's a kind of escalator where people move up. You know 100 years ago we had millions of immigrants from Europe ... the huddled masses ... they filled these jobs. What did Americans do? They stayed in school, we had the high-school movement, they upgraded their skills and everyone got on this upward escalator. That's the American way."

Ray Suarez, PBS Host: "Well, you say that they're competing with the lowest skilled Americans, but that is four million high school or less Americans who are unemployed or underemployed. Wouldn't they get some of the jobs, as Dean Baker suggests?"
Daniel Griswold: "They would, but I think what you'd see happen is U.S. companies literally could not find the workers they need. They would be priced out of the market. They can't raise wages without taking into consideration what consumers will pay.

"The wages are low in those industries because productivity is low and there's only so much people will pay. You know, if the cost of going out to a restaurant goes up, buying a new home, having cleaning and janitorial services goes up, we'll have less purchasing of those services. Those industries will contract.

"It'll be one more reason for the textile and carpet industries to move offshore, and that will cause job dislocations for middle-class Americans in management, and sales, and accounting in those industries.

"We can all benefit if we have more open immigration on the top end of the skill scale and the bottom end. We've argued consistently at Cato for that."

Daniel Griswold discusses immigration issues with Bill O'Reilly on The Radio Factor.
March 8, 2006.

Bill O'Reilly: "How do you read the Mahoney objection to the tough law, proposed law?"
Daniel Griswold: "I think enforcement without reform is doomed to fail. You know in the last 15 years we've increased spending on border enforcement 10 fold, line watch 8 fold and as you read at the beginning of the hour the problem is getting worse. I think the President has it basically right. We need to create this legal channel; we need to find a path for legalization for those who are here. They are contributing to our economy - 1 out of 20 workers. And yet we need to have enforceable law and enforce it and to keep terrorists and criminals out of the country. And that is more difficult to do if we are trying to sift through the 90+ percent of people coming across the southwest border who's only intention is to work and help us actually build a stronger economy."

Bill O'Reilly: "Your thoughts on 'open society' and 'one world'?"
Daniel Griswold: "Well, its utopian, there was a lot of this thinking after World War II, and I think one world government is kind of scary. Because what type of government is it going to be? "I think we are a free country, and we are better able to maintain that if we have our sovereignty but also we have an important stake in being a part of the global economy. Countries that are engaged in the global economy through trade, through investment, through immigration tend to grow faster, they are more dynamic, and they achieve higher incomes. So lets not commit economic suicide while we are trying to secure our borders. We can do both."

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