Podcasts

In addition to these short CTPS podcasts, most CTPS media highlights and events are available in RealAudio, RealVideo or MP3 (podcast) format.

CTPS Audio Offerings Events Media Highlights Podcasts

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New Frontiers in Free Trade, featuring Razeen Sally, 09/16/2008 (MP3 )

Free, Flexible Labor Markets Demand More Immigration, featuring Jason Riley, 09/03/2008 (MP3 )

Trade Deficits Don't Matter, featuring Daniel T. Griswold, 08/15/2008 (MP3 )

American Ag Subsidies and Doha, featuring Donald J. Boudreaux, 08/11/2008 (MP3 )

Doha Is Dead, Liberalization Lives, featuring Daniel J. Ikenson, 07/31/2008 (MP3 )

Trade, China and Deficits, featuring Daniel J. Ikenson, 06/17/2008 (MP3 )

Farm Bill Flubs, featuring Brandon Arnold and Sallie James, 06/03/2008 (MP3 )

Troubles With Trade Facilitation, featuring Daniel J. Ikenson, 05/02/2008 (MP3 )

Higher Food Prices: Part 2, featuring Sallie James, 04/28/2008 (MP3 )

Wal-Mart vs. Mom and Pop, featuring Russell Sobel, 04/21/2008 (MP3 )

Boudreaux on Globalization: Part 2, featuring Donald J. Boudreaux, 04/18/2008 (MP3 )

Boudreaux on Globalization: Part 1, featuring Donald J. Boudreaux, 04/17/2008 (MP3 )

POTUS Hopefuls Differ on Trade, featuring Sallie James, 04/16/2008 (MP3 )

H-1B Visa Program Caps American Innovation, featuring Daniel T. Griswold, 04/07/2008 (MP3 )

Sovereign Wealth Scare, featuring Daniel J. Ikenson, 04/02/2008 (MP3 )

Sovereign Wealth Mania, featuring James A. Dorn, 03/14/2008 (MP3 )

Obama and Clinton Versus NAFTA, featuring Daniel T. Griswold, 02/28/2008 (MP3 )

Jobs and American Manufacturing, featuring Daniel J. Ikenson, 02/20/2008 (MP3 )

Counting the Free Traders in Congress, featuring Daniel T. Griswold, 02/15/2008 (MP3 )

Bush Renews Free Trade Push, featuring Daniel T. Griswold, 01/29/2008 (MP3 )

Trade Adjustment Assistance, featuring Sallie James, 12/18/2007 (MP3 )

State of Immigrants, featuring Daniel T. Griswold, 12/17/2007 (MP3 )

Fat on the Farm Bill, featuring Sallie James, 11/12/2007 (MP3 )

Immigrants: Your Country Needs Them, featuring Philippe Legrain, 10/19/2007 (MP3 )

Obama's T-shirt Tariff, featuring Daniel T. Griswold, 08/29/2007 (MP3 )

The Thriving U.S. Manufacturing Sector, featuring Daniel J. Ikenson, 08/28/2007 (MP3 )

Milk Market Miasma, featuring Chris Edwards, 07/27/2007 (MP3 )

Attitudes on Globalization, featuring Brink Lindsey, 07/26/2007 (MP3 )

Ending the U.S. Sugar Racket, featuring Chris Edwards, 07/02/2007 (MP3 )

ANASTASIA UGLOVA, HOST, CATO DAILY PODCAST: "Welcome to Cato Daily Podcast with Anastasia Uglova. A major farm bill is currently moving through Congress and giving policy makers a chance to cut damaging farm subsidies. In the latest Tax and Budget Bulletin, Cato Scholar Chris Edwards zeroes in on U.S. sugar restrictions which keep domestic sugar prices more than two times higher than world prices. Today Chris and I discuss how cutting these subsidies would benefit average Americans, make U.S. manufacturing more competitive, and end unfair benefits for a small group of wealthy sugar barons.

"The US sugar program is pretty complex, but let's just pare it down to the simple pieces."

CHRIS EDWARDS, DIRECTOR OF TAX POLICY STUDIES, CATO INSTITUTE: "For decades, ever since the 1930s, the U.S. has protected its sugar producers, sugarcane growers in the south and sugar beet growers in other parts of the country. The federal sugar program, basically, has three parts: The U.S. Department of Agriculture guarantees minimal prices for sugar producers, so there [are] no free-market prices in the sugar industry. Secondly, they maintain those high domestic prices by trade restrictions. For example, we currently only import about fifteen percent of our sugar, here, in the United States, but a couple of decades ago, when the market was freer, we imported half of our sugar. The third part of the sugar program is detailed production quotas. The federal government, by decree, has decided that exactly 54.35% of sugar in the United States is going to be beet sugar and exactly 45.65% is going to be cane sugar. The federal government allocates specific quotas to every state and every sugar producer in the country. It's a soviet-style, top-down, command-and-control system. There is no free market in sugar."

UGLOVA: "And is this damaging to U.S. manufacturing?"

EDWARDS: "It is very damaging. The sugar program raises the price of U.S. sugar to twice, or three times, the world price in sugar. The program costs American consumers about $2 billion annually. It doesn't just hurt consumers as families, it hurts all industries [that] use sugar in production: Kellogg's cereal, Hershey's chocolate manufacturing, American companies that make candies and other sorts of products are damaged by these high sugar prices, and we've seen substantial job losses in companies that make chocolate and sugar and other products. They're closing their American plants and moving their plants to Canada. One of the big changes in recent years was the Lifesavers factory in Michigan that hired 600 workers "moved to Canada to access that lower sugar cost."

UGLOVA: "That's right. You also mentioned that Hershey's is moving production abroad."

EDWARDS: "That's right. Hershey's has closed down American factories and moved some facilities to Mexico. Chicago used to be the candy capital of the United States. They used to have a lot of different manufacturing companies like Fanny May that made candies in Chicago. They've closed down and moved to Canada or Mexico."

UGLOVA: "Is there an environmental impact?"

EDWARDS: "Yeah, another thing that is remarkable about the sugar program and [a reason] it is surprising that Congress retains the sugar program is it causes substantial damage to the environment, and we particularly see that in the Florida Everglades. The Florida Everglades are being paved over, in effect, by sugar cane production fields, [which] frankly, are only there because we protect American sugar. [P]eople think the Everglades are being terribly damaged because of the chemicals used in fertilizers. For example, run off from sugar fields [can] damage the Everglades, the wetlands down there. So these programs are economically really damaging and they are environmentally damaging as well."

UGLOVA: "If the program is so universally damaging, then why does Congress keep supporting it?"

EDWARDS: "That's a really good question, and it's kind of fascinating actually. There [are] only a few thousand sugar growers in the United States, but for some reason, they hold an enormous amount of political power. There [are] families such as the Fanjuls in Florida who, for decades, have been big political contributors. They've given to Democrats, Republicans, the Bush family, the Clintons, Bob Dole. Many political leaders [have gotten] campaign support from the sugar-growing families down in Florida. For this reason, I think, most politicians, frankly, don't have the spine to stand up to the sugar lobby and do something that would be good for consumers and repeal these damaging programs."

UGLOVA: "In light of that, are there any prospects for reform this year?"

EDWARDS: "There are some prospects for reform. Both conservative and liberal newspapers have editorialized against the sugar program. The Washington Post has called the sugar program a "sugar racket." It really is a crazy program, and I would urge… many people in the public to look into this program and demand it be repealed in this year's farm bill."

UGLOVA: "Thank you, Chris, and to the listeners for staying tuned to the Cato Daily Podcast. For more information, please visit us on the web at www.cato.org."

Doha Round, RIP?, featuring Daniel J. Ikenson, 06/26/2007 (MP3 )

ANASTASIA UGLOVA, HOST, CATO DAILY PODCASTS: "Welcome to Cato Daily Podcast for Tuesday, June 26th. This is your host, Anastasia Uglova. The news from the trade front just makes you want to throw your hands up and ask, "This again?!" Doha round trade talks collapsed once more for the fifth time and were suspended indefinitely. WTO Director-General Pascal Lamy and U.S. Trade Representative Susan Schwab would like to breathe new life into the talks, but is it still feasible? We'll ask Cato's Dan Ikenson for some clarity."

"What happened at the breakdown of Doha trade talks? Was it the row over the U.S. farm subsidies that finally did the Doha round in?"

DANIEL J. IKENSON, ASSOCIATE DIRECTOR, CENTER FOR TRADE POLICY STUDIES: "Agricultural subsidies have been the most contentious aspect of the negotiations, certainly since the Cancun debacle in 2003. I don't think the talks ever really recuperated from that breakdown in Cancun. But at the end of the day, I don't think you can cast blame entirely on the United States or EuropE even though their agricultural policies really do need to be reformed. I think developing countries are not that interested in trade liberalization. There is a concern, on their part, that they are competing a lot with imports from China and many of them don't want to leave themselves without the political option of responding to increased Chinese imports "with measures to stop [competition with China]. I think countries recognize the benefits of trade liberalization, but nobody really wants to be bound to new commitments at this point."

UGLOVA: "The United States blamed Brazil and India for being uncompromising and inflexible. What did those two countries want from the negotiations?"

IKENSON: "Brazil and India were the de facto heads of the developing countries. We have a hundred and fifty members in the WTO and most of them are developing countries. Brazil and India are not particularly representative of the breadth of economic situations in the developing world, but, nonetheless, they [reflected the idea] that developing countries didn't necessarily need to give much, that they didn't need to open up. This was called the Doha Development Round. I think, maybe, it should not have been named that at the outset because it did convey this false premise that it was just developed countries that would be opening. Developing countries need to open as well particularly in services and particularly in non-agricultural areas, but many of them wanted to hold out and expected the United States and Europe to make all the moves. That certainly wasn't going to happen."

UGLOVA: "I think what's frustrating for a lot of people is that we've been talking about this Doha Round, for what is it? Seven years now? And periodically papers run front page articles about how the Doha round is about to fall apart, ring the alarm! If the process isn't working, why not scrap it altogether and pursue a policy of unilateral liberalization for example?"

IKENSON: "Yeah, the Doha Round was kicked off in November of 2001 and it seems like it has ended in calamitous breakdown many times. There have been diehards that have attempted to resuscitate the talks over the years - trade delegations, trade ministers whose missions were to accomplish a Doha agreement. In fact, this would be the first multilateral trade negotiation not to produce an agreement. I think a lot of ministers, a lot of delegations are not that interest in being associated with failure, so they want to try to the very last minute, but at the end of the day, I think, most trade liberalization around the world happens when countries recognize that it is in their own interest to liberalize. This game that we play where we pretend that exports are good and imports are bad and therefore, in order to win export market access, we have to concede our own markets to foreigners – that lie needs to be put to rest. That is done when countries come to grips and realize that, you know, it is in our interest to cut our tariffs, to remove our quotas, to open up our services sector to competition, and I think ultimately that's what we will see. I don't think it will happen this year or next in the United States, but I think that there could be momentum for unilateral liberalization in the United States over the next few years."

UGLOVA: "So long as we continue to pursue trade liberalization through bilateral and multilateral trade negotiations, you know, President Bush's fast track authority expires in a few days on June 30th, do you think that is going to further jeopardize any possibility of successful trade negotiations, and should the President, perhaps, pursue renewal?"

IKENSON: "Trade Promotion Authority expires on June 30th, and quite frankly, I'm not going to shed too many tears. The Bush administration has brought home some successful bilateral and regional agreements. The main objective of Trade Promotion Authority was to bring home a successful Doha Round agreement. But the politics have changed, in Washington in particular, with Democratic control of Congress, there is much greater aversion of trade liberalization, much greater skepticism about the benefits of trade.

"The Congress and the administration recently worked out a deal on what trade agreements should include going forward. And that deal, to me, is not a deal worth taking. It really includes provisions for, penalties if labor standards are not enforced, if environmental standards are not enforced. It, in my view, puts the cart before the horse. A lot of the developing countries, with whom we would be negotiating, need development and need trade in order for their labor standards to rise and in order for their environmental quality to rise. In 1996, within the framework of the WTO, WTO members met in Singapore and declared that, under no circumstances, would they want labor and environmental standards to be written into these agreements. The Bush administration seems on the verge of capitulating that point to the Democratic congress, and in that regard, I think, it will hamstring future administrations going forward.

"I don't think pursuing TPA at this point makes much sense. There was a chicken-and-egg thing. At one point, the Congress said well, if we see enough progress in Doha, we might be willing to extend Trade Promotion Authority for the President. But negotiators in the Doha round said we want to see that the United States is going to extend Trade Promotion Authority before we can achieve any more progress, so it was at a standstill.

"I think the best thing the Bush administration can do now on trade policy is to hold the line on China, and not allow anti-Chinese, anti-trade legislation to make it out of the Congress and not to sign anything like that into law."

UGLOVA: "Thanks, Dan, for the input. Thank you for listening to Cato Daily Podcast. See you next time."

Downsizing the USDA, featuring Chris Edwards, 06/25/2007 (MP3 )

ANASTASIA UGLOVA, HOST, CATO DAILY PODCAST: "Welcome to Cato Daily Podcast for Monday, June 25 with Anastasia Uglova. As Congress considers a new farm bill in coming weeks, it has the opportunity to cut damaging subsidy programs and reduce the federal deficit. To help policy makers and the public find programs that are good targets for cuts, Cato has launched a new web resource called "Downsizing the U.S. Department of Agriculture." Cato's Director of Tax Policy Studies Chris Edwards talks about the project in this podcast.

"Why did you launch this new website dedicated to downsizing the USDA?"

CHRIS EDWARDS, DIRECTOR, TAX POLICY STUDIES: "We plan to launch, at Cato, a whole series of websites called Downsizing the Federal Government – one website for each of the fifteen cabinet agencies. I started with the U.S. Department of Agriculture because Congress is considering a farm bill this year. The purpose of these websites is to let policy-makers and the public know where they can find major savings in the federal budget because we have a gigantic budget deficit in Washington, and we have exploding costs for Social Security and Medicare coming down the road. We need to cut budget costs, and I want to help people find out where they can find savings."

UGLOVA: "What are the biggest culprits in the USDA's budget? How much, for example, does the USDA spend on farm subsidies?"

EDWARDS: "The USDA is a gigantic federal agency spending $89 billion of taxpayers' money every year. Interestingly, though, most of the money does not go to farm subsidies. About $29 billion of the $89 billion goes to farm subsidies, but $55 billion goes to food subsidies -mainly the school lunch program and food stamps."

UGLOVA: "How much are, for example, trade barriers and regulations costing the U.S. economy?"

EDWARDS: "Well, the USDA not only provides a lot of cash subsidies (about $30 billion a year to farmers), they also put up trade barriers [on] products like sugar and milk. Cheaper foreign sugar and milk is prevented from coming into the United States costing American consumers a lot of money and making our dairy and sugar industries very inefficient."

UGLOVA: "How did the USDA get so bloated?"

EDWARDS: "Most of these programs started in the 1930s under the New Deal. Franklin Roosevelt had a plan to raise prices across the board because he thought producers, including farmers, should have high prices, but he didn't care much for American consumers. A lot of programs started in the New Deal “ [which] created cartels or producer monopolies, and they were bad for consumers, and farm programs are exactly in that mold."

UGLOVA: "Is there a political will to downsize, then?"

EDWARDS: "Well, you know, the interesting thing is the Republicans came into office; [they] took over Congress in 1994 promising more free market reforms, but they didn't touch farm subsidies at all. In fact, they made the farm subsidy problem much worse. For example, President Bush signed into law a big farm bill five years ago in 2002. He increased dairy subsidies, and he increased subsidies for a lot of other farm products unfortunately. Now the Democrats have a chance. The Democrats control Congress. There is a big farm bill up for discussion this year, and the Democrats really should take a strong look at these programs."

UGLOVA: "Let's talk about that farm bill for a minute. How do you think it's all going to turn out?"

EDWARDS: "Well unfortunately, if you look at the House and Senate agriculture committees, they are packed with members, senators and representatives, who are from farm districts, and often, many of them are farmers themselves. This is one of the reasons why it is really difficult to put farm reforms through Congress. Nonetheless, there is as dedicated group of about a hundred, or so, reformers in the House led by Jeff Flake [R-AZ] who do want to reform some of these programs. There has been a lot of negative media on the farm programs recently because we found out that folks like Ted Turner and various millionaires and billionaires get farm subsidies which is completely outrageous. Hopefully, there will be some public pressure to reform these programs."

UGLOVA: "Thank you, Chris, and thank you for listening to Cato Daily Podcast. For more information, please visit www.cato.org."

Is Immigration Reform DOA?, featuring Daniel T. Griswold, 06/13/2007 (MP3 )

ANASTASIA UGLOVA, HOST, CATO DAILY PODCAST: "Welcome to Cato Daily Podcast for Friday, June 13th. This is your host Anastasia Uglova. The much anticipated, much reviled immigration bill fell apart in the Senate after failing, by fifteen votes, disappointing both the President who has made immigration his top priority and Senate Majority Leader Harry Reid who strongly supported the compromise. But what now? That's for Cato's Director of Trade Policy Studies Daniel Griswold to answer.

"Senator Reid has said he will bring the immigration bill back to floor if he can get a compromise. What does Reid need to bring this bill back?"

DANIEL GRISWOLD, DIRECTOR, CENTER FOR TRADE POLICY STUDIES: "The Senate Majority Leader has said it needs to have more Republican support. This bill seemed to die a week or two ago, and I was one of those who thought it was as good as gone, but the President, his cabinet, and Republicans like Sen. John Kyl [R-AZ] who has worked closely to make this compromise work say that it is quite possible that it could be brought back in the next couple of weeks. As you know, President Bush made a rare appearance on the Hill this week to make the case for immigration reform, so I think there is a chance that it could come back. What Sen. Reid has said is that it has to have more Republican support this time around, maybe not a majority of Republicans, but more so. It lost on a procedural vote, where there were only a handful of Republicans who voted to keep debate going. I do think there are the ingredients for compromise. The essential elements are in this bill. The President and others, I think, have made the case that we need move ahead with comprehensive immigration reform that recognizes the needs of our economy. We really need to get it done this time, or we may not have a chance for several years."

UGLOVA: "Why have Republicans responded so viscerally against this measure? What exactly in the bill are they unhappy with?"

GRISWOLD: "First, it's divided – the Republican Party – and there are some Democrats who are opposed to it too. But the Republicans who oppose this bill - some will oppose any bill that legalizes anybody. They're just, in principle, opposed to more immigration. Others have asked, I thought, more thoughtful questions about border security [and] about the impact on taxpayers. We at Cato, [at] freetrade.org, in our research on immigration reform and, I think, the administration, have tried patiently to answer these questions. The primary objection is that these workers will become permanent, they'll become charges [of] the taxpayer, they'll compromise our security; when, in fact, you can restrict access to the welfare state. Many workers want to come here temporarily and not stay permanently, and we want some to stay permanently; they are important parts of their community and the workplace. As far as border security goes, I'm convinced this bill will enhance our border security. We'll drain the swamp of smuggling and document fraud. We can bring 12 million people out of the shadows, into the legal economy. They can cooperate with law enforcement. We can run background checks. I think most importantly, we can shift our resources away from chasing down janitors and roofers and housemaids, and go after criminals and terrorists. Homeland [Security] Secretary [Michael] Chertoff has made it clear. He would much rather have his agents going after people who represent true security threats [rather] than just economic immigrants trying to better their lives."

UGLOVA: "But striking a compromise on this bill was, by no means, easy, so is there any room to improve the bill in a way that won't further compromise its chances of passing the Senate or create even more opponents."

GRISWOLD: "In a way, it's a classic compromise. Nobody's happy with it, and I'm not happy with it. We have outlined, for several years now, what we think would be successful immigration reform. This bill, certainly in its original form, had all the essential elements. The key to making immigration reform work is to have a robust, workable temporary worker program. That hasn't been tried before. People look back to '86 and they say we tried immigration reform and it didn't work. We had an amnesty. We legalized 2.7 million. We tried more enforcement. Well, it didn't work because there was no provision for new workers to come to the country legally. The pool of illegal workers kept filling up. The problem is [...] the Senate passed two amendments that were pretty close to being killer amendments. One chopped the temporary worker problem in half from 400,000 visas, which I think comes pretty close to meeting the needs of our economy to 200,000 visas. It's an inadequate number. It just guarantees continued inflow of illegal immigration. Then they sunsetted it after five years. There is hope that further along in the process we can add an escalator clause to allow that number, at least, to grow with the economy. It has to go through the House so changes can be made there and in the conference committee. Also, [let's] hope they can reverse the sunsetting of this provision. Without a workable temporary worker program, we're really just going to replicate what we did in 1986. And that, obviously, was inadequate."

UGLOVA: "President Bush wants to leave his legacy on immigration. This is very important to him, and he has been very unambiguous about it. What are the consequences of failure on this issue this time around?"

GRISWOLD: "President Bush has been criticized a lot by Cato, and rightly so, and we have dished out some of the criticism here at the Center for Trade Policy Studies, but he deserves high marks for the way he has handled this issue. He believes it in his heart .He has embraced, I think, a practical, market-oriented approach to it. He wants to get something done. He doesn't want to just leave this problem to fester for another president and another congress. If we don't tackle this problem now, if we just throw more money trying to enforce an unworkable, unenforceable system, what we're going to is: We're going to spend billions of dollars more. We're going to build fences to nowhere in the middle of the desert. We're going to increase the government's power to raid businesses from coast to coast. Native-born Americans are going to have to carry around, pretty soon, something like a national ID card. We're going to have to depend on a central government computer database for permission for us to work and support our families, and we're going to have to continue to live with 12 million people without documents. Hundreds of thousand more are coming across the border creating distractions and chaos for our enforcement officials. We'll just have to come back in two to three years when there are 13 or 14 million people here. We need to solve this problem now. The polls show the American people want this problem to be solved. If you explain it to them correctly, the majority support the current approach of legalizing those who are here, not amnesty, but giving them temporary status, a fine, probation, expanding a temporary worker program for new workers to come in, and then, enforce that enforceable law against terrorist and criminals who would still want to come in. The ingredients are there. I think the political will is there. But unfortunately, it is a long, difficult process with a lot of political partisanship mixed up in there. We'll see what happens. I'm hoping they can solve this problem, but I'm not sure I'd bet in favor of that."

UGLOVA: "I know you say it's not amnesty, but that was the main criticism among Republicans - that this bill is tantamount to amnesty. What do you say to that?"

GRISWOLD: "Well, first, some critics will call anything amnesty. Anything that legalizes anybody, they'll call amnesty, but I don't think that really applies here. Being in the country illegally is a misdemeanor. This legislation would assess a fine which is not chump change to somebody on a low wage. They would be on probation, and those are the typical punishments for the infraction of a misdemeanor. They would not be eligible for permanent legal status. People waiting in line to become legal immigrants are waiting for permanent status. This would just give them temporary status. They wouldn't be able to apply for permanent status for eight years. Meanwhile in those eight years we would be clearing the backlog of those waiting to enter legally, so they wouldn't be jumping the queue, they would have to pass security checks. They would have to go back to their home country and apply there for permanent status. They can call anything they want "amnesty." I don't think it fairly applies to this legislation as it's written."

UGLOVA: "What about the part of the bill that allows workers who have been here before January 1st? How can they prove they've been here before January 1st, if they were undocumented and so fundamentally don't have a paper trail?"

GRISWOLD: "Well first you have to have some kind of cut-off date, and that raises problems whenever the cutoff date is. That can be addressed by requiring some kind of proof. Payroll records and many of them, most illegal immigrants despite being illegal, are on official payrolls. They're paying social security taxes. There's a pay stub and a record of that. Things like rent and other transactions – there are ways they can prove it, and the burden of proof should be on people to show that they've been here that long. Even people, who could qualify for the "Z" visa may want to just leave the country and come in through the new visa program, as well, the "Y" visa for new workers. I think the important thing is to legalize those who are here illegally, not to give them advantage, but to bring them out of the shadows. It would be better for our economy, it would be better for our national security to bring these people out of this underground labor market and into the full light of the rule of law."

UGLOVA: "Thank you, Dan. if you would like to find out more about Cato, please visit our website www.cato.org."

Immigration Reform, at Last?, featuring Daniel T. Griswold, 5/17/2007 (MP3 )

Anastasia Uglova: "Welcome to Cato Daily Podcast. Thursday, May 16th. I'm Anastasia Uglova. As congress begins two weeks of intense debate on immigration reform, passing an effective reform bill remains a possibility. In the free trade bulletin titled "Comprehensive Immigration Reform: Finally Getting It Right", Cato scholar, Daniel Griswold, provides a pragmatic solution to the United States' failed immigration policy. In his podcast, he explains that solution. What does successful and comprehensive reform of U.S. immigration law look like?"

Dan Griswold: "I think any successful reform has to have some key components. I think the most important one is a workable, temporary worker program. Our economy needs more workers. We are creating jobs at the high-end and the low-end of the skill spectrum and yet the pool of Americans willing and happy to take those jobs continues to shrink, so we need a temporary worker program. We need to legalize those who are here, they're not going home, we can't round them up in some kind of biblical exodus, and then we need to enforce that law, we need to have an enforceable law and then enforce that because then we know if somebody is sneaking across the border they are intending to do us harm. You know, some people point back to the 1986 Immigration Reform and Control Act, which was a major piece of legislation. It legalized 2.7 million people who were here illegally. It dramatically ramped up our border enforcement, including making it illegal, for the first time in U.S. history, to knowingly hire illegal workers. The missing component of the '86 law though was any provision to allow new workers to come in legally. So, we largely drained the pool of illegal workers and then it just started filling up again. That's the missing component that the most important aspect of the current reform has to be a workable, sufficiently large, temporary worker program to meet the needs of the growing U.S. economy."

Anastasia Uglova: "Now critics complain that America is flooded with immigrants and the American economy threatens to buckle under this weight and yet you maintain that immigrants are contributing greatly to our economic success. So, which is it? What's actually happening?"

Dan Griswold: "There's this idea that we're being flooded with immigrants and it makes me chuckle. We're a country of 301 million people now, $13 trillion economy. When you look at the immigration rate, I think that's the way to think of it, we talk about a crime rate, a poverty rate, a growth rate. The immigration rate is actually well within the norms of historical American experience. Even when you consider incoming illegal immigrants, immigration numbers are about 5 new immigrants a year per 1000 U.S. population. That's less than half of what it was a century ago when it was over 10 immigrants per 1000 population, in fact that's a lower immigration rate than we had from 1840 to 1920. As a percentage of our population immigrants today, foreign born people are about 12.7% that compares to 14.7% from say about 1890 to 1910. so we were more of an immigrant nation 100 years ago, we are not buckling under the weight, in fact immigrants fill important niches in our economy at the high end think of a college physics professor, a computer programmer, or a think tank policy analyst, many are foreign born. But on the lower end too. They're filling important jobs in key industries like landscaping, retail, food preparation, construction, cleaning, they're allowing these whole sectors to grow and meet the demands of our economy."

Anastasia Uglova: "But what do we do with those immigrants that are already here illegally? Do they deserve a special pathway plan that rewards illegals while others obey immigration laws?"

Dan Griswold: "Now this is probably the toughest question, certainly politically, but also maybe policy-wise too. What to do with the 12 million here. You know many of them have been here quite a long time. Some 40 percent of them 10 years, over half of them 5 years or more. They're important members of their community and their workplace, we can't round them up and send them home. I think what we need to do is find a way for them to become legal. We want, for security reasons if nothing else, we want these 12 million people to come forward and register so we know who they are, so they don't live in fear of the police and we want them to be part of the above ground economy rather than the underground economy. I think the way to do it is to assess a fine; they did break the U.S. law after all. You can assess back taxes although many of them have been paying payroll taxes all along. One proposal, which I think could work, is to make them briefly go back to their home country, a kind of touch base and re-enter legally. And then I think a key provision just for the sense of fairness that Americans have is that they shouldn't be able to jump the cue and become legal ahead of people who've been waiting sometimes for years. And one proposal from the administration is we accelerate clearing the backlog of people waiting to become legal and that they think will take about 8 years and then the newly legalized workers would be eligible to apply for permanent legal status. So we're not talking about making them permanent residents or citizens but just temporary legal residents and then 8 years down the road they could become legal permanent residents and then another 5 years after that citizens. So a minimum of 13 years before they could become citizens."

Anastasia Uglova: "The immigration issue came up repeatedly during Tuesday's presidential debate. Why don't we conclude with a quick round-up of the top candidates' immigration platforms, both parties."

Dan Griswold: "Obviously this is an important political issue, immigration is an important issue to Americans. I think you're seeing some division, certainly within the Republican party, a fairly deep division among Republicans. There are certain Republican candidates who have spoken favorably about immigrants in general and about comprehensive immigration reform, that's Rudy Guliani, John McCain who was one of the chief sponsors of the reform effort last year. Some like Mitt Romney aren't quite sure where he stands on that, he sounded like he was in favor of the reform last year, but now he's sounding less certain. And then there are candidates like Tom Tancredo and Duncan Hunter who made opposition to immigration and any kind of legalization a key part of their platform. As for democrats most of them generally looked favorably on immigrants generally and immigration reform but they have some division in their party as well but really the key division is among the Republican Party."

Anastasia Uglova: "The Senate's about to take the issue up, so what do you expect?"

Dan Griswold: "I think it's quite possible, maybe not probable, but possible that the senate will pass out sensible immigration reform like the kind I've been talking about. Here Senator Harry Reid, to his credit sees this as an important issue. He has scheduled two weeks of debate. There are Republicans who are willing to work with the Democrats on this, the administration has been putting on a full court press sending up cabinet secretaries and President Bush has been talking about it. So I think all the ingredients are there for a bipartisan compromise. I think there are enough Republicans to support it, the Democrats want to get this done, the president wants to get it done, one, it's the right thing to do, but two, he's thinking about his legacy, and there's politics, there's millions of Hispanic voters who look at this issue as a very important issue to them. So I think all the ingredients are there, I think the only thing that can sink it is partisan politics."

Anastasia Uglova: "Thank you, Dan."

Gambling with Our Reputation, featuring Sallie James, 5/14/2007 (MP3 )

Anastasia Uglova: "Welcome to Cato Daily Podcast.  Monday, May 14th.  I'm Anastasia Uglova.  After filing two complaints against China with the WTO since March, the United States has simultaneously thrown in the towel on its own trade commitments at the WTO, ignoring a recent ruling that it must allow offshore internet gambling casinos to operate in the US market.  While the US allows interstate gambling, other countries find themselves facing discrimination, and Antigua and Barbuda, a tiny country whose economy has been hurt by US restrictions on gambling, is now taking aim at the United States where it hurts the most, intellectual property enforcement.  Our guest today is Cato Trade Policy Analyst, Sallie James.  It's been in and out of the media eye for a while now, but internet gambling is yet again in the news. Why now?"

Sallie James: "Well, two reasons.  First of all, not too long ago the United States lost a case at the World Trade Organization that ruled its restrictions on internet gambling that are in place at the moment and not consistent with its obligations at the WTO, so it's been an ongoing saga in the trade world for a while now.  The other reason is about two weeks ago Barney Frank introduced a bill to lift the restriction on internet gambling on what he claims were libertarian grounds, and he used that word libertarian.  He made the point, and I agree with him, that what adults do in the privacy of their own homes, with their own money, on their own time, is not the governments business, it's not the place of government to interfere in people's recreational time.  So he proposed to lift that restriction.  So, I guess it's come up in the news on both of those levels in the kind of its reignited the civil liberties debate and it's also an ongoing trade concern."

Anastasia Uglova: "Why did the United States end up imposing restrictions on gambling in the first place?"

Sallie James: "Well, they really, the restrictions they introduced were really just updating the 1961 Wire Act which already established that it was not legal to bet, you know, over the telephone, for example. So it was really just updating these restrictions for the new technology, but the reason given, and this law was kind of snuck into the Port-Security bill, and the reason given was that it was on moral grounds, that the republican congress, at the time, or the leadership, did not think that adults should be gambling over the internet or anyone should be gambling over the internet.  So it was primarily a socially conservative view about what people could do over the internet."

Anastasia Uglova: "What will happen if the United States ends up ignoring the WTO ruling? What are the repercussions of that kind of an action, or inaction?"

Sallie James: "Well, there are two possibilities when a country, such as the United States, in this case, has been found to be violative of the commitments it has made in the WTO, and they have been found to be violating their commitments a couple of times now.  There is no real question in anyone's mind that the United States has not been abiding by the law in the WTO.  They can either face retaliation in that event, which is usually tariffs imposed by the injured party.  So, in other words, if Antigua and Barbuda, who, in this case, are the injured party, see that the United States has not been opening up its market to, in this case, internet gambling services, they can place what are known as retaliatory tariffs on United States goods. 

"Now, there are two problems with that approach in this case.  First of all, Antigua and Barbuda, in a rare display of economic coherency, have said that putting tariffs on a country's goods is economic nonsense.  It punishes the country imposing the restrictions, not the errant member.  So they're refusing to go down that route.  The other reason, of course, is Antigua and Barbuda is under 80,000 people, so that's 78,000 people, you know, what can they possibly do that is going to harm a country such as the United States?

"What Antigua and Barbuda did, at least, publicly muse over doing, was to suspend its obligations under the agreement on trade related aspects of intellectual property rights.  So, in other words, what Antigua and Barbuda could do is no longer enforce its restrictions on say software piracy or movie piracy.  Now that would get the United State's attention, as you can imagine, if Antigua and Barbuda decided to set itself up as a haven of piracy, of intellectual property rights violations, that would definitely harm the United State's interests and it would make them, this is the logic, change their policy."

Anastasia Uglova: "Well, in light of that threat from Antigua and Barbuda, the US basically has to lift the restrictions now, doesn't it?"

Sallie James: "Well, normally, yes that's the usual course of action if a country doesn't want to face retaliation, but, and this is another reason it's been in the news lately, the solution the United States trade representative has proposed is for the United States to go back into the law of the WTO and change the commitments it made.  In other words, the United States is saying, they're basically admitting that they are not complying with the law of the WTO, but they don't want to change their policy, nor do they want to face retaliatory tariffs or intellectual property rights.  Basically, what they're saying is: we don't like this law, we don't want to comply with it, so we want to go back into our, what's called the schedule of commitments, which is the list of things that the United States said it would do, and we want to change it.

"So, what the United States is saying, in its defense, is: oh, we never meant to allow other countries to access our market for internet gambling services.  They're basically saying they made an error when they signed the agreement and they didn't know what they were signing. 

"Now, everyone has a problem with that.  First of all, no one believes that the United States would make a mistake.  When these schedules, as they're called, these lists, are drawn up, there's extensive meetings, you know, debates, there's counter offers, there's all those sort of things, and it's very hard to imagine that it simply slipped through the net.  The other reason is there are a lot of countries in the WTO who did in fact exclude gambling from their commitments, so it's highly unlikely that some countries found it and some countries didn't.  The other problem is that wanting to go back and change your schedule is allowed, but you have to pay compensation.  So, in other words, if the United States was to go in and say, we want to change the commitments we made, any country in the WTO, including Antigua and Barbuda, can say, alright then what are you going to give us in return. 

"Now, I have strong doubts that there's anything that the United States could offer Antigua and Barbuda in return for closing the market to internet gambling, or they could just cut them a check.  Antigua and Barbuda I've read a figure of 90 million dollars, that's how much they've lost because of these restrictions in the United States."

Anastasia Uglova: "And, of course, that's in a country with a GDP of only 900 million."

Sallie James: "Right, so, in theory, they could offer them a check and the problem would go away.  Problem is, as I said, the World Trade Organization is a multilateral institution.  The United States would have to go into consultations with any member that saw that they were going to be affected by this change in commitment.  That includes the United Kingdom and other European countries.  So, in other words, the United States would have to pay compensation to all of those countries. 

"I think the broader problem here is: what sort of precedent does this set for the World Trade Organization? This is the first time, in response to a dispute, a country has wanted to raise the barriers to trade.  Normally, as I said, they either change their policy and lower the barrier, bring it into conformity with what they agreed or they face sanctions.  But never before has a country said: well, I'm not going to comply and I don't want to face the sanctions, so I want to go back in and change the law.  That has not happened before and it sets a very dangerous precedent in a very rough time for the WTO.  The Doha Round is not going well and the United States' reputation abroad is not exactly squeaky clean at the moment and this sets a very bad precedent and it's not a good look."

Anastasia Uglova: "Thanks, Sallie."

Failures of the Farm Bill, featuring Sallie James, 04/18/2007 (MP3 )

Anastasia Uglova: "The 2002 Farm Bill is set to expire in September and agricultural lobbyists are already hard at work to make this year's farm bill even more formidable. But as outlined in the new Cato PA, Freeing the Farm: A Farm Bill for All Americans, the farm bill is a failure in need of major reform. You can find the PA on our website or in your pod cast's RSS feed. Today's guest is Cato's Trade Policy Analyst Sallie James, one of the PA's authors."

How damaging are farm subsidies to the United States?"

Sallie James: "Well, the actual dollar figure will vary from year to year because of world prices, domestic prices, production in the United States, weather, etc. All of those things can impact the amount of money the government will give to farmers through disaster payments or the more traditional commodities subsides. In financial year 2005, it was about $21 billion and I should say that more than half of that went to large farming interests. It is not necessarily the small struggling family farm that people often think of that are getting the lions share of this money.

"In addition to the actual fiscal outlays, the line item in the budget, there are also costs to consumers for products like sugar and dairy that are mainly supported through artificially high domestic prices. These are caused by trade barriers at the border to stop competitive imports, from coming in, and other policies as well. So it is important to think about the different ways the government directs money. Sugar and dairy can add billions more to that $21 billion figure that I mentioned before.

"This is a regressive tax because consumers who pay more for those sorts of goods tend to be poorer. Poor people spend a higher proportion of their income on food and it is flowing to farmers that on average have a higher income. So it is actually a regressive tax in that perspective. Also, a lot of these subsidies benefit land owners because the subsidies get capitalized into the land value. People expect subsidies in the future so land values go up. That doesn't always benefit farmers. They may not own the actual land; they may just farm it. It is important also to remember that land owners are not always the people actually farming. The opportunity costs of all these policies was looked at in our study, using what we call the OECD (Organization for Economic Cooperation and Development, a group of richer countries) producer subsidy equivalent. It is a measure of the transfers from consumer and tax payers to farmers. In other words, it measures how much government intervention benefits farmers. We looked at that for 1986-2005, so over about 20 years, and then we discounted it using the Treasury bond rate and came to a figure of $1.7 trillion dollars. What that means is that had consumers and taxpayers not spent money on farm programs and instead invested that money at the prevailing Treasury bond rate at the time they would be $1.7 trillion better off today."

Anastasia Uglova: "Is there a foreign policy dimension here?"

Sallie James: "Definitely. That is another cost, if you like, to the United States even though it is not directly included in things like government outlays and consumer spending. The hypocrisy is seen by other developing countries towards the United States. In other words they say, "Here is the United States, which preaches free markets, liberty, and opportunity for all and yet their policies are directly adversely affecting other developing countries interests. By artificially stimulating production in the United States, which then gets sold on the world market, they depress world market prices for a lot of these goods." That adversely affects developing countries interests. The biggest contribution the United States can make to the Doha round is to reform its agricultural policies. Unless and until we get significant reform in what we call domestic support to agriculture, the way the government supports agricultural interests in the United States, that deal is not going to come to fruition. It is true that other countries have to do their bit as well, but the United States' role is to reform farm subsidies. As long as these policies go unreformed it not only harms the domestic economy it harms the world economy and it harms other interests in the United States that would benefit from a freeing up of world trade."

Anastasia Uglova: "But with agricultural interests in the United States, being entrenched as they are, how does one go about dismantling the farm program?"

Sallie James: "With great difficulty obviously or it would have been done before now and we would be $1.7 trillion richer, in the last 20 years. It is true that it is a very powerful lobby; but one of the ways this year is different is, we have seen a few changes is the coalitions that are forming to confront these interests and to point out the damages that are done to the economy. There are the ones that I just spoke about in the previous question and other ones are environmental groups have been quite forward this year about asserting the damage that these policies can do to the environment. For example, they can encourage overproduction on marginal lands which perhaps would be better off left fallow or unplowed. Those types of groups, anti-poverty groups (Oxfam International is one group) have really been trying this year to point out the damage that these polices do and to provide if you like a counter weight, a lobbying or advocacy counter weight to the farm policy lobby.

"The other thing that can be done and I think has been done successfully this year, although how successfully in terms of its actual effect remains to be seen, is to create demand for reform, in other words to get a lot of press out there. The Washington Post's series on harvesting cash is an excellent example of they types of media outrage about some of these policies and their effects. I think if people are aware of exactly what farm subsidies do and what they do not do, I think that will create that outrage factor. The other thing that really needs to be done if we are going to get serious about reform I think is to provide alternatives. It is very difficult to fight something with nothing and I think it is important for people to put reform ideas out there."

Anastasia Uglova: "What policy solutions does your paper address?"

Sallie James: "We have advocated a one time limited buy out of the subsides, rural development outlays, disaster payments, and also the price supports and trade barriers for say dairy and sugar that I have talked about. It is really a political solution, since as you know Cato stands for free markets and limited government and the farm bill really offends these on every level. Really our ideal solution would be to just end these programs overnight, but as I said you have to provide some sort of solution and unfortunately pragmatically that means providing some sort of incentive for farmers to sign on, since they are just so politically powerful. What we are advocating is buying out the predicted benefits that farmers would get over the next seven years. We would give it to them upfront no strings attached saying, "here is your money sign on the dotted line." Some reforms have been tried before, what we are advocating this time, which we hope will make a difference is to repeal the permanent laws that are on the books that allow agricultural programs to continue, in other words, repealing enabling legislation that means every five years farms come back for more. I think that if we repeal that it would make things very difficult because every five years if the farmers wanted a farm bill they would literally have to rebuild the whole program from scratch and that is a huge barrier to overcome. We would also advocate translating the changes into a schedule of commitments in the WTO. That means that the WTO would be written into our buy out stating that, at the WTO that our subsidies are zero and that we have zero trade barriers. What that means is that there is a useful back step against reneging on reform. If you then violated your commitments other members of the WTO would be able to hold you to task through the dispute settlement system. It is kind of like a gambler giving a casino a picture of themselves and saying, "If I try to get back in again stop me." It is basically the United States saying we want to reform, we know that the political pressure is going to be there from certain groups, in this case the farm lobby, to reneging on that reform. If it is written in our schedule of commitments there would be serious consequences for us for reneging. So that would be a useful back step as well."

Anastasia Uglova: "Thank you so much for your commentary Sallie."

Trade Dispute Chafes China, featuring Daniel J. Ikenson, 04/11/2007 (MP3 )

Anastasia Uglova: "Good afternoon. This is Cato Daily Podcast with your host, Anastasia Uglova. Today is Wednesday, April 11. After the U.S. launched two dispute settlement cases with China over intellectual property rights protection and market access at the WTO on Tuesday China's response was harsher than usual, saying it would seriously damage bilateral cooperation and harm business ties. Is a trade war with China at hand? Associate Director of the Center for Trade Policy Studies Dan Ikenson thinks that's awfully pessimistic. The U.S – China trade relationship isn't looking to cozy these days, do you agree?"

Dan Ikenson: "I think the U.S. – China trade relationship is very healthy. Two-way trade has increased significantly, U.S. businesses are doing very well there, U.S. exports increased by thirty-two percent over 2005, which is a rate nearly double what our exports grew to other countries over that period, but politically, there is a lot of pressure on the relationship. I think it stems from the fact that we do have a very large trade deficit with China. The congress has been putting constant pressure on the administration to get tougher with China, to compel them to raise the value of their currency, to reign in alleged unfair trade practices, subsidization, and other issues. Over the past eight weeks there have been three WTO cases filed and one administrative action by the Commerce Department imposing preliminary countervailing duties on Chinese paper products, which have been perceived by many in the public, and certain policymakers, that we are entering a trade war with China. But in fact, I think this is part and parcel to our developing relationship with China. Bringing cases in the WTO is the appropriate venue, the appropriate approach to take. I think we will actually get a lot of what we want. It is within the rights of the United States to bring the cases that it is bringing right now. China has been a member of the WTO for over five years and it has worked hard to live up to the commitments it made when it joined and it's done a pretty good job. But it is failing in some areas and that is what many of these cases are about, the subsidy case, the intellectual property case, and the market access case."

Anastasia Uglova: "In the two complaints that were just filed with the WTO what are the allegations that China faces?"

Dan Ikenson: "The first involves intellectual property rights violations and the second involves market access impediments to U.S. copyright industry-oriented products. The IPR case has been in the works for many, many years; the previous two USTRs were collecting evidence to try and make the case that China is somehow dishonoring its obligations under what's called the TRIPs Agreement, the trade related aspects of intellectual property. I have the feeling that the trade representative isn't all that convinced that this case is winnable. Under the TRIPs Agreement countries are required to offer some minimum threshold of intellectual property protection and they're also required to apply those laws the same way to their domestic companies as they would to foreign companies and to treat all foreign companies the same way. In other words, they're honoring two cornerstone principles of the WTO; one is national treatment and the other is most favored nation. The Chinese have laws on the books but the question is are they above that bare minimum or not and are the Chinese enforcing their laws adequately. I think it's a very difficult thing to prove. Of course, we've heard quite frequently that there are intellectual property rights violations in China that it costs U.S. industry billions of dollars and that is probably the case. There is probably a loss of business as a result of such violations but it is common in developing countries. I think bringing the market access case was somewhat of a hedge for the USTR because if in fact the United States doesn't win the IPR case at least the same industry that will benefit from the victory will be the beneficiary of the market access case as well because that deals with copyright-oriented industries such as book producers and distributors, CD, DVD, audio visual, those types of industries. Right now, the allegation is that they are unable to freely import and freely distribute their products within China whereas other industries are more readily granted the capacity to do so in China. My view, though, is that when a trade dispute is initiated the first stage is called a Request for Consultations and the goal of dispute settlement in the WTO is to get the dispute resolved during consultations without need of formal adjudication. I have the feeling that some of these issues will be resolved at that stage. The Chinese, right now, within their intellectual property law, they have minimum threshold rules, which means they are allowed to have up to a certain number of pirated copies in their store and if they have below that threshold they can't be prosecuted, or, if they produce pirated materials but don't distribute them, they also are immune from prosecution. Another complaint of the United States is that pirated goods taken at the border are often just stripped of their labels and then reintroduced into the commerce of China. So I see several areas where the Chinese can say during the consultation phase "alright, we will give you this, we will give you that, and we will change our regulations and our rules with respect to these issues" and the United States might be willing to take that and therefore drop the case. It's a matter of, really, what the copyright industries in the United States are looking for, what kind of compensation they're looking for, and whether the Chinese are willing to compromise. I don't think it's in China's interest to allow this case to actually go through dispute settlement because I suspect that the Europeans and other countries would want to get involved as well and if it goes all the way through and China is found to be violating its commitments then the WTO could authorize retaliations against China and that would be problematic."

Anastasia Uglova: "But you know, what really gets me about this intellectual property dispute is that intellectual property rights are murky even in the United States so isn't it unfair to go after China on something we haven't even settled for ourselves?"

Dan Ikenson: "Certainly. You see IP violations on the streets of Washington. You can go to one of those hotdog vendors and probably buy a fake Rolex watch there as well. The TRIPs Agreement became part of the WTO after the Uruguay Round. The Agreement recognizes the lack of uniformity of intellectual property laws around the world, emphasis on the needs for those kinds of laws, but the TRIPs Agreement does specify that each country should provide a minimum threshold of property protection. I believe this is the first WTO dispute involving the TRIPs Agreement and it's going to be somewhat murky as to what the burden of proof is going to be in how much deference the WTO Panel, if it gets that far, will give to the Chinese authorities. Presumably, the WTO is rooted in a culture of granting deference to national authorities because it doesn't want to usurp sovereignty and typically as long as the laws are being applied equally to Chinese companies as well as U.S. companies and other companies around the world its hard to find that they are doing something that violates their commitments"

Anastasia Uglova: "What kind of risks are we taking by antagonizing China at this point?"

Dan Ikenson: "You know, I don't think that there are a whole lot of risks associated with going to the WTO. It would certainly be more risky if we acted unilaterally, if we just allowed the Congress to pass punitive laws such as a 27.5 percent tariff against China or laws that would strip China of its Most Favored Nation status. That, to me, is the bigger risk and that, to me, is one of the reasons that these cases have been filed this year. The administration is trying to keep Congress on the sidelines. Congress is very interested in hitting China over the head. These cases have been telecast to China, they've known they were coming, I'm sure you'll hear some Chinese officials saying that this is unfair and the United States is going too far and they're pushing us and being belligerent, well the fact is, China has benefited considerably from its membership in the WTO. It does need to play by the rules. If countries have problems with one another what better way is there to resolve disputes than within the good graces of a multilateral institution where everybody needs to honor the same rules? So, I just think that China recognizes that we're in a new phase of the relationship. The former USTR Robert Zellick called on China to become responsible stakeholders and the USTR's office recently released a new policy with respect to China suggesting that the honeymoon period is over and we are going to expect greater accountability commensurate with China's economic weight. So I think this is all sort of consist with that and there are really no surprises for China"

Anastasia Uglova: "But what if Congress jumps the gun? How unpalatable would a congressional reaction right now be?"

Dan Ikenson: "I think it's important that we keep Congress out of the game right now. Certainly there is a lot of pressure on the Treasury Secretary to compel China to raise the value of its currency. There's been a lot of pressure on the administration to bring cases against China in the WTO and here they've done that. If you go to Thomas.gov, one of the legislative websites, and you enter in the search terms "China" and "trade" you'll see over 100 pieced of legislation that have been introduced. Most of those bills purport to punish China for actions or inactions. One of the side benefits of using the WTO to resolve these disputes is that it will show over zealous members of Congress that there are alternatives to what they're thinking about and if this is all resolved amicably the trade relationship will continue to grow and be beneficial for people on both sides of the Pacific as well as all over the world. This is a very strong relationship. I think these new cases are just sort of a right of passage. I've heard people in the press, a lot of media reports suggesting that these are the first shots of a trade war. I really beg to differ. I don't think that is what we're in store for. I think there's just too much at stake for that to be the end result."

Anastasia Uglova: "All right, thank you Dan. A new book David's Hammer: The Case for an Activist Judiciary is now available from the Cato Bookstore by constitutional litigator Clint Bolick. The book challenges the conventional wisdom that lawless activist courts are a threat to republican government. In fact, the book contends that, for better or worse, only a vigorous judiciary can enforce the limits on executive and legislative action, protect constitutional rights, and take aim on elected bureaucrats."

A Legal Alternative to Illegal Immigration, featuring Daniel T. Griswold, 03/01/2007 (MP3 )

Anastasia Uglova: "Welcome. This is the Cato Daily Podcast for Thursday, the first of March. I'm your host, Anastasia Uglova. The immigration debate that stalled last year has picked up again after the Senate held hearings yesterday on comprehensive immigration reform. Testifying at the hearing were Homeland Security Chief Michael Chertoff and Commerce Secretary Carlos Gutierrez. Our guest for the podcast today is the Director of the Center for Trade Policy Studies Daniel Griswold, who argues that the only lasting solution to illegal immigration will be to offer a legal alternative. You've read the transcripts of the immigration hearing held yesterday on Capitol Hill, what were Chertoff and Gutierrez angling for in their testimonies?"

Dan Griswold: "I think what the administration was trying to accomplish today was to demonstrate its commitment to comprehensive immigration reform. It sent two of its heavy hitters on the subject up there, Michael Chertoff, the Secretary of the Homeland Security Department and Carlos Gutierrez, the Commerce Secretary. Secretary Chertoff emphasized all the things the administration has done in the past several years to strengthen security at the border and how comprehensive immigration reform, including a temporary worker program and legalization of workers who are here, how that would make his job easier in securing the borders. Commerce Secretary Gutierrez, of course, emphasized the economic angle of immigration and immigration reform. He pointed out to the Judiciary Committee that immigrants play a vital role in our economy, they provide goods and services to Americans at lower prices and that enhances our standard of living. He also pointed out something very important in this whole discussion about illegal immigration. While the U.S. economy continues to create jobs for high-skilled and low-skilled workers the pool of Americans who have traditionally filled these jobs, who are Americans without a high school education continues to drop. In fact, he pointed out that from 1996 to 2004 we actually had a decrease of 4.6 million Americans in the workforce without a high school diploma, so we've got a structural gap between demand for workers in our economy and the supply in the workplace and yet there's no legal channel for those workers to enter the United States legally and that has to be the essence of comprehensive immigration reform, to expand that legal channel."

Anastasia Uglova: "The administration says that they've already beefed up border security, so why do we still need a bill and a law?"

Dan Griswold: "Yes and the administration had something to brag about. They've dramatically increased the number of agents at the border and spending at the border. They've sent the National Guard down there, they've deployed all sorts of high tech gadgetry, drones and infrared cameras, and they've also increased interior enforcement, such as raiding chicken processing plants. There's just one problem, it hasn't really solved the problem. It hasn't even made a dent in it and that's been the story of the last decade or two. And Secretary Chertoff was very clear in his testimony. He spent the first three-quarters of it saying all the good things the administration had done on border security, and then he said this can't work in and of itself. We need to have comprehensive immigration reform to take the pressure off the border, to let otherwise peaceful people who are just coming here for a job to come in over legal channels, to bring 11 or 12 million people out of the shadows so that we know who they are and they'll be more inclined to cooperate with law enforcement. Then his department can train its resources on those people who have criminal acts or terrorists act in mind."

Anastasia Uglova: "So what is the Kennedy and McCain Bill going to look like?"

Dan Griswold: "Well, last year the Senate did pass a comprehensive immigration bill and the chief sponsors were Senators John McCain and Ted Kennedy and it had the essential, I think, the essential ingredients of successful reform. It had a temporary worker program, it had a way of legalizing those workers who are here, and it had enforcement provisions. I do think it was too watered down to be effective last time. There was just too much controversy in the Senate, of course, the House didn't pass anything other than enforcement only and we know from experience that that doesn't work. One of the problems last year with the Senate bill was that quotas for visas were too low. An amendment reduced it to 200,000 and I think that is inadequate for our economy. We are creating at least 400,000 or 500,000 new jobs each year that I think require immigrant labor on the low end of the skill spectrum. If the numbers are too low we are just going to have the same problem of workers coming in illegally. As long as there are jobs available here in the United States and we've got this 2,000 mile border with Mexico and our other Central American neighbors, I think you're going to have illegal immigration. The other issue that people don't talk about is that a lot of people here illegally enter legally and then overstay. Thirty or forty percent of those here illegally entered legally, and you can build a 2,000 mile fence and that isn't going to keep those workers out unless we want to shut ourselves out from tourists, business travelers, and other visitors, so we don't know what the legislation is going to look like. The Senate Judiciary Committee is going to take that up in the weeks ahead but all the signs are its going to have the broad outlines of the legislations last year. I hope they fix some of those provisions that really made last years legislation ultimately ineffective if it had become law."

Anastasia Uglova: "We're still hearing some proposals for a national immigration card and retinal scans. What do you think of those?"

Dan Griswold: "Well, of course, I think for American citizens a national ID card is something we should oppose. We shouldn't need a license to live and work to support our families. I do think when you're talking about a new visa program, people coming into the country from outside the country temporarily as sort of guests of the country and guest workers; you do have to have some type of security, especially in this post-911 world. Yes, there's not a terrorist problem emanating from Mexico and Central America but the workers participating in this program won't be just from those countries, so I think some kind of tamper-proof ID is going to be required to ensure people that while we're meeting our economic needs we're not compromising our national security and I think Secretary Chertoff's testimony showed that there isn't a contradiction between sensible comprehensive immigration reform to serve our economic needs and the need to maintain national and border security. In fact, he pointed out that the two work well together."

Anastasia Uglova: "And what will be the ramifications of this kind of reform?"

Dan Griswold: "I think we'll see positive ramifications. One, I think we'll see a dramatic decrease in illegal immigration. Immigrants would rather come in legally and those from Mexico, they jump at the chance to come in legally, to have full privileges in the workplace, and to be able to go home multiple times to visit families. We know from the 1950's, with the Bracero Program, when we increase the number of visas, illegal immigration drops dramatically. Two, I think we would be more secure because we'd start to drain the swamp of smuggling and document fraud, you know, our efforts to stamp out illegal immigration without any kind of worker program has spawned a whole underworld of document fraud and smuggling. It's created an underground labor market and I think comprehensive immigration reform would bring that market up into the full sunlight. And finally, we'd benefit as Americans. We'd know who those 11 or 12 million people are who are currently here illegally, we'd take a lot of the pressure off US employers having to be experts in documents and looking people over, and you can't discriminate against Hispanics and yet we know they're a majority of the illegal immigrants, so I think comprehensive immigration reform would answer so many problems that we're currently facing in our immigration system, we just need the political will to do it and I think today's hearings will hopefully be the beginning of the end of this problem we have with illegal immigration."

Anastasia Uglova: "The majority of support for The Cato Institute's work comes from individuals and Cato depends solely on tax-deductible contributions to provide the public with a wealth of free resources, including this podcast. We hope you'll consider supporting or even joining Cato. For information, please go to www.cato.org."

Expand the Visa Waiver Program, featuring Daniel T. Griswold, 01/30/2007 (MP3 )

Anastasia Uglova: "Good day Cato Podcast listeners. Today is Tuesday, January 30 and I am Anastasia Uglova, your host. In a new Free Trade Bulletin published by The Cato Institute, the director of the Center for Trade Policy Studies Dan Griswold argues that the United States is unnecessarily costing itself millions of dollars and sorely needed good will with an overly cautious visa waiver policy. The study, entitled "Expand the Visa Waiver Program to Qualified Countries," makes the case for extending the visa waiver to a handful of nations that pose no security threat to the United States, but whose tourists are discouraged by our prohibitive visa process."

Anastasia Uglova: "What's wrong with the visa waiver program that we have in place today?"

Dan Griswold: "Well, really, there's nothing wrong with the program other than it should be extended to more countries. The Visa Waiver Program has been in place for twenty years and it allows visitors from twenty-seven different countries to come to the United States for up to ninety days without first obtaining a visa for tourism or business travel. These twenty-seven countries are basically the countries of Western Europe, and Japan, Australia, New Zealand, and Singapore. The problem with the program is there are a number of other countries, called The Road Map Countries, that really should be part of the Visa Waiver Program. They're strong U.S. allies. They have middle to upper incomes so there isn't a danger of them wanting to come here for jobs. These countries are important U.S. allies, like Poland, Hungary, the Czech Republic, the three Baltic republics of Estonia, Latvia, and Lithuania. South Korea. The Japanese can come here without a visa but South Koreans can't. Explain that policy. We are loosing out, one, on tourist dollars, but two, on an opportunity to build good will with people around the world by excluding these countries from this program."

Anastasia Uglova: "You talk about the economic consequences of this program in your study. What benefits are we missing out on?"

Dan Griswold: "Well, what we're missing out on are hundreds of thousands and potentially millions of visitors who would come to the United States and spend their dollars. The studies show that somebody coming here on the Visa Waiver Program spends more than twice as much, or, almost twice as much as somebody who comes to the U.S. from other programs. Over half of the visitors to the United States last year came from visa waiver countries. Two-thirds of visitors outside the North American continent come here on the Visa Waiver Program. Some estimates say that were we to revoke the Visa Waiver Program, it would cost the U.S. economy something like $28 billion over a five-year period and three million people wouldn't come to the U.S. who would have come here otherwise. These visa waiver tourists right now are invigorating our economy to the tune of $5-10 billion per year. Just to illustrate the potential that we've lost by not extending the program, I compared the Czech Republic with Portugal. These countries are remarkably similar in their population, their economic development, their economic ties with the United States, and their trade and investment. They are both members of NATO and the European Union, yet Portugal is in the Visa Waiver Program, with over 100,000 visitors to the U.S. last year, and the Czech Republic is not and we had only 45,000 visitors from there last year and I think the absence of the Visa Waiver Program makes a difference. It costs $100 to apply for a visa. You have to show up at a consulate or an embassy, fill out forms, wait for weeks if not months and it is discouraging people from coming to the United States and that is not in our interest."

Anastasia Uglova: "Would extending the program jeopardize our national security?"

Dan Griswold: "No it wouldn't. In fact, it would enhance our national security. None of the road map countries pose a security threat to the United States. There are not restive populations in Poland or South Korea looking to do us harm. They are some of our best friends. One of the most problematic populations abroad is Muslims and Muslim extremism, and there are hardly any Muslims in these road map countries, so that shouldn't be an issue at all. It enhances our national security by one, building good will. We are treating these countries in a discriminatory fashion and they somewhat resent having to apply for visas when neighbors who are similar in their view towards the United States don't need to apply for visas. Also, it allows the U.S. State Department and its consulates abroad to redeploy their resources. Rather than spending thousands of hours and millions of dollars processing visa applications from South Koreans and Czechs, Poles, and Greeks, they can turn those resources to less developed countries, for example, where the security threats are more real."

Anastasia Uglova: "I'm willing to bet that a lot of these visitors are actually workers looking for better paying jobs. Wouldn't this exacerbate our illegal immigration situation?"

Dan Griswold: "I'm sure that is an objection you will hear on Capitol Hill, that if we let more Poles and South Koreans in, they'll overstay their visas and become illegal workers here. I think the chances of that are pretty minimal. One, these countries are very developed with relatively high standards of living. Most of these countries are members of the OECD, which is kind of the rich country club. They don't need to come to the United States to get a better job and live an illegal existence here. For these European Countries, they are members of the European Union now and they can go legally to places like Great Britain and Sweden and other places if they want to migrate to better their condition. So the chances of them staying and adding to our illegal population in any significant numbers are small. One final check is that we can kick countries out of the Visa Waiver Program as rapidly as we let them in. Argentina and Uruguay were members of the Visa Waiver Program. In the late 1990s they went through some economic difficulties and there were legitimate concerns that we would get economic refugees from those countries so we just kicked them out of the program. We can do that if there is any threat to our national security and if there is any evidence of widespread violations of our immigration laws we can remove them so it's a pretty safe. Low-risk bet to extend this program to half a dozen or a dozen or so deserving members in the road map countries."

Anastasia Uglova: "Extending this program would probably do something for our image abroad."

Dan Griswold: "I think it would enhance our image abroad. You know, there was a very poignant letter from Vaclav Havel, who was the great dissident and former president of the Czech Republic, wrote to President Bush, saying, we're one of your best allies in the world and yet, as a relic of the Cold War, we've been excluded from the visa waiver group of countries. In a way, this is one of the last relics of the Cold War and a last piece of unfinished business. It is like the Berlin Wall is still in place, preventing Czechs, Poles, and Hungarians, who've waited so long to join the free world and are such great allies of the United States in ever sense of the word, and yet, we are discriminating against them. If you are a French citizen you can come here without a visa but if you are a Pole, you can't. Explain that to me."

Anastasia Uglova: "This has been Cato Daily Podcast. Thank you for listening."

Doha Part Deux, featuring Sallie James, 01/19/2007 (MP3 )

Anastasia Uglova: "Hello. Welcome to Cato Daily Podcast. Today is Friday, January 19 and I am Anastasia Uglova. Recent meetings between U.S. Trade Representative Susan Schwab, WTO Director-General Pascal Lamy, and EU Trade Commissioner Peter Mandelson have led to revived optimism about the future of Doha. The World Economic Forum is set to meet next week, which may lead to further developments in trade negotiations. Cato Trade Policy Analyst Sallie James joins us today to help sort out the rumors. What spurred these hopes that the Doha Round may soon be revived?"

Sallie James: "A series of high level meetings between European and American trade negotiators and, obviously, the President of the United States and the European Commission occurred last week. From those meetings, we saw the presence of very strong rhetoric from U.S. President Bush that he wants to see a successful Doha Round outcome. The other thing we saw, or, rather, we didn't see was the finger pointing and blame-gaming we've seen from the U.S. and the Europeans so far. I think, on the other hand, that what we haven't seen is significant open shifts in positions, especially from the Europeans or the United States, which are the two biggest players at the moment. We really need to see shifts from those two and then other significant players will start to weigh in. We have not seen any open changes in positions from the Europeans and the United States that have been publicized in any way so far. That will be necessary to get this round going."

Anastasia Uglova: "U.S. Trade Representative Susan Schwab gave a speech at the WTO, in which she spoke about confidence building and, I quote, "what if?" conversations. What did she mean by that?"

Sallie James: "Well, I think what she has indicated is that what she wants to get away from is the focus on a few specific numbers, and while they are important, what they ignore is the kind of exceptions and various rules about how you can use certain subsidies. That will determine the substantive outcome. For example, in agriculture, there might be an average tariff cut, and while that is very important and it is getting a lot of focus, and rightly so. What are also very important are the exceptions to that rule. For example, countries have the ability perhaps to shield a certain number of products from that average tariff cut in exchange for opening up more quota access. So really, for a country to decide whether a deal is or is not in their interest, they will want to know "yes, this is the average cut but if you are going to shield all the products that I have interest in, then its not going to give me a whole lot of benefit." These are the sorts of packages of various combinations of numbers that Susan Schwab might be talking about. I think she also wants to get away from the focus on agriculture. I don't know if that is going to be possible. Agriculture is very visible and very important in these talks and we've seen that they've actually caused the breakdown of these talks a number of times. But, she's quite right in saying that the WTO is about a lot more than just agriculture. The other "what if?" scenarios she might be talking about are things like, if we gave some access in agriculture, what would we see in services and industrial products. I think what she is trying to do, and what a lot of other countries are trying to do as well, is to have these kinds of discussions to move away from that rhetoric-based finger pointing that we've seen in the past."

Anastasia Uglova: "What pulled the Doha Round under are these stubborn attitudes of the U.S. and the EU towards making any kinds of concessions. Do you think it is likely that the U.S. will lower farm subsidies this time to keep the Doha Round alive?"

Sallie James: "That is a very good question. I don't know that we're going to see a lot from the United States unilaterally and I think that is a real shame because these subsidies are very much a drain on the US economy, even though a lot of American lawmakers see them as a bargaining chip. In other words, as something to kind of keep back and only give away in exchange for market access. They really are a drain on the economy and for that reason they should go anyway. Colin Peterson, the new chairman of the House Agriculture Committee, has remained adamant that the United States will not lower their farm subsidies unless they see significant market access, if at all. The other thing Chairman Peterson has indicated is a certain dismissive attitude towards the WTO in general. For example, in response to questions from the press about the possibility of dispute settlement action against the United States, Chairman Peterson has said, and I paraphrase here, it doesn't matter, we've got a lot of lawyers in Washington. And that is really a worrying sign. As far as stubbornness from the Europeans, some French ministers this week have openly criticized EU Commissioner Mandelson for offering or indicating that he might go beyond what the European Union has already offered in agriculture. The French are very reluctant to do that. Of course, they have presidential elections coming up in April and May and that is going to constrain them. So European Commissioner Mandelson is in a really difficult position."

Anastasia Uglova: "The World Economic Forum will meet on January 24. What can we expect to happen there?"

Sallie James: "Well, the Swiss are hosting a meeting on the sidelines of the WEF in Davos, and they have invited thirty key agricultural, or more generally, trade players to this meeting and the idea is, from what I can gather, is to discuss process going forward. I'm not sure we are going to see a whole lot out of that meeting. We may see big statements of support for the round going forward and while that is welcomed, we need to keep in mind that those sorts of statements were issued last year at the very same forum and in fact, nothing came of it. So, I think we need to keep our expectations very moderate for that forum. In fact, a lot of key players, including the Swiss are downplaying the expectations of that forum, only because setting up the idea that something big is going to come of it is only setting up people for disappointment if nothing comes of it. So I think they are deliberately keeping expectations low."

Anastasia Uglova: "What if the talks fail again?"

Sallie James: "Well, I think we can expect a stall for a couple of years, at least until probably 2009. The problem we have coming up is, first of all, the French elections in April and May that I mentioned and it's looking like trade promotional authority won't be extended. At least that is the indication we are getting from certain key congressional members. The other problem is then you get into 2008, where there is the United States presidential election. Unfortunately, these sorts of political events really do interrupt these trade calendars because it tends to bring out even more protectionist political rhetoric that does not help these negotiations. So that is something that is really going to place a hiatus on these talks. I think it is very unfortunate for a lot of reasons. First of all, if we don't see a successful conclusion to these talks in the next few months, we could see a slide into protectionism in the absence of these possibilities of negotiating a successful outcome. The other concern that I have is that we might see a push towards more bilateral agreements or regional agreements and while these can open trade, they are no where near as good as the WTO, that of course said, not as good as unilateral liberalization. But in the absence of that we have to rely on multilateral agreements. If there are no negotiations in the offing, countries tend to get a little anxious about that and a little rancorous and they might start launching dispute settlement action. While that may be justified in some cases, it is certainly not helpful to a smooth global trading system. On the other hand, Doha has been struggling for a while and yet world trade has continued to grow, in fact, last year world trade grew by about eight percent, which is almost double GDP growth so, in other words, trade is growing even faster than income. We've had things like the Chinese accession in 2001, which was a huge event and it's been, by in large, a good success as well. So on the other hand, I think the world will keep on spinning but I certainly would want to see a successful Doha Round that is for sure."

Anastasia Uglova: "This has been Cato Daily Podcast. Thank you for listening."

On the Wealth of Nations, featuring P.J. O'Rourke, 1/10/2007 (MP3 )

Anastasia Uglova: "Welcome to Cato Daily Podcast for Wednesday, January 10, I'm Anastasia Uglova. Today's guest is Cato's H.L. Mencken Fellow P.J. O'Rourke. P.J is the author of thirteen books, including Parliament of Whores and Give War a Chance, both of which were number one New York Times Best Sellers. Yesterday, P.J. gave a book forum at The Cato Institute on his most recent work On the Wealth of Nations, which is an impressive, and I would add successful attempt to cull the essential concepts from Adam Smith's massive Wealth of Nations into a brisk, enjoyable, and informative 217 pages. P.J., why is your book necessary?"

P.J. O'Rourke: "My book is necessary because nobody is going to read The Wealth of Nations. I mean, there are two or three people here at Cato that have read it but that's it. It's 900 pages long and a lot of it is out of date. A lot of it has to do with econometrics that are old fashioned and a lot of it could quickly represented with graphs but Adam Smith didn't have graphs and yeah, it runs on. So what's really needed is a wise condensation of it but failing that we are going to get my commentary."

Anastasia Uglova: "Did you find such a tome a little bit unapproachable and intimidating at first?"

P.J. O'Rourke: "No. It was just a lot of work. Actually, Adam Smith has very nice prose style. Once you get with the rhythm of 18th Century English it's really not difficult reading at all; there's just a lot of it. And of course, there's context, I mean, it took me a year, more than a year, to do the reading for this book. But a lot of that reading was background reading to understand what was going on at the time. I was not as familiar as I should have been with the French Physiocrats, with David Hume, with a variety of other subjects."

Anastasia Uglova: "How does Wealth of Nations retain its relevance when most of the examples that Adam Smith used to demonstrate his concepts are outmoded and by and large irrelevant today?"

P.J. O'Rourke: "Well, the simplest answer to that would be on the issue of free trade. Adam Smith had that absolutely nailed, long before our present panic about trade with China or, twenty years ago, our trade with Japan, or whatever the panic will be in the future. The same panic pertained in 18th Century Britain about the balance of trade and current accounts deficits and Adam Smith just demolishes these things. He said, of course we're spending money overseas but it's not like we're not getting anything for that money. You say, well, money has a worth that perishable goods don't have and he said, well, pots and pans have a worth that perishable goods don't have so why don't we try and accumulate more pots and pans in Great Britain and thereby exacerbate our domestic felicity."

Anastasia Uglova: "Which teaching of Adam Smith's would you say is least appreciated today?"

P.J. O'Rourke: "The same teaching of Adam Smith's, of all good economists, which is that wealth is not zero-sum. If there is one key lesson to be learned about economics it is that wealth is not zero-sum. There is not a fixed amount of good things in this world and if I eat too many pizza slices you have to eat the Domino's box."

Anastasia Uglova: "How well do you think we have learned those lessons?"

P.J. O'Rourke: "Very poorly indeed to judge by our behavior. I mean, we've just elected a pack of Democrats to Congress, not that the pack of out going Republicans were so swell. But one of the things these Democrats are so excited about is to restrict trade. They think that they are going to make America more prosperous by restricting trade. Prosperity is based on three things: pursuit of self-interest, division of labor, and freedom of trade. The Democrats might as well come in on a program saying that you can't do anything that's good for you, or that you can't specialize, that you must know how to do everything. It would be equally absurd."

Anastasia Uglova: "You mentioned in the book that in order to fully understand The Wealth of Nations it is necessary to also peruse his earlier Theory of Moral Sentiments. Why is that?"

P.J. O'Rourke: "Well, Adam Smith was not primarily an economist. He couldn't have been because the field hadn't been invented. He was a moral philosopher and his plan was to write three massive works: The Theory of Moral Sentiments, the first book that he wrote; The Wealth of Nations, and a book about politics, what he called jurisprudence. And the idea was that The Theory of Moral Sentiments would address how we achieve moral understanding, how we make moral decisions, how we improve our own morality, and the second book would be how we improve our material condition, and the third book would be how to improve our political condition. He didn't get to the third book, in fact, I think he may have been too discouraged to try the third book in a way, because as a moral philosopher he must have eventually come to the conclusion that politics is no place for morality and not much of a place for philosophy either. People regard the work of Adam Smith as being mostly about the material world; well that's only half of his work. He makes a lot of arguments in The Wealth of Nations that sound rather cold and calculated, for instance, his argument against slavery in The Wealth of Nations is that slavery is inefficient, that slaves are actually very expensive and that slavery is not a good way to accomplish things, and you think, well doubtless, that's all right but gosh, what a cold argument. Well, he had already made his impassioned moral argument against slavery in The Theory of Moral Sentiments and it's in The Theory of Moral Sentiments that we see Adam Smith laying out his ideas about what is valuable, what actually constitutes self-interest and he leaves these things unsaid in The Wealth of Nations because he assumes you've read the first book and you haven't and neither had I. In fact, I had never even heard of the first book until I started to work on The Wealth of Nations."

Anastasia Uglova: "How do you think the invisible hand concept became so famous given that Smith only mentions it in passing once or twice?"

P.J. O'Rourke: "Actually, he mentions it three times. There is kind of an off-hand reference to the invisible hand of Jove in an essay about astronomy of all things that he wrote when he was in his twenties. I don't know why people grabbed on to that. I guess it was kind of a cool image. When Adam Smith used the metaphor of the invisible hand what he really meant, what he was really talking about, was unintended consequences. There are all sorts of things that we do that have unintended consequences, some positive and some negative. Specifically, when he used the invisible hand in The Theory of Moral Sentiments he was talking about how the rich people, when they develop and generate wealth, even though they are bad people and they would love to use all this wealth the sad fact is they cannot wear more than a certain number of clothes; there stomachs are no larger than our stomachs. They'd like to eat all the food that they grow but they simply are physically incapable of doing it and so therefore, the wealth that rich people generate benefits other people, even though the rich people don't want it to. That's what he's talking about with the invisible hand. How that exactly got, what the historiography, if you will, of the invisible hand, why it got picked up as an idea about how capitalism naturally makes everything better for everybody I don't know. When Adam Smith meant that he said it. He had specific ideas about a system of society and government where people would be allowed to keep the fruits, they would be secure in the fruits of their endeavor and that we should work to build a system of law and a system of contract that would give people security, and so, he didn't need to use the invisible hand and indeed he didn't."

Anastasia Uglova: "How did he go about upending the theories of the Physiocrats and especially the mercantilists given the popularity of their ideas at the time?"

P.J. O'Rourke: "Well, he really didn't spend that much time, he a lot of time refuting the mercantilists. He didn't spend too much time refuting the Physiocrats and I think the reason was that their ideas were so absurd on the face of it. They basically felt that all wealth came from agriculture and only from agriculture. It was such a ridiculous argument that he didn't even, I mean, he does refute it but he doesn't spend a lot of time doing it because it doesn't need a lot of time for refutation. Instead, actually, he was very complementary about the Physiocrats because, among the other things the Physiocrats believed, I mean, they believed some silly things but they also believed in not interfering with people's economic endeavor and Smith so approved of the fact that they approved of free trade and they approved of a free market system that he gave them kind of a bye on their sillier ideas."

Anastasia Uglova: "How did your politics evolve? You started out, as I understand, at a left-wing rag and now you are the Mencken Fellow at The Cato Institute."

P.J. O'Rourke: "Well, I actually started out as a normal Republican. I came from a normal Republican family but it was the sixties. I was carried away by the winds of the times and I thought I was a leftist just because all the other kids were thinking that they were leftists and the cute girls seemed to go for leftists or whatever. And as I got into my late twenties and early thirties and I started to see the reality of the world I think the thing that really changed my mind, and it wasn't something that happened instantly, it was a thing that gradually changed my mind was the realization that left-wing philosophy required a tremendous amount of interference in individual life and that interference couldn't possibly be effective without a tremendous amount of coercion. And there were examples extant in the world of where that coercion went, I mean, big, horrible, nasty examples like the Soviet Union, like Mao's China, like Vietnam, Pol Pot's Cambodia, and North Korea, and you had to be pretty dense not to see what direction that amount of coercion led."

Anastasia Uglova: "As a prolific writer are there any other books in the works?"

P.J. O'Rourke: "Two things interest me at the moment. One is raising children. I came to child-raising rather late so I'm having a lot of fun with that and that probably will translate into some written. The working title is The Drinking Man's Guide to Bad Parenting. And the other thing is democracy, I'm fascinated by democracy. Besides being involved with Cato I'm on the board of trustees for Freedom House and here we are promoting democracy and freedom around the world and yet I've realized over the past few years that we don't always know what we mean when we start talking about democracy and we don't always know what we mean when we talk about freedom."

Anastasia Uglova: "If you enjoyed this program consider subscribing to Cato Audio, a dynamic sixty minute monthly recording that brings you inside The Cato Institute for highlights from exceptional one of a kind lectures and events on key issues of the day presented by nationally known scholars, authors, and political leaders. Cato Audio is available on our website as well as on I-Tunes, and Audible.com."

In Defense of China, featuring Daniel J. Ikenson, 12/14/2006 (MP3 )

Anastasia Uglova: "This is the Cato Daily Podcast for Thursday, December 14, 2006 and I'm Anastasia Uglova your host. Scolding China's economic and trade policy is nothing new. It's been accused of everything from stealing our jobs to taking our money and flooding our shores with substandard goods. In an Op-Ed published in the National Review Online this week, Daniel Ikenson, who is associate director of the Center for Trade Policy Studies and co-author of Anti-Dumping Exposed: The Devilish Details of Unfair Trade Law, argues that China deserves our praise for the progress it has made and that it should be encouraged, not blocked from continuing to make strides in the right direction. How has China's membership in the WTO affected its economy?"

Dan Ikenson: "China's economy has been in growth mode since the late seventies when Deng Xiaoping instituted reforms for the country. Since China's WTO membership, five years ago this week, that trajectory has been even steeper. China's economy is growing faster, by double-digits at an annual rate. But it's not only China's economy that has faired well on account of its membership in the WTO. The US economy has done exceptionally well in the past five years. It's expanded for nineteen consecutive quarters. It's increased by thirty percent since 2001 and in real terms it has increased by sixteen percent. There is a lot of bluster from US manufacturing industries about the adverse impact of imports from China on US manufacturing industries but the fact is, that US manufacturing output has actually increased by eighteen percent since China joined the WTO. Revenues have increased by thirty-eight percent and operating profits for manufacturing industries have increased at an increasing rate every year. Wages in manufacturing have gone up nearly ten percent during this period. Likewise, the global economy has experienced no hiccups in the past five years. A lot of countries are doing very well on account of the fact that China is a production platform. For example, there is a lot of outsourcing going on in Japan. The Japanese economy was moribund for over a decade but recently, it has awakened from its slumber and is doing quite well. One of the reasons is because they are able to rely on Chinese production and the Chinese market, so it has been a boon for the world that China has been part of the global economy."

Anastasia Uglova: "Nonetheless, it's a fact that the US manufacturing sector has declined in recent years."

Dan Ikenson: "Certainly there has been a decline in the number of workers in the US manufacturing sector but China has lost even more manufacturing jobs than the United States. There is this belief that every time a shop closes down in the United States that it reopens in China. The fact is, American's invest less in China, American individuals and companies invest less in China every year than we do in the Netherlands and American companies employ fewer people in China than we do in Germany. This decline in manufacturing employment is a world wide phenomenon and it is attributable to a longer term trend of productivity growth. We don't need as many people on the production line to produce the widget today as we did a year ago, five years ago, or twenty years ago."

Anastasia Uglova: "If this is true, if this phenomenon is happening simultaneously everywhere else in the world, then why is China constantly put in a position where it has to defend itself against criticisms that it's causing a huge trade deficit and that its stealing