Politics, et Cetera

A publication from The Political Forum, LLC

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Tuesday, August 5, 2014

They Said It:

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.  He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it.  By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.  Nor is it always the worse for the society that it was no part of it.  By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.



“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” Adam Smith wrote in his classic, An Inquiry into the Nature and Causes of the Wealth of Nations, “but from regard to their self interest.”  With these words, Smith not only launched the modern study of economics, but provided a truth by which much of human behavior can be observed, measured, and predicted.  As a general rule, he observed, individuals respond to stimuli by doing what they perceive is best for them, their families, and their interests.  Man (and woman) is self-interested.  And thus is his life structured.  And thus is our world comprehended.

We won’t waste too much time explaining incentives and their power, given that most of you, gentle readers, are undoubtedly far better schooled in economics than we.  We will note only that individuals react in various ways to changes in conditions, such as providing benefits or imposing costs.

As Smith noted, from an economic perspective, the most effective incentives are remunerative, meaning that they affect personal financial well-being.  The butcher, the brewer, and the baker increase supply, for example, to meet demand, knowing full well that their financial self-interest will be served by serving the needs of the consumer.  Everyone wins.

Of course, not everything is an economic transaction.  And that means that not all incentives are remunerative.  Sometimes people are motivated by factors other than immediate financial considerations.  And therefore traditional financial incentives sometimes fail, even backfire.

The classic example of this remunerative failure is blood donation.  As countless economists have noted, one would normally expect blood donations to increase when remunerative incentives are offered.  Pay for blood, and you’ll get more blood.  But that’s not the way it works.  As it turns out, payment for blood actually – and counterintuitively – decreases donations.  Women in particular prefer to give blood selflessly, as an exercise in altruism.  Payment destroys the altruistic sense of honor and decency associated with the act.  And payment therefore has the economically perverse effect of decreasing blood supplies.

Rational choice theory attempts to explain how and why financial incentives fail and how to understand human behavior beyond mere financial transactions.  As with blood donations, individuals have preference sets that extend far beyond immediate financial considerations.  And as a general rule, individuals will act to maximize the highest perceived preference.  And that means, in turn, that even actions that may seem crazy to outside observers are not actually crazy when the preference set of the actor is considered.  Indeed, nearly all human behavior is rational, in that it attempts, as best as possible, to satisfy the highest preference at the highest level.

Over the past several decades, as the study of human behavior and motivations has advanced, the professional administrative-technocratic class has attempted to incorporate incentive calculations into public policy.  Sometimes, this recognition of economic reality has worked well, as with the supply-side tax revolution.  Give people an incentive to keep a greater portion of what they earn and they will strive to earn more.  Take more of what people earn and they will lose their incentive to increase their efforts.

Of course, calculating people’s preferences is not quite as easy as would appear.  Again, not all preferences are remunerative in nature, and there is always, therefore, the risk of “mirror-imaging,” which is to say the risk of substituting one’s own preferences for those of the target population and thus crafting political/policy options that are either ineffective or which backfire.

More often than not, when our present-day administrative elites attempt to design policy specifically to manipulate behavior they fail, usually quite miserably, because their personal experiences are too far removed from those of the population whom they are trying to manipulate.  They are not billionaires seeking to protect their hard-earned wealth from onerous taxes.  They are not long-term unemployed workers with few options for future gainful employment.  They are not insolvent young adults in good health and seeing no need to pay exorbitant health insurance premiums just to subsidize older, sicker people.  And most especially today, in light of the daily headlines and the growing chaos on this nation’s southern border, they are neither Central Americans who are fleeing horrible conditions at home nor average, law-abiding American citizens who are worried about their jobs, the adequacy of police protection, infectious diseases, or the sovereignty and dignity of the American state.  As such, their prescriptions are likely to be disastrous, particularly if they are sullied by partisanship.

Enter Barack Obama.

When Obama first won the presidency in 2008, he did so by assembling an exceptionally broad coalition.  He won nearly every demographic category except white males and cruised to an easy victory.  When he was re-elected in 2012, he won most of the same groups, but by significantly smaller margins.  All except one, that is.  In four years, Obama actually increased his portion of the Hispanic vote from 67% to 71%, winning a higher share of that demographic group than any candidate since Bill Clinton in 1996.  This slight, but exceptional jump among the fastest growing voting bloc in the country was enough to ensure not only his victory but months and months of Republican hand-wringing as well.  One key paragraph in the Pew Center’s write-up of the election’s demographics sent shockwaves through the GOP establishment:

Throughout this election cycle, the issue of immigration has been an important issue for Hispanics.  In the national exit poll, voters were asked about what should happen to unauthorized immigrants working in the U.S.  According to the national exit poll, 77% of Hispanic voters said these immigrants should be offered a chance to apply for legal status while 18% said these immigrants should be deported.  Among all voters, fewer than two-thirds (65%) said these immigrants should be offered a chance to apply for legal status while 28% say they should be deported.

Washington insiders on both sides of the aisle had, for a long time, discussed “comprehensive immigration reform.”  But only after the 2012 election did Republicans begin to panic over the widely believed revelation that the GOP was dead unless it could win a greater share of the Hispanic vote.  After much internal argument, they concluded that they had no choice but to pander on the issue of immigration.  The following article from The Hill, gives just a taste of the tenor of the fear that has set in among Republican insiders.

Sen. Lindsey Graham (R-S.C.) offered a pointed rebuttal Sunday to strategists and pundits who say embracing immigration reform will put GOP incumbents at risk in future primaries.

Graham said if Republicans let the status quo stand and hope illegal immigrants leave the United States because of poor conditions, they will obliterate their chances of winning the White House in two years.

“If we keep playing this game that self deportation is the only answer for the Republican Party, we will have destroyed our chances in 2016 and dealt a death blow to our party because by 2050 the majority of the country is going to be African American, Hispanic and Asian,” he said on CBS’s “Face the Nation.” . . .

“If we become the party of self deportation, if that again is our position in 2016, we’re going to drive a deep wedge between us and Hispanics,” he said on CBS. . . .

“If you solve the immigration problem in a good, American, responsible way, our party’s back in the game and we can dominate the 21st century,” he added.

During the 2012 campaign, the Obama administration and other Democrats had a growing sense of the Republicans’ desperation on this issue.  More to the point, they also had a growing sense of Republicans’ divisions over how to address it.  They knew that the GOP establishment wanted frantically to attract Hispanic voters by signaling “good will” and approving a comprehensive bill containing de facto amnesty.  They also knew that Republican voters, as opposed to Republican insiders, would never stand for such a bill and would not only attack their party’s establishment but would do so in a vocal and easily caricatured way.  Needless to say, the Democrats stirred this pot constantly by claiming that despite the party leadership’s weak attempts to court Hispanic voters, the GOP is actually a party of racist rednecks who want to deport all Hispanics and save the country for the “white man.”  This was, in the eyes of the White House, a “can’t miss” opportunity.  And so the Obama administration went about pursuing the immigration issue and, in the process, making Republicans look out of touch and hopelessly divided.

Beginning in June, 2012, Obama stepped up the pressure on the GOP.  First and Foremost, he issued a memorandum directing Janet Napolitano, then-Secretary of Homeland Security, to begin implementing what the administration called “Deferred Action for Childhood Arrivals” (DACA).  In essence, this was a grant of at least temporary legal status to the “DREAMers,” who were defined (for DACA) as illegal immigrants between the ages of 15 and 30 who had made their journey to the United States as children and who either were in college or were willing to serve in the military.

The name came from the DREAM Act (Development, Relief, and Education for Alien Minors Act) which, by the way, had failed to pass Congress.  And this, in turn, meant that the Obama administration was granting de facto, if temporary, amnesty to a large group of individuals, but without the standing of law and without any official “pathway to citizenship.”

Over the course of the following two years, the administration took full advantage of the division and confusion that this caused within the Republican Party.  While claiming to be something akin to “the deporter-in-chief” Obama nevertheless instructed his Justice Department and Immigration and Customs Enforcement agency (part of Homeland Security) to exercise discretion in enforcing the nation’s immigration laws, specifically directing them to focus little or no attention on “low priority” undocumented aliens, those whose only crime was coming to the U.S. illegally.

By the spring of this year, Obama was openly and unashamedly signaling his intention to rework the nation’s immigration laws, unilaterally if necessary.  Needless to say, he cloaked this action in compassion, pragmatism, and desperation born of the GOP’s unwillingness to address this crucial issue.  Specifically, he directed Secretary of Homeland Security Jeh Johnson to “see how [DHS] can conduct enforcement more humanely within the confines of the law.”  Most observers construed this to be an instruction to slow-walk deportations.

This awakened at least a few slumbering Republicans to the fact that Obama had placed them in an extremely difficult political situation.  On April 24, 22 GOP Senators, led by Iowa’s Chuck Grassley, wrote a letter to the President accusing him of provoking a constitutional crisis over immigration and the separation of powers.  Specifically, they wrote:

Your actions demonstrate an astonishing disregard for the Constitution, the rule of law, and the rights of American citizens and legal residents.  Our entire constitutional system is threatened when the Executive Branch suspends the law at its whim and our nation’s sovereignty is imperiled when the commander-in-chief refuses to defend the integrity of its borders.

Obama smiled.  At least for the time being, he had successfully maneuvered his foes into an enormous and enormously cynical “trap.”  And they have yet escape.  If they yield to his instincts, they will alienate their base.  If they do not, or worse, if they actually fight back, they will further alienate Hispanic voters, who everyone seems to believe hold the key to all future national elections.

More than that, though, Obama has created a massive and nearly irreversible incentive for illegal immigrants – and especially children – to hurry to the American border in order to take advantage of his generosity, his “humane” deportation policy, and his presumed coming amnesty.

Wittingly or unwittingly – and we believe it was a little of both – Obama delivered a message, which was received by not just the Hispanics, but by the entire world.  “Get across the border,” he hinted, “and we’ll make sure you get to stay.”

Now, Obama’s supporters claim that he set no trap for the Republicans; that the Trafficking Victims Protection Reauthorization Act, which established the rules for handling illegal child immigrants, was passed in 2008 and signed by none other than George Bush himself.  Moreover, they claim that the current reaction to this law is not Obama’s fault either; that the children are being driven out of their home countries in Central America by war, crime, drug gangs, and the like, and if anything, Obama is as much a victim of this circumstance as the kids are.

All of this sounds nice enough, we suppose.  But it’s not true.  The law directing Homeland Security on dealing with children may have been signed by Bush, but it had no effect whatsoever on child immigration or illegal immigration more broadly until the world received and understood the full importance of the melding by Obama of two separate policy decisions, namely his lax approach to boarder enforcement and this Deferred Action for Childhood Arrivals message.

Lest the relationship between these actions not be grasped, current projections are that the U.S. Border Patrol will “apprehend” more than FOUR TIMES the number of children immigrating to this country illegally in 2014 than it did in 2011.  More than FOUR TIMES.

Which brings us back to the subject of incentives.

Last June, a report written by Border Patrol agents in the Rio Grande Valley sector of Texas, based on interviews with some 230 immigrants (and reported by the Washington Examiner’s Byron York), put it this way:

The main reason the subjects chose this particular time to migrate to the United States was to take advantage of the “new” U.S. “law” that grants a “free pass” or permit (referred to as “permisos”) being issued by the U.S. government to female adult OTMs [Other Than Mexicans] traveling with minors and to UACs [Unaccompanied Child].   (Comments: The “permisos” are the Notice to Appear documents issued to undocumented aliens, when they are released on their own recognizance pending a hearing before an immigration judge.)   The information is apparently common knowledge in Central America and is spread by word of mouth, and international and local media.  A high percentage of the subjects interviewed stated their family members in the U.S. urged them to travel immediately, because the United States government was only issuing immigration “permisos” until the end of June 2014 . . . The issue of “permisos” was the main reason provided by 95% of the interviewed subjects.

Further evidence that even the administration understands that it is responsible for creating the incentives for encouraging children to make the harrowing journey from Central America, through Mexico, past the rapists, and the pimps, and the human traffickers, and the drug smugglers, is the fact that everyone from the President on down has been trying to defuse the situation by telling the people of Latin America not to make the journey.

In June, Obama sent the hapless Joe Biden to Central America to “emphasize the dangers” in travelling north to the United States.  And last month, Obama himself, said this in response to a question from ABC News’s George Stephanopoulos: “absolutely . . . don’t send your children unaccompanied on trains or through a bunch of smugglers.  That is our direct message to families in Central America.  Do not send your children to the borders.  If they do make it, they’ll get sent back.  More importantly, they may not make it.”

All of this demonstrates that while the administration is finally beginning to grasp that it is responsible, at least in part, for the border crisis, it still does not understand how incentives work.  It still does not understand that what Obama tells the people of Central America is largely irrelevant – not as irrelevant as what clown-prince Biden tells them about the dangers of making the journey north, but irrelevant nonetheless.

As long as there is the perception among the people of Central America that they and especially their children will be given aid and comfort and eventually residence upon reaching the American southern border, they will factor that information into their preference sets.  And they will then act “rationally” based on those preferences.

This means that when the President continues to attack Republicans for dragging their feet; when he continues to promise/threaten unilateral action in place of legislative action; when he continues, essentially, to wink at the Latin Americans even as he says “don’t do it,” he is reinforcing the incentives that he has fashioned over the last five years.  Obama and Biden (and Hillary Clinton, for that matter) may say that the trip is not worth the cost, but that doesn’t make one whit of difference, as long as the potential immigrant population believes that the evidence suggests otherwise.

Clearly, Obama and the administrative class badly misread the incentives in this case.  They assumed, correctly, that some Latin Americans would find some motivation for coming to the United States, if they believed that they would be granted residence.  But they had no idea how much motivation would be found or by how many.  They clearly never considered the importance attached to the “American Dream” by those who have no other dream.  And why should anyone have expected them to, these folks whom Russell Kirk described in his last book as the “enemies of the permanent things?”

And now, fittingly, it all appears set to backfire on them.  Instead of incentivizing a little furor about and a slight increase in illegal immigration, the Obama administration incentivized a full-blown humanitarian disaster.  The headlines, the stories, the images of the children being crammed into detention facilities or, worse yet, dying in the Mexican and Texan deserts all contribute to a palpable sense that there is chaos on the southern border.  And at this moment in particular, chaos is one thing that Americans are keenly interested in avoiding.

As the UACs are shipped out from Texas to Nebraska, California, Virginia, Illinois, Alaska, Arizona, Hawaii, and Heaven knows where else, Americans with good sense are becoming upset.  They do not believe that their cities, their states, and their school districts have the resources to handle this influx.  And in some cases, they’re right.  But even if they are not, they are still upset.  And upset voters are prone to throw the bums out.

Additionally there are health concerns and safety concerns associated with the influx of new illegal immigrants.  Much of this worry is overblown.  But some of it is not.  And again, reality here doesn’t matter as much as perception.  And the perception is that the Obama administration created this problem and now expects average Americans to pay for it, perhaps with their own lives.  Over the weekend, Breitbart News (the right-leaning news wire created by the late Andrew Breitbart) reported the following:

A leaked intelligence analysis from the Customs and Border Protection (CBP) reveals the exact numbers of illegal immigrants entering and attempting to enter the U.S. from more than 75 different countries. . . .

Among the significant revelations are that individuals from nations currently suffering from the world’s largest Ebola outbreak have been caught attempting to sneak across the porous U.S. border into the interior of the United States.  At least 71 individuals from the three nations affected by the current Ebola outbreak have either turned themselves in or been caught attempting to illegally enter the U.S. by U.S. authorities between January 2014 and July 2014.

As of July 20, 2014, 1,443 individuals from China were caught sneaking across the porous U.S. border this year alone, with another 1,803 individuals either turning themselves in to U.S. authorities at official ports of entry, or being caught attempting to illegally enter at the ports of entry.  This comes amid a massive crackdown by Chinese authorities of Islamic terrorists in the Communist nation.

Twenty-eight individuals from Pakistan were caught attempting to sneak into the U.S. this year alone, with another 211 individuals either turning themselves in or being caught at official ports of entry.

Thirteen Egyptians were caught trying to sneak into the U.S. this year alone, with another 168 either turning themselves in or being caught at official ports of entry.

Four individuals from Yemen were caught attempting to sneak into the U.S. by Border Patrol agents in 2014 alone, with another 34 individuals either turning themselves in or being caught attempting to sneak through official ports of entry.

Obviously, there is no way to know whether any of the individuals from, say Yemen, are dangerous.  But that’s the point.  No one knows.  No one can possibly know.  And given the mess at the border right now, no will ever know, unless, of course, someone dangerous gets through and does something dangerous.

Right now, illegal immigration is Obama’s baby and his alone.  He intended to trap the Republicans with this gambit, but has instead snared himself and, by association, his party.  Late last week, the Washington Post noted the following:

Immigration has emerged as perhaps President Obama’s worst issue — definitely for today, and maybe of his entire presidency — when it comes to public perception.

new poll from AP-GfK shows more than two-thirds of Americans (68 percent) disapprove of Obama’s handling of the immigration issue in general. Just 31 percent approve — down from 38 percent two months ago.

When you separate those most passionate about the issue, the difference is even more stark, with 57 percent opposed and just 18 percent in favor. That’s more than three-to-one.

Sure, Bill Gates and Mark Zuckerburg want comprehensive immigration reform.  And so do the AFL-CIO and the National Chamber of Commerce.  So do Senator Lindsey Graham and Speaker of the House John Boehner.  And so do Nancy Pelosi and Harry Reid.  And so, therefore, does Barack Obama.

But then, so did erstwhile House Majority Leader Eric Cantor.  And if you can catch him before he packs up the last of his boxes and skedaddles on back to Richmond, maybe you can ask how that worked out for him.

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