Cato Daily Dispatch for November 4, 2003
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Bush Backs Medicare Spending LimitsWal-Mart Is Target of Grand Jury Investigation
P. Diddy 'Sweatshops' Not Really Sweaty
Bush Backs Medicare Spending Limits
"The Bush administration joined House Republicans on Monday in pushing a proposal that would force Congress to vote on possible cutbacks in Medicare if the costs of the program, including new drug benefits, grow faster than expected," The New York Times reports. "The plan would also set limits on the use of general tax revenue for Medicare."
In "Medicare Drug Debacle," Cato's Michael Tanner, director of health and welfare studies, writes: "Unless they are reformed, entitlement programs like Medicare and Social Security will soon become an unbearable burden on our children and grandchildren. But, unfortunately, young people don't vote. Unless they do, or unless a few members of Congress discover their courage, today's young workers can expect to be handed the bill once again."
Cato Director of Fiscal Policy Chris Edwards and researcher Tad DeHaven also argue that Congress should cut spending rather than expand elderly entitlements. In "War between the Generations: Federal Spending on the Elderly Set to Explode," they explain that with the huge numbers of Americans nearing retirement age, Medicare and Social Security are already insolvent, and adding pricey new benefits to the program will prove costly and unfair to young workers.
"It is clear that adding an unfunded prescription drug benefit to Medicare moves directly against reform because it puts the program's spending on an even more unsustainable path," they write. "Unfortunately, tomorrow's young taxpayers are not here to defend themselves against the huge burdens that are being foisted on them by Congress."
Wal-Mart Is Target of Grand Jury Investigation
"Wal-Mart Stores Inc. said Tuesday it has received a target letter from the U.S. Attorney's Office saying the world's largest retailer allegedly violated federal immigration laws," according to The Associated Press.
"On Oct. 23, federal agents arrested about 250 allegedly illegal workers in a 21-state sweep of Wal-Mart stores. ... Wal-Mart received the letter Friday and the grand jury will look at whether the company 'violated federal immigration laws in connection with the use of third-party floor cleaning contractors.' The raids focused on floor cleaners employed by companies Wal-Mart hired for the work. Ten of those arrested were Wal-Mart employees hired as the company continued a move to bring its floor cleaning in house."
In "Willing Workers: Fixing the Problem of Illegal Mexican Migration to the United States," Daniel Griswold, associate director of the Cato Institute's Center for Trade Policy Studies, writes: "Demand for low-skilled labor continues to grow in the United States while the domestic supply of suitable workers inexorably declines--yet U.S. immigration law contains virtually no legal channel through which low-skilled immigrant workers can enter the country to fill that gap. The result is an illegal flow of workers characterized by more permanent and less circular migration, smuggling, document fraud, deaths at the border, artificially depressed wages, and threats to civil liberties.
"Legalizing Mexican migration would, in one stroke, bring a huge underground market into the open. It would allow American producers in important sectors of our economy to hire the workers they need to grow. It would raise wages and working conditions for millions of low-skilled workers and spur investment in human capital. It would free resources and personnel for the war on terrorism. ... President Bush and leaders of both parties in Congress should return to the task of turning America's dysfunctional immigration system into one that is economically rational, humane, and compatible with how Americans actually arrange their lives."
P. Diddy 'Sweatshops' Not Really Sweaty
"We don't mean to be obvious, but presumably among the criteria defining a 'sweatshop' is that its workers actually, uh, sweat," says a Wall Street Journal editorial. "So when hip-hop impresario Sean 'P. Diddy' Combs found himself accused of exploiting Honduran workers who are 'hot' and 'sweating' as they turn out his Sean John line of designer clothing, we called the factory ourselves. Turns out that among the things that distinguish the Southeast Textiles factory (Setisa) from competitors around the world is this: It's air-conditioned.
"This tale, moreover, turns out to be about a lot more than one celebrity and his fashion line. It is the latest example of American union activists trying to shake down a celebrity to become a recruit for their anti-free trade agenda. The people who suffer as a result are the Hondurans for whom textile jobs are a rare opportunity up from poverty."
In "The Idea That Is Changing the World," Cato Executive Vice President David Boaz echoes the sentiment expressed by the Journal. "Some opponents of globalization display an ill-informed nostalgia for the quaint villages in which happy peasants in their traditional costumes make their traditional arts and crafts," Boaz writes. "How much more fulfilling that must be than working for Nike or Kathie Lee Gifford! And yet, to the horror of the anti-globalization activists in Oxford and Ann Arbor, the actual peasants flock to the Nike factories. And no wonder: multinational companies pay about twice the average wage offered by domestic manufacturers in low-income countries. Global incomes are rising because of the increased efficiencies of a greater international division of labor-and rising most clearly in the poor countries that were previously outside the world trading system."
Swedish author Johan Norberg systematically and thoroughly rebuts the the anti-globalization argument in his book, In Defense of Global Capitalism. Norberg takes on the tough issues--economic growth, freedom vs. equality, free trade and fair trade, international debt, child labor, cultural imperialism--and concludes that free-market capitalism is the best route out of global poverty.
Wyatt Dubois, editor, wdubois@cato.org