 I have to tell you how Richard and I met. I was living in Dallas practicing law, and I contacted the head of the economics department at the University of Dallas who is here with us, Sam Bostef. Would you, Sam, raise your hand there. And Sam is one of these great guys. It's in academia as an Austrian libertarian economist, and he's the head of the department there at UD. And UD is this fine, excellent private college in Texas. And I hired Sam to tutor me in economics. And so he says, well, show me what you've read. And so I bring in the list, and he says, no, no, we have to go back to fundamentals. So we go back to the wealth of nations chapter by chapter and into David Ricardo's principles and then up through Manger's principles. And we get to human action by Ludwig von Mises. And he says, well, I really have enjoyed the money you've paid me, but I have to, in good conscience, turn you over to a new tutor. He says, there's a guy coming into the department who is the most widely read Austrian economist of your generation, because this guy is a walking encyclopedia. So Richard Ebling became my new tutor in human action chapter by chapter. And we'd go out to lunch afterward, and we'd start testing each other. OK, well, where do you stand on this? You know, Ray, where do you stand on limited government? Well, where do you stand on public schooling? And we're ferreting out who leaked, you see? Who was the wishy-washy one? And then we finally found a couple issues we disagreed on and fought bitterly until finally one day we figured it might be costing us our friendship, especially when he called me a mini-fascist. And so we decided to declare a truce. And then Richard went on to Hillsdale College. He has edited five books and co-edited one book, The Dangers of Socialized Medicine. Richard is also a expert and scholar on the ex-Soviet Union, Russian history, Chinese history. He made several trips to the former Soviet Union during all of the chaos and the dismantling of the Soviet Union. One of those trips was during the Soviet crackdown in Lithuania. Richard was there advising the Lithuanian parliament. We think it was by coincidence that that happened at the same time. We're not sure. We have doubts whether it was a coincidence because a while later he was in Moscow during the coup attempt. So we're not really sure. One of his colleagues suggested that since tanks go wherever he goes, that maybe he ought to spend more time in Washington. Richard helped me to found this organization. The theme of his talk today is very, very important. The world, of course, is moving toward more managed trade. The anti-immigration fervor is increasing at almost an exponential rate. It has motivated us to hopefully publish our third book after the first of the year, which Richard has co-edited, entitled The Case for Free Trade and Open Immigration. And that, in fact, is the title of Richard's talk. Richard Ebeling. Thank you, and welcome to our conference. Before I begin my talk, I perhaps would like to amplify a little bit about how I met Bumper and the foundation got started. As he suggested, I had been teaching at the University of Dallas. I'd just take up my appointment. And Sam Bostef, the department chairman there, had recommended that Bumper approach me and have me tutor him through human action. And I was somewhat reluctant to do this, because I had my own regular teaching load, and I have my own research, and I'm trying to keep up with a lot of literature, which is time consuming. But finally, he told me the hourly fee he would pay, and it was a price I couldn't refuse, so I agreed. Now, at first, I was working very hard. I would prepare for an hour or so before our sessions, reading over the chapters that we were going to discuss that day in human action and making careful notes, even though it was just one person in this tutorial. And I was ready. Well, I soon realized I didn't have to hardly do any preparation at all. Because while we would talk a bit about these chapters in human action, mostly what he would want to do is sort of find out how I had become a libertarian, what my views were on this subject or that subject. So really, I was being paid just to talk about myself. Then on top of that, as he said, a lot of times we would want to go out to lunch. And he would say, well, let's continue talking over lunch. So we would often go to this Mexican restaurant, not far from the campus. And invariably, he picked up the tab. So I figured I had it made. I had no work, great pay, and a free lunch. Now, I have to confess that he then went off to the Foundation for Economic Education to be program director there for a while. And he had paid me my last monthly fee. And he left before he got his money's worth. So I'm only admitting all this because I assume the statute of limitation on contract breach has now been exceeded. But as Bumper mentioned, the third book that we're going to be putting out, we published last year, Dangers of Socialized Medicine. And then just recently out, Sheldon Richman's book on separating school and state, a third book will be on this topic of the case for free trade and open immigration. And that is the theme that I want to spend a bit of time on with you this morning. If one reads the daily press, one has the impression that the world is a dangerous place, a violent place. For example, our television screens show the mass murders in Rwanda. We see the deadly and seemingly insoluble civil wars in places like the former Yugoslavia. We see superpower-military intervention in places such as Somalia and Haiti. And we see acts of cruel terrorism, such as the Muslim fundamentalists in Algeria, who basically indiscriminately go after killing foreigners. So this has happened in Egypt as well. And of course, brutal dictatorship, such as Saddam Hussein's in Iraq, or still the functioning gulag in China. Yet, away from the headlines and the media sensationalism, the world appears, in fact, a much more peaceful place of commerce, culture, and communications. It's worth keeping in mind that tens of millions of dollars of goods and services cross borders every day in the form of ever-changing patterns of imports and exports. It's worth remembering that literature, arts, and scientific knowledge of the world knows no borders. Continuously, there appear almost rapid provided translations of works of literature, of scientific works, into numerous languages, works of art constantly travel around on exhibitions from one country to another. And it is also worth recalling that tens of thousands of people, I don't know the statistics, maybe the equivalent of millions of people every day, board aeroplanes, ships, get in their automobiles, or get in trains, and travel from one country to another, constantly every day around the globe. And finally, through telecommunications, through telephones, fax machines, email systems, thousands and thousands of people communicate with each other continuously across not just hundreds but thousands of miles that separate them. There is in fact occurring, and has been occurring for a period of time, an increasing unity of the world. In other words, the globalization of trade and globalization of the world is upon us. Trade, commerce, and investment appear to have no boundaries. In fact, a few years ago you might recall a book that Richard McKenzie and Dwight Lee came out with called Quick Silver Capital, in which they emphasized that by the touch of a button, it was now possible for a person in one place of the world to send information about changing technological ways of combining resources, of shifting ownership and use of assets. In fact, to shift the capital structure of the world in terms of its location, its direction, its application, and its ownership. In fact, this means that the world is now boundaryless in the sense of how financial and in many cases real capital can be transferred, applied, and changed in terms of ownership. In the recent November issue of Atlantic Monthly, the economist and management expert, Peter Drucker has a very interesting article on what he calls the transformation that the world is going through right now. And he says that we are now passing out of the industrial age to what a number of other people have emphasized as the knowledge age. And he emphasizes that knowledge knows no boundaries. In fact, as he says, there is no domestic knowledge and no international knowledge, there is only knowledge. And with knowledge becoming the key resource, there is only a world economy, even though the individual organization and its daily activities operates within a national, regional, or even local setting. By definition, a knowledge society is a society of mobility, Drucker continues. People no longer stay where they are born, either in terms of geography or in terms of social position and status. The essence of a knowledge society is mobility in terms of where one lives, mobility in terms of what one does, and mobility in terms of one's affiliations. And a few statistics to give this indication might be useful. For example, between 1950 and 1990, the United States population increased by approximately 56%. While the number of Americans living and working abroad during the same period increased by 452%. In 1990, 17 million people visited the United States for either business, pleasure, or education. And that was equivalent to 3.5% of the US population. In the major Western European countries, the number of foreign workers as a percentage of their total domestic employment runs as from as low as 3%, for example, in Denmark, to as much as one third of the working population being foreigners in the country of Luxembourg. And these statistics are from the late 70s and early 80s, and I'm sure that that's changed in the case of the common market. In the entire world today, more than 100 million people live in countries of which they are not the citizens. While approximately 17.5 million of these people are in fact refugees of wars and civil wars in various forms of political terror, that still means that there are 80 million people living in different countries around the world not of the country of their birth in which they have chosen to move there for the personal political reasons or economic opportunity. And of course, there has been the expansion of these global opportunities with the slow and somewhat inconsistent transformations of the socialist economies to market economies in Eastern Europe and in Russia. That is now the incorporation of a large portion of the Eurasian continent into a global market economy. Now, when politicians and political analysts and political pundits write about these things, what they say is that the world is moving towards a free market. They referred to the further integration of the common market countries into the economic union as a movement towards a free market. They referred to the North American Free Trade Agreement as a movement towards a free market. They referred to the GATT agreement, the General Agreement on Tariffs and Trades, as a further movement towards free markets. And it cannot be denied that with these agreements there are strong and important elements of freer trade, less regulated commerce, a greater degree of freedom of movement of some people between borders and across countries. And in the case of the common market countries, it has become easier for people to shift where they live to where profit opportunities in terms of livelihoods suggest. But a set of political arrangements among governments that permit degrees of freer trade and freer movements of people is still not a social system of free trade, free markets, and free immigration. It remains a political regime of managed trade, regulated markets, and controlled movements of people. Why? Because it still remains in the discretionary hands of these governments to determine the degree to which we shall have freer trade, less managed commerce, more freedom of movement. Even when more liberal policies are implemented, we remain unfree in an ultimate sense as long as government maintains and claims the right of maintenance of discretionary power to dictate and determine as they see fit to decide how much of these freedoms we shall have. This is an example of the continuing confusions of language, where Americans and many people of the world believe that to have freer trade means free trade. To have less regulated commerce means to have free markets. To have a degree of greater freedom to live where you want means open immigration, and it's not. And these linguistic confusions are important to keep in mind and we need to watch for them because what has been occurring is the same type of linguistic or terminological twisting as occurred earlier in the century with the word liberalism. Bill Beach of the Institute of Humane Studies in his talk last night at the Vienna Coffee Club bemoaned the disappearance of the word liberalism from our lexicon that liberalism had meant free trade, limited government, free enterprise, individual liberty and how it had been usurped by the collectivists of this century to mean its opposites. We are in a period of time in which now in sort of like an Orwellian Newspeak, we have a situation in which managed trade means free trade. Regulated markets means free enterprise and more open borders is taken to mean free immigration. They are not. They still mean the regulated economy and the paternalistic state. But in thinking about these things and understanding these linguistic shifts, we cannot ignore the fact that arguments are being made for government even though the labels have changed to sound as if it's free or trade or free trade. There are arguments still being made in defense of government control to say yes, free or trade, but we can't have free trade. Free or immigration, but we can't have free open immigration. And it's important for us to spend a little bit of time understanding the logic of those arguments and developing refutations of them if we are to prove why these are not sufficiently free or trade and why in fact there should just be no regulated trade. Now I wanted to use a few examples in the time that we have and I want to sort of look at the arguments that are sometimes made for restrictions on freedom of trade and freedom of immigration and offer some counter arguments against them. First of all, the most common argument that is heard against absolute free trade are the arguments of what can be called retaliation and reciprocity rationales. It is often argued that we live in a world of unfree trade, that governments will often impose trade barriers against American exporters who therefore are denied the opportunity to have access to the markets in that foreign country. And in the defense of that US exporter who has denied opportunity, it is necessary for the US government to retaliate to set an example and a warning and to impose a price upon that offending foreign government. The question is when the retaliators make these suggestions, is that we must ask the question, raise the question with them, who is hurt from acts of retaliation? Well, first of all, the person hurt initially and primarily are the consumers in the American market. Why is that the case? Because in fact, when the tariff is imposed, it is the American consumer who ends up paying that tariff. The good now costs more to be brought into the United States. Who must pay that tax? The American importer. And in the long run, since the American importer must cover his cost of production, that additional tariff cost must be reflected in his price in the long run in terms of his general expenses of doing business, which means that the American consumers pay and bear the price in the name of assisting some offended US exporter that the United States government wishes to assist. It's also worth recalling that as a result of this, the American consumer pays more and receives less. Because as the price rises, consumers economize in their purchases and therefore purchase a smaller quantity. As a result, American consumers bear the burden of paying more for the commodity and end up choosing to purchase less for what they are paying more for. It's worth keeping in mind that another person who bears the price is the American importer of that foreign good. He now has to pay more. He now sees lower sales. He sees his revenues go down. He now is put in the position of perhaps being the marginal importer, by which I mean that before the tariff was raised, he was just staying in business. And now the tariff is the make or break and he is forced to leave that import sector and find an alternative level line of endeavor and activity in the American economy, which means he must choose his second best. That is the one that he prefers not to be in. Why? Because if it was the more preferable, he wouldn't have been in that import business in the first place. So the government forces the importer into a second best line of production because it imposes these expenses on doing his first preferred economic activity. It's also worth keeping in mind that it also hurts American exporters. Why? Because since the foreign producer now sells less than the United States because the tariff makes it less attractive to American consumers, foreigners who sell those goods earn fewer dollars. And since they earn fewer dollars, they have a smaller amount of financial wherewithal to buy American goods. And that affects all of the American exporters who would otherwise have been selling goods to those foreign producers who would have sold those commodities to Americans if not for the retaliatory tariff. The question then comes, who gains by this tariff? Not the consumers, not the importers, not the American exporters, not even the offended American exporter who asked for their retaliatory tariff. He's still locked out of that market. He doesn't see an increase in his business. In fact, he may lose some additional business because some of the people who were still buying his product, even with the offending nation's high tariff, may not be able to because they may be the people who earn less dollars by selling less goods in America because of the retaliatory import tax. Who gains then? In fact, only the U.S. government by generating more revenue for its help from the tariff. And even that is problematic because it depends upon how much the imports decrease to determine whether the total tax take is larger or smaller afterwards. The only one who seems assured to gaining are those domestic producers who compete against the goods that are now restricted by the import tax. Who in fact previously couldn't get a larger market share because the foreign goods were more attractive before the import tax was put into effect. But now have a guaranteed market, an increased market because they now have the tariff wall to operate behind. So the American inefficient producer captures more of the American market because the U.S. government imposes a retaliatory tariff to help some other exporter who is upset that he couldn't sell more in some foreign land. That in fact is the essence of what happens with this retaliation. But even if the argument is accepted about this, they say, but wait a minute, the world still operates without free trade. Surely we cannot just lower our barriers and allow goods to just flood into the American market. We must go into negotiation for reciprocity. And as they lower their tariffs in conjunction with us, we will all have a freer level of free, we will lower the tariffs and we will have a open more prosperous level of free trade for everyone's benefit. But we just can't unilaterally lower our tariffs. Well, in fact, the mistake in this argument is that whether America's trading partners do or do not lower their tariff barriers, the American economy benefits by us doing so on our own. Lower tariffs and lower trade barriers means that immediately American consumers have an increase in their real income. How so? They're now able to buy all these foreign goods for less. And at the same time, they will often after making their purchase at the lower import prices have extra dollars left in their pocket to spend on different goods that previously they couldn't afford. So they get the import goods for less and they now have more dollars in their pockets to buy things that they couldn't afford to purchase before. They have a significant increase in their real income. And that increased demand for other things that they now can afford because they economize on the cheaper import is one of the avenues where domestic producers who may not be able to match those imported goods can find alternative employment to satisfy new demands that the American consumer is spending on in terms of his freed dollars. It also means that foreigners will be earning more dollars from selling us more, which increases American export markets as well. So even unilateral trade has only benefits for us and no downsides. It is true, some Americans industries and sectors will have to reallocate themselves, redistribute themselves among the activities they undertake in the American economy. Some will be able to match the new competitors at the lower prices, some others won't. But all changes in an economy involve shifting to changing market opportunities and this will require it as well. But the net effect for the society is that we will all be better off. Now a new argument that has arisen in this context that I want to spend a little time on is a new argument that has emerged in defense of government support of exports and government defenses of import restrictions. And this new argument is what I call the new infant industry argument that has become very popular and particularly with the Clinton administration and those people in academia or the think tanks who advise them. Now what do I mean by the infant industry argument? Well, there used to be an older infant industry argument in the 19th and early 20th century. And this older infant industry argument ran like the following. When a country is just developing and industrializing, it must set up tariff walls to protect its emerging versions of the industries already firmly established and well-established abroad. Because the startup problems of being sort of the late comer are so difficult and the existing industries in the foreign countries are so well-established and so cost efficient that unless we put our own domestic versions under a hot house protection, they will never be able to grow strong, become efficient and be able to compete openly and fairly at some point in the future against the established rivals in the more industrialized advanced countries and other parts of the world. These were the arguments, for example, that many of the German mercantilism protectionists made in the mid and late 19th century against allowing free importation of British industrial goods. The idea is the British had started industrialization first and now Germany was gonna catch up and have matching firms. You have to put their firms, the late comers under a hot house. Well, the new version of this, in fact, is a rationale for artificial support of first comers. It is argued that the specialization upon which a nation fits itself into the international division of labor is something that national economic policy cannot be indifferent about. The choice can have long run consequences as to what industries a country developed and the beginning of new technological innovations. And whether it is first there and captures a niche at first and therefore is secure ahead of the rivals and the pack that is behind it. Basically, it is argued that there are certain technological and high tech industries and industrial activities that can give a country a potentially advanced jump on the rest of the world, a niche that can secure them, a rising standard of living and a higher standard of living and after they're established will be difficult for other countries to sort of nip at their heels at. Now this sometimes is referred to as strategic trade policy and the type of industries that are often talked about, Al Gore talks about this as semiconductors, telecommunications and informational superhighways, financial intermediation and other high tech sectors of the economy. The government must subsidize and support these things, get them established and then we will be there first, secure in the market, having incurred all of the startup costs while our rivals haven't and we will be secure for a long period of time in a rising segment of the economy and that will guarantee us a headstart and a good income position as a nation in terms of the global market. Now to begin with a problem with this is one that was pointed out over 20 years ago by an English economist named John Jukes who delivered a lecture called government and high technology and in this lecture he points out is that what is meant by high tech in policy discussions or debates? And what he said is that high tech when it enters into policy debates in fact it really has little to do with either the industry in question or the degree of the sophisticated scientific knowledge or application involved in bringing it online nor do these technologies really have to do with the amount of capital investment involved in bringing them online. He says that all the time new technologies are put in place and sometimes they involve sophisticated scientific and technological knowledge and information and complexity and they often involve huge and massive amounts of initial startup capital investments and these go on all the time and have always gone on all the time. What then makes these industries that government usually talks about in public policy different? And as he says that high technology means exceptionally high risk technology. Projects to which companies in close contact with realities would not give their support because the chances of profit seem too small, problematic or remote, but where the government for one reason or another feels it knows better. Private enterprises will not jeopardize the requisite shareholders' capital but governments feel justified in risking the taxpayers' money. In other words, what we're talking about are particular technologies that the government presumes to know best should be invested in, where, how, to what extent, by home. In spite of the fact that the private sector has evaluated it as not worth the investment at this time. In fact, if they did offer the attraction of profit as estimated by the market participants themselves, the government wouldn't need to stimulate, direct or coax them into it. They would be already there before the government had even realized what was going on. And all of the arguments against these are basically the same arguments that the economists would make against variations on the central planning thing. How does the government know what the market wants? How does the government know the right technology? How does the government know the proper cost efficiencies and applications of resources? How does the government free itself from the political corruption of pressure groups who'd be more interested in government dollars as opposed to satisfying consumer demand? But it's also worth pointing out that besides the political arguments, how would government know? How would government pick winners and avoid losers? How would the government avoid the corruptions involved in people lobbying for the government investment in high-tech dollars? It's worth pointing out is that always being first isn't advantageous. In fact, we would not always want, from a sort of global or national point of view, for every one of our companies to be the first online supplier. Why? Well, because it's worth keeping mind that the initial supplier is the one who is burdened with the cost of opening this new market and making the product familiar to potential consumers. He must incur the experimentation costs to discover what qualities and features might be most interesting or useful for the consumer. He's the one who has to incur all of the startup investments of getting the bugs out of the new technology. Those who enter the market later in the process, in a sense, can easily ride the coattails of those newcomers, by in fact being successful latecomers. They don't have to break the people's ignorance to begin with, the people already know about the product, all they have to do with their marketing is to persuade the consumers that they have available a better or less expensive substitute about something that is already a known quantity. They also can save on investment and technological costs. Why? Because the first comer incurred all of the technological problems of figuring out what the technology could do, getting the bugs out, what the market was interested in. And therefore, the late comer, the second comer can invest in technology that incorporates all of the mistakes and successes of the first comer and therefore have technological plant and equipment more efficient than the first supplier. But what if the selective, what if governments in other countries still follow this path? What if other governments implement these high tech supported investments, subsidize them? Can we afford to let other countries undertake these high tech subsidizations and sort of jump the gun on us while we just stand still and philosophically and theoretically say it doesn't matter and it's better if another one comes in second anyway because it may not be useful or as efficient to be the first comer on the block? Well, let me suggest the following, that from an economic point of view, it does not matter if other governments subsidize some of their industries into these artificial developments of high tech sectors of the economy. Because you see the end result from our point of view as consumers of that technology is that it is exactly the same as if the innovations in the other country had been, quote, natural. That is if the industries in other countries just had a normal market comparative efficient advantage in developing these technologies first, marketing them first, presenting them to the world economy first. The people who should be upset about this are the taxpayers of that country. They're the ones who through the subsidy are bearing the cost of the startup costs, experimenting with the new technology in the selected and chosen enterprises who have to incur through the subsidy, the marketing cost of that product to themselves and foreign buyers. The taxpayers of that subsidizing country should be the ones that complain, not us. What if our government listening to the interventionist argument say, but wait a minute, we have to guarantee this sector of the economy for ourselves. We're going to put tariffs preventing those countries from importing those high tech products into our country. Their government have subsidized it. We must secure our market in our hot house. Well, first of all, if we keep out those new high tech products that have been subsidized by that foreign government, we in fact impose a severe burden on the American consumer in the sense that we now have to pay higher prices for those new technologies and new products with those technologies would otherwise be the case. And therefore we deny ourselves as a nation a higher standard of living that we could have had in principle. But it also makes it more costly since we're raising the tariff price of importing those products and technologies. We make it more costly for American purchases of this new technology in the sense that it slows down the rate at which American industry absorbs and adopts products and investment activities with these technologies. The tariff makes it more expensive for our industrial and producer sectors to import the products with the technology. Therefore, we slow down the rate at which we are absorbing the new tech possibilities for ourselves even if some of those new tech possibilities have been paid for in terms of subsidies by the taxpayers of other countries. Those other countries that do not impose such import tariffs against the new technologies and absorb them more quickly than our industry is permitted to in fact are given an artificial advantage by our government. All of this means is that it would be better most advantageous for us to again follow a policy of laissez faire to allow those technologies to just enter the US economy. Let other countries either naturally and normally in the market or through the hot house expense of their government subsidies provide them online to us and for us to benefit from them. We gain everything and we lose nothing. It's also worth keeping in mind that this could set up a trade war. What kind of trade war? Well, if all these countries are now going to be trying to fight and jump the gun on each other on subsidizing high tech products and new technologies and to try to be the first on the world market with it, what happens when countries find themselves competing against each other each with their subsidized product? Each with their subsidized new high tech products? Well, I would suggest that if several countries are simultaneously trying to market the same high tech products with subsidization, they will try to cow and intimidate and strong arm their weaker trading partners to accept those products whether they want them or not. And among the stronger nations, what you will have is even more managed trade as the strong countries each combating for the same high tech markets try to divide and negotiate divisions and market shares of the global economy for themselves. Well, you get this fraction of it. I get that fraction of it. So in the name of subsidizing high technology, we create a scenario in which competing governments all doing the same resort to the negotiating table to try to carve up the markets in a politicized, cartelized fashion. And already some advocates are seeing the consequences of this. One advocate of such managed trade said that to break old structures and overcome the effects of the industrial policies of other countries, it may be necessary for America to negotiate affirmative action for imports and foreign investments. So now these races to be first for high technologies around the globe will result in managed trade affirmative action. Each one would be given their fair share of the market. Let me turn briefly to a number of other topics. My talk is on free trade and open immigration. I want to take a few minutes to talk about immigration not as an economic issue but as a human rights issue. There is a lot of literature from a wide number of organizations that clearly have demonstrated that all the standard economic arguments against free trade, free immigration are fallacious. Whether it be the arguments of an economist such as Julian Simon or the fine work done by Stephen Moore at the Cato Institute or numerous other people. It has been demonstrated, I believe, conclusively one reads the arguments that the negative effects that many see in open immigration, free immigration, are not sound and valid. And while not wanting to say it's not important to make all those arguments, there's a lot of literature now on our side of the fence either by people who believe in open immigration or at least make the case for a lot more open immigration to refute those arguments. In my little bit of time here, I want to talk about the human rights element. It's worth keeping in mind that the world has been transformed greatly during the last 150 years by the vast migrations of tens of millions of people across the continents of the globe. Between 1840 and 1940, 60 million Europeans left their home countries and settled on the other continents of the globe. 34 million of these 60 million Europeans between 1840 and 1940, 34 million of these Europeans settled in the United States. 6.5 million settled in Argentina. 5.2 million settled in Canada. Brazil accepted 4.4 million. Australia took 2.9 million. The British West Indies, 1.6 million. Cuba, 660,000. South Africa, 852,000. And they on and on and on. The world has been transformed by these waves of just European immigration. Now what enabled this European immigration to occur? Well, my wife was often a critic of some aspects of my public addresses, always tells me that I read too many quotes in my talk so I'm gonna resist doing this. But there's an excellent passage in a history of the Western world by an historian named R.R. Palmer, a book that published in 1965 in which he talks about these transformations of immigration. And he says in this discussion of his history of the modern world, how was it that 60 million people could just start flowing out of Europe and find new homes in the other parts of the globe? And he says that the most important principle, they were these factors, they were those factors, these influences, those influences would enable people to have the freedom to do this was the liberalism of the 19th century. That no longer did governments tie people to the land. No longer did government restrict people to leave their countries. No longer did government confiscate the property of individuals. People were now free under classical liberalism to live where they wanted. In this new era of liberty that was transforming Europe. And many of them admittedly wanted to come to America. Despite of my wife's criticisms, I have to read this. The rise of individual liberty in Europe as well as the hope of enjoying it in America made possible the great emigration. For so huge a mass movement, the most remarkable fact is that it took place by individual initiative and at individual expense. Individuals and family groups detached themselves atom by atom, individual by individual from the mass of Europe crossed the ocean on their own and reattached themselves atom by atom, individual by individual to the accumulated mass of the new world. And while we as in the United States and the fact that many of our immigration waves have been European, we tend to think of that context. It's worth recalling that during the last 150 years there have been massive waves of migration from other parts of the world to other parts of the world. The movement of people from the subcontinent of India and what is now Pakistan to become merchants, tradesmen, craftsmen and the masters of commerce in East Africa. The Chinese who left China during the last 150 years and opened up and brought prosperity to many markets in Southeast Asia. Freedom of movement has transformed the world for both those who looked for better opportunities and other lands and for the lands in which they settled. And a fine summary of these benefits of immigration can be found in this most recent book by Thomas Sowell on race and culture in the chapter on race and immigration. I highly recommend it. It's an excellent little summary of several of the important themes on this topic of the positive effects of world migration during the last 150 years. But the importance of the immigration subject stems from the fact that there are few issues that touch so fundamentally on the issues of human freedom. As the question as to whether an individual has the right of freedom of movement to leave the country in which accident of birth has placed him and the freedom to settle and to live and to work. And if he chooses to raise a family where he thinks that life can be made better for himself and for those he loves. Why is this a problem? Well, a fellow named Bob Sutcliff who recently published a piece in England called The Index on Censorship pointed out that the dichotomy and the tension and the hypocrisy is in the very United Nations Declaration on Human Rights. The Declaration of Human Rights says, the United Nations Declaration of Human Rights says that an individual shall not be denied the right to move freely within his own country. The United Nations Declaration of Human Rights says an individual shall not be denied the right of a passport and the right of leaving his country and returning to his country freely as he chooses and without molestation. But what the Human Rights Declaration does is stop right there. Okay. The world, at least in this example of a public statement the United Nations Declaration of Human Rights has said you have a freedom to leave. But it says nothing of a freedom of a right to go and settle anywhere. That is viewed as the political privilege, discretion, power of the receiving country. And there is the perversity of it. Even if you can get out, even if you have lived under oppression and tyranny, even if you can get out, you can be not, you can no longer be assured that there is any place in the world that will permit you to come in. Jacob and his remarks and his presentation emphasize some of those unfortunate themes in the case of the Cubans, Haitians and others. In other words, the world has practiced a perverse one-sidedness in its belief in freedom. Now this matters. Let me just give an example from the 1930s. In June of 1939, a German ocean liner named the St. Louis left Hamburg, Germany and came to North American waters. They were carrying over 900 German Jews. Neither Cuba nor the United States would allow that ship to land and those German Jews to disembark and request and receive refuge in the new world. After sailing around for about a week in the Caribbean and off the coast of Florida when the ship was close enough to Florida that the people on the desk could see the lights of Floridian cities at night, that ship then returned to Europe. Many of those German Jews ended up being killed in Hitler's extermination camps. Let's take a different case from that period. And that involves the experience of 20,000 German Jews who between the mid 1930s and 1941 were saved from the fate of many other Jews in Europe by the fact that they were fortunate enough to be able to find a way to traverse Europe and Asia and reach the city of Shanghai on the Chinese coast. Shanghai in the period before the Second World War was practically a free city state independent of Chinese jurisdiction and administered by a city council made up of members elected by the foreign residents of the international sediment of Shanghai, a foreign community that was made up of more than 90,000 Westerners, including many Americans. And in this period when Shanghai was in practically an independent city state, there were no passport requirements or visa requirements to enter and reside in the city of Shanghai. It was an open city. And these lucky German Jews were able to settle in the safe haven. In fact, they settled in a part of Shanghai called the Hong Q district that had been destroyed when the Japanese were invading China. And they made it, they reconstructed it between 1938 and 1941 until all the buildings have been restored. It was commerce, prosperity, little shops and businesses. And they survived the war even after Shanghai was occupied. This independent part of Shanghai was occupied by the Japanese following Pearl Harbor. In fact, the people who are still alive from that group of German Jews recently had a memorial conference in Shanghai in remembrance of their period of being saved from the Nazi Holocaust by being able to escape to a free haven of a free city state. It's not sufficient to be able to have the freedom to leave, though that is absolutely important. People must have the freedom to be able to go somewhere if they can escape from the tyranny they fear. Now, since in our century, free trade has come to mean managed trade through international agreements among governments. Many people in the United States are fearful of agreements that the United States is now entering into such as the World Trade Organization, WTO which is an outgrowth of the general agreement on tariffs and trade. The idea being is that the World Trade Organization will become the trade equivalent of the World Bank, the International Monetary Fund. And that through this international organization of the World Trade Organization, member countries will become required to be subservient to the rules and the dictates of an international organization and therefore the United States government will give up and cede its national sovereignty to a world organization who might dictate rules and policies involving trade that can threaten the liberties of Americans. Many of our conservative friends and colleagues are concerned about this and quite justifiably if in fact such an organization were to lead to such consequences because in this organization the majority might very well make a decision that impacts negatively in calling for subsidies, regulations, government business partnerships, import restrictions of various sorts that redounds to the disadvantage of American consumers and producers. And whether we are burdened by these things will depend upon the discretion of the United States government in that setting as to whether they abide by the rules or break the rules and refuse. Again, further arbitrary discretion of our economic fates being dependent upon Washington, bureaucrats and political figures as to whether they will abide by an international organization's rules and edicts that may or may not be good for the freedom of the American citizenry. But this need not be the policy and the path that America follows. If we keep in mind that managed trade is not free trade, if we understand that free trade does not require political agreements among nation states, but can just be unilaterally lunges, lower the tariff barriers, lower the trade restrictions, then the United States government need not abrogate or surrender any of its constitutionally enumerated sovereign rights. But needs to be done is for the United States government at home to repeal those legislative acts that have given regulatory and interventionist control of the United States government over the economic affairs of our own citizens. If this has done them from the day, indeed the hour from which these regulatory and interventionist controls were abolished, the United States would from that point have unilaterally instituted free trade and free immigration and it would have been done without the prior approval or consent of any other government anywhere in the world. We don't need to get Zimbabwe's permission. The United States government would have basically returned to the limited responsibilities originally delegated to it in the constitution. What would be reestablished is the personal and individual sovereignty of the citizens of the United States to manage their own personal affairs, to peacefully plan their own personal and individual courses of action, to freely enter into contracts and agreements with others regardless of where those others live anywhere in the world for mutual benefit through trade and for anyone to freely and in an unrestricted manner to enter and leave the United States for any length of time without government approval or molestation. By deregulating the economy and repealing and abolishing all interventionist controls over market activity, all issues concerning trade and migration in the United States at the same time would be depoliticized. By depoliticizing these issues of trade, commerce and movement, they would no longer be matters and affairs of state. They would now be personal matters of private individuals who choose to produce trade and move as they find it most profitable and pleasurable to do so. They would no longer be anything for the American government to negotiate with other governments in the world precisely because the United States government would no longer have the authority to influence or dictate how or in what manner Americans went about their private and peaceful economic affairs, both at home and abroad. The real agenda for bringing a social order of free trade and free immigration, therefore, begins right here at home, not around the negotiating tables of various international governmental organizations. Thank you very much. Okay, I think we have a bit of time left for a few questions. Okay, this is time for rotten tomatoes, banana peels. Yeah. The question is, what about welfare benefits for people who come into the United States? The concern is often expressed that open or free or immigration is inconsistent with the existence of the welfare state. The solution to that, it seems to me, is that you just say all those who come into the United States are not eligible for welfare benefits and that should be the position we take and that that's the first step to repealing welfare benefits for American citizens as well. Now, usually the argument made is that, well, wait a minute, this will create a two-tier society, the privileged of the Americans and the unprivileged non-American citizens. I suggest that we recognize those distinctions all the time. If you come to the United States legally, for example, as a legal immigrant, are you allowed to vote initially and from the moment you get in, really, not in federal elections, you're expected to reside in the United States for a period of time, you're expected to then apply for citizenship, you're expected to take your little test on American history, take your oath, get your little certification, and then you're a full-fledged American citizen after you supposedly have immersed yourself in American culture, learned something about the American political tradition and now are an informed new citizen to be eligible to participate in that most fundamental human right, the right to vote. We have a two-tier system of rights, those who vote and those who don't. Same thing, those people who want to come to the United States do not receive welfare payments and that is the first step to repealing it at home. It is better to make that position than to try to argue about, well, we shouldn't let too many in or what can the system afford? Even the proposal, for example, that has been made by some to sort of auction visa permits into the United States. Sounds good, because why? Some people will say, well, the ones who most want to come here will be willing to pay to come in and those with the most marketable skills will view that the investment upfront is worth in terms of future income to be earned in the American market. It'll pay itself back, so to speak. All of that's true, I don't deny that. But what about all of the people who, because again of accident, of circumstance, of birth and the political and economic environment of their own oppressive government in their home country can't afford to buy or bid for a visa permit? That, it seems to me, is unfair privilege and ranking. So I think that the solution in my mind is just to say, sure, you can come in but no welfare. Is it possible to imagine other scenarios or forms to try to solve this? Perhaps so, but I think that our premise must be freedom, freedom to enter, freedom not to receive benefits because the welfare state is a form of redistribution of wealth and to view that as an agenda from which to go further in our own country. Yeah. Okay, the question is, is it unfair because of the cheaper labor in other countries? For example, imports at low prices from third world countries. In fact, the wages represent the productivity of those workers. Workers receive a wage reflecting their value in a production process. If the wages are low in those countries, it's because those countries are low productivity countries which means they tend to produce products of lower marginal quality. So basically what they're doing is filling niches for low income Americans who otherwise could not afford more expensive products in the United States. For example, let us suppose that you go into what, Kmart or Walmart. What do you find in Kmart or Walmart if you go through the clothing stores? Everybody would concede that Walmart and Kmart is not considered upscale clothes, right? And people who shop at Walmart or Kmart or stores like them as a generalization are sort of in the lower income range. Okay, I think most of us would agree upon that as a generalization. Who is supplying them with the ability to be clothed or to have household utensils? Look at the labels, okay? Made in third world countries, in China, India. My wife and I were in JCPenney's not long ago in Michigan and they were selling coats made in the Ukraine. Many Americans would not want to buy a coat like that. It's quite possible that there are some Americans who have no alternative given their budgetary restraints but to do so. So to my mind, low wage industries in fact are filling the niche of supplying low cost goods for the lower income scale of Americans and therefore are benefiting us. And at the same time, those lower income people, those low wage producers are earning dollars which enables them to import American goods that they have otherwise couldn't afford. Hello. I come from Argentina. All of my grandparents are foreigners, even my great grandparents. I mean, I'm a mixture of Italian, British, Swedish, a whole bunch of foreign blacks. So I have a, let's say, a moral point in favor of free immigration. But sometimes it's difficult for me to, some people ask, what isn't there a need to control the, let's say, the international terrorist movement of people among nations? Isn't it a necessity to check that in the immigration? Well, I think that the question, if you understood, is what about the problems of international terrorism? It seems to me is that immigration has little to do with terrorism. Most terrorists are not coming to the United States to settle here and take a job. I mean, if there is a terrorist, I mean, I think his motives are slightly different. I think that then it's just a policing responsibility that if someone is suspected of likely of committing a crime or if the authorities believe that he has committed a crime, then that's just a matter of police work. But I think that with anyone coming into the country as with an American within the country, the presumption under our law must be that he is innocent until proven guilty, that there must be legitimate suspicion for either his person or his property to be molested through an arrest or a seizure, that he has due process of law. I mean, there could be a lot of people in the United States who might wanna carry out terrorism in the United States or in other countries. Would that justify the United States government on the possibility that there might be American potential terrorists to be snooping around and investigating everybody who wants to move between California and New York? What do you have some left-wing potential bomb thrower? And he lives in California and he says, well, I don't wanna drop a bomb on some capitalist enterprise in California, but it's easier to track me down. So I'll go to New York. Are we now gonna have border controls to check people out as to whether a potential terrorist is going across U.S. state lines? The same logic would require that. So it seems to me is that we just have to respect anyone who comes into the United States with the same liberties and constitutional protections as we normally give an American and to view the United States border internationally as in fact nothing, not much different than someone who wants to cross from New Mexico to Utah. And by the way, I share your imagery of a background of many different ethnicities and cultures because I'm in the same position. My grandparents came from Europe before the First World War. On my father's side, I'm German, Irish, and English. On my mother's side, I'm Lithuanian Jew and Russian Jew. I usually decided that this was great because being both Jewish and German, I assume that meant I was both the chosen people in the master race. The only difficulty is the nightmares I have at night in which one part of me tries to throw the other into an oven, but I've resisted that so. I know that there are most libertarians, I think, despite the fact that there were problems with NAFTA, felt that on balance, we're probably better off having NAFTA than not. And we're identifying problems in the GATT agreement also, and I wanted your comments on the GATT agreement, whether you think on balance, we're still better off going ahead and agreeing to it or not. Well, first of all, as an implicit theme of my comments, I think that we could have all of the benefits that we want from the GATT in terms of our trade gaining in terms of imports without having to do anything other than just say, we're now lowering these barriers. And I think it is very dangerous and undesirable for us to enter into political agreements in which to get other countries to lower some of their barriers, we have to concede non-free market points. Okay, they'll lower this barrier in Mexico if we'll lower that barrier in the United States, but some American producer says that, no, I don't want this barrier lowered because this will hurt me. And there's sort of this political reciprocity of what sectors will be deregulated or open first, to what extent, what tariffs will still be in place, what domestic content requirements are required on both sides of the border. All of the benefits, I believe, that can be received from free or trade can be done unilaterally. It's worth keeping in mind that the most famous historical example is Great Britain. When Great Britain began its path of free trade in the early part of the 19th century, no other country was doing this. They just started repealing tariff after tariff after tariff, a trade import restriction after trade import restriction, and just opened themselves up. I don't think that we should be hostage to what other governments will permit, allow, or demand from us that would still hamper our own free economy at home. So I'm suspicious of these agreements. Even if, often, it seems that once the agreement has been signed, there are categories or corners of the market that seem as a result to be freer, and we might very well be. But I think that the precedent and the principle of doing this through political negotiation hampers us in ways that would not be necessary, and that we'd have most of the benefits if we just did it on our own. Richard, would you comment on the matter of subsidies to foreign businesses which export to the United States? In the mid-80s, the cement industry of Mexico was in a recession, a bad recession, and they started exporting cement to the United States. Their electric power and their fuel was highly subsidized, and they had great advantage over American cement companies. The question is, what about the case where government subsidized the exportation of various goods in general, not the particular form that I used about high tech industries being fostered, and this idea of being first on the block? My response to that is, is that the effect is no different than, from our point of view as a society, is no different than if there had been natural market cost efficiencies introduced in Mexico that had lowered the cost of supplying cement, that had lowered the cost of supplying certain energy sources. I see no reason why the American economy should not take advantage of whether it be long-term or even temporary, increases in standards of living. Think of agricultural fluctuations. Some years, because of the accidents of the weather, we have better crops than other times, and we temporarily have the advantage of bumper crops where certain agricultural goods quote full through the bottom, unquote. We as a consuming public never object. We recognize the hardships the farmer suffers and that he needs to show forethought. I know he gets a lot of government programs, but hypothetically the private farmer would show forethought to have reserves and insurance policies knowing that these cycles of ups and downs in weather occur. But we think nothing wrong with that. We have boons at some times and smaller crops at other times. If another country wishes either permanently or temporarily to subsidize certain of our exports, I don't see why we should not benefit it from it as consumers. And as a society as a whole in raising our standard of living. Again, as I suggested, even with this high tech example or the retaliatory examples, the complaint should come from the Mexican taxpayers because it's particular sectors of the Mexican economy that are receiving the subsidies. Those subsidies on net have to be paid by other Mexicans. Their incomes go down. Their job opportunities are limited. Their savings in capital pool is narrowed for other things that might have been done in the Mexican economy. They're the ones who should be complaining, not us. One more, okay. What would you say to those who would, in regard to open borders, say that this conceivably is deluge of immigrants could perhaps even double the population of this country within a few years when our city's already overcrowded? What about the people already live here by lowering their standards of living by this overcrowding? First of all, I think we have to keep in mind is that we have much as a percentage of the existing population at the time. We've had much larger waves of immigration. For example, in the decades around the turn of the century, immigrants or their immediate children in around 1900, 1910, 1912, if I remember the statistics is correct, represented approximately 20 to 30% of the population of the United States. That's a huge inflow of people to imagine that 20 to 30% of the existing population are made up of immigrants or their children. But that is not considered a period in which America had great hardship or problems. I think that such an inundation would make us a better and richer society. My wife and I drove across the United States this past summer, I was doing some research at the Hoover Institution out at Stanford, and you just get west of the Mississippi, there ain't nothing out there. Now, people say, but how can you settle out there? There's nothing there. But just think of the United States 150 years ago. There was nothing there anywhere. And people said, well, how are you gonna build over these mountains? How are you gonna cut down all these trees? Where are you gonna get the water from? How are you gonna do this, that? Somehow they did. I mean, that's how we got the America we have today in terms of cities, towns, communities, industry, agriculture. So does that mean that every part of Utah or Nevada can be settled? Of course not. But I think there's plenty of space and there is plenty of economic opportunity to take in a huge deluge of people who would add to our labor force and add hands to be worked. Bill Beach last night in his presentation at the Vienna Coffee Club talked about this and he reminded us that in his presentation that every additional person coming in the United States comes with two hands as well as a mind which enhances our productive capability in terms of knowledge and ability and intensification of division of labor. As far as the cities are concerned, go to these cities today where immigrants are flowing in, New York, Boston, San Francisco. What you find are is that the magazine and newspaper stands like in the subways are manned by Pakistanis. They fill that niche. You go to the fresh fruit and vegetable stands. Many of them are Korean. I remember having lived in New York many years. There was a period when all the taxi cab drivers were Jamaican and then they were all Russian and then they became sort of Indian Pakistani and I have no idea what they are now. I mean, they just occupy parts of the city in waves of immigration and then they just sort of establish themselves, get oriented, learn the language, get some forms of education and then disperse themselves even if not them, their children. And by the third generation, they're just immersed in the society as a whole. So they're like entry points and sort of like the pebble dropped in the pool, the wave shoot out over one or two generations. My grandparents settled on the Lower East side of Manhattan. I assure you it's not European Jews who live predominantly in the Lower East side of Manhattan anymore. That wave of immigration at the turn of the century disperse and now a new injection is occurring and another injection will occur. I really don't see these problems and they enhance our society. They enrich our society. They make us a wealthier society. So I say, welcome, come on in.