Saturday, June 16, 2012

The Unraveling of America - Part III - Immigration

Under Construction

News flash 

Pres. Obama has rewritten constitutional law by executive order, without the will of Congress, and in defiance of public consensus.  The "Dream Act" (amnesty for illegal aliens) has been signed into law.  2012/06/15.

Everyone warns me not to discuss immigration. Xenophobia and racism threats will occur. We are too "politically correct" to objectively study this issue. Unfortunately, immigration (legal and illegal) is a huge problem in the Unraveling of America and must be repaired. Both legal and illegal immigration statistics are notoriously hard to find - mostly bad guesses from various sources. Estimates disagree between US government departments.

First, I am going to tell my personal observations. Then I will present the abuse of the work visa programs, penetration of various industries by illegal aliens, deportation vs. sanctions on employers, the effects of "Free Trade Agreements" on them and us, Constitutional and Congressional rhetoric, and the ties to Globalization that has decimated the economies of the world.

How immigration has affected me

My first brushes with immigration occurred in the mid-1980's in Houston, TX. My 36 year career has been Information Technology. IT has become the main battleground of the importation of cheap foreign labor having received from 45% to 72% of the total visa quota. More of that later.

I worked primarily as an IT consultant (contractor) to oil, gas and pipeline companies. The Savings and Loan Disaster, corporate mergers, acquisitions, downsizings, and layoffs were daily occurrences. Houston was falling from its heydays in the 70's. Salaries were stagnant and you felt lucky to have a job.

On many of my contracts I heard stories of failed "offshoring" projects - as high as 300 million dollars - moving IT development and administration functions to foreign locations. As a matter of fact, I have worked at dozens of top 500 corporations with offshore projects and not one has succeeded. At each of these companies I noticed pockets of foreign workers. Most were in isolated annexes of office buildings - I suppose, to keep the build-up of these foreign workers invisible to the citizen employees who were being laid off at the same time. "The plan", lauded by CEO's and the US Department of Commerce and financed by the US government, was to train these "non-immigrant" (temporary) foreign workers on local systems, then move the whole function to India, Philippines, etc., to take advantage of that cost savings in labor. After all, this was Free Market Capitalism at its zenith. We used to call it slave trade. Now it is Globalization.

"More than 1.3 million additional Western jobs will vanish by 2014 due to "the accelerated movement of work to India and other offshore locations," says the study released Nov. 15. Hackett doesn't talk of this as good or bad, but as something that will be a reality and a challenge for more Western businesses. Hackett says the pace of job erosion has nearly doubled this decade." Dec 2010

"There is research that proves that many companies that outsource either domestically or internationally don’t perform as well as before the outsourcing. In a study, the average user satisfaction deficit was 13 percent. Other criteria, like value for money and company perception by customers, showed similar drops. One has to ask oneself if it’s really worth it." The Outsource Blog Jul 2010

"According to a mid-2009 report by AMR Research Inc. on the state of IT outsourcing, roughly 80% of enterprises plan to increase their amount of IT outsourcing or keep it the same." Feb 2010

"Compass Management Consulting services director Nigel Hughes argued that companies could see productivity losses of up to 60 percent when the full cycle of application development is outsourced, leading to longer development times." VNUNet April 2009

"The number of H-1B visas that can be issued annually is capped by Congress at 65,000...but while the total of available visas remains constant, the number issued to the major offshoring vendors is rising. The four largest H-1B recipients last year are all based in India: Infosys Technologies Ltd., with 4,559 visas; Wipro Ltd., with 2,678; Satyam Computer Services Ltd., with 1,917; and Tata. The number of visas issued to Infosys was identical to what it received in fiscal 2007, but Wipro, Satyam and Tata all saw increases." Computerworld February 2009

"When compared to their beliefs two years ago, 58% of companies said they were less of a believer in the idea that working with Indian IT outsourcers delivers value for their company and its shareholders." InformationWeek January 2009

"The $50 billion-a-year offshore outsourcing business was growing at a 29 percent annual rate until the credit crisis hit last fall, said Rod Bourgeois, a technology services specialist at Sanford C. Bernstein & Company. But he now forecasts growth in 2009 to be about 10 percent." New York Times January 2009

"Numerous surveys indicate that anywhere from 17 percent to 53 percent of customers have not realized business value/return on investment from offshore outsourcing." CIO November 2008

As work became rare in Houston, I took contracts all over eastern US. By the late 1990's, nearly all the employment agents nationwide were Indian. This was in stark contrast to employment agents in the 80's who operated out of local agencies that had been in business for decades. Most of these local companies were run out of business by increased competition from the international firms who were the biggest employers of H-1B foreign workers and from a deluge of new Indian employment (contracting) agencies. Rates were going lower and lower and pushed all experienced and capable engineers out of the market and into more lucrative jobs like stock trading and mortgage brokering.

In the 2000's the only jobs I got paired me with H-1B visa foreign workers. I was not told or paid to be a trainer, but that was my obvious job. Rates and salaries continued to plummet as the IT industry became saturated with foreign workers. My highest career earning period was 1998. It has been down hill ever since.
The US President's Council on Jobs and Competitiveness has recommended easing immigration for skilled migrants among other economic reforms.

What about the millions of unemployed citizens?

Remember the lies about "only 65,000" H-1B visas available for jobs that corporations cannot fill?
H-1B is broken down as follows, according to information on the USCIS web site:
1,400 nationals of Chile; Free Trade Agreements
5,400 nationals of Singapore;
20,000 with master's and doctor's degrees from US colleges and universities;
58,200 with "bachelor's degrees or equivalent experience" from any hole-in-the-wall in the world;
unlimited visas for those employed by non-profit research outfits;
unlimited visas for those employed for local, state and federal research;
unlimited visas for those employed by US colleges & universities.
the data

The H-1B and L-1 are very large guest worker programs,
admitting 214,261 new foreign workers in fiscal year
2008 alone, a year in which the U.S. economy lost a net
of 920,000 jobs (U.S. Department of State 2008) While
no one knows the exact number of H-1B or L-1 holders
in the United States at any one time, because the govern-
ment does not track those numbers, estimates are in the
range of 600,000 H-1Bs and 350,000 L-1s.

Does this sound familiar?

The same scenario above has been described to me by career truckers and construction contractors. The complaint is illegal Mexicans taking over large portions of the trucking and construction industries. I faced this when I was out of work for 18 months and tried to go back into building construction. If you didn't speak fluent Spanish and accept $10/hr, you didn't work. The same issue is raised in the restaurant, hospitality, and building maintenance trades. Citizen companies in these trades cannot compete with illegal aliens who are largely paid under the table without taxation. When you go illegal, nothing that proceeds can be legal. Criminal employers are given the upper hand. The Citizenship and Immigration Services and Immigration and Customs Enforcement are practically unfunded and cannot (will not?) enforce the immigration laws of the country. ICE rounds them up, USCIS turns them loose.

Attempts to pass "Immigration Reform" legislation are appended to nearly every major appropriations bill in Congress. "Immigration Reform" means amnesty for all illegal aliens. Amnesty was passed in the mid-1980's and failed to stop the flood over the border. America needs orderly enforcement of the existing immigration laws. Border control needs to be taken as seriously as the wars in Iraq and Afghanistan. Mexico is being overtaken by drug cartel armies. The US is being overrun by refugees.

Deportation vs. Employer Sanctions

The media immigration debate usually centers around deportation of individuals, mothers and fathers torn from their families, abandoned children, mistreatment in detention centers, etc. I don't see the rationale in these media circus raids. The courts can't handle the load, so they are released.

The employers say that illegals do jobs that Americans won't do. That is a big lie. Only 17% of farm workers are illegals. 83% are Americans at below subsistence pay.

There is not much said about the employers of illegal aliens. There is very little, if any, punishment for knowingly employing illegals. The recent economic recession has proved that illegals will self-deport if there is no work. The employer of illegal aliens is committing a felony. There are far less employers than there are illegal alien employees, so the cost of enforcing the law against employers is much less than the cost of rounding up millions of illegal aliens. The bus lines that bring illegal aliens from Brownsville, TX and distribute them east and west about the country can, and do, make the reverse trip.

How did we get here?

The flood of Central and South Americans into the US has been caused by failed US trade policies. The North American Free Trade Authority (NAFTA) caused the loss of 3 million manufacturing jobs in the US and turned Mexico into a slave state. The Mexican economy collapsed, farmers were forced out of their farms by huge American corporations, and the Exodus grows.

January 1, 2004 marks the tenth anniversary of the North American Free Trade Agreement’s implementation. NAFTA promoters — including many of the world’s largest corporations — promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports. NAFTA opponents — including labor, environmental, consumer and religious groups — argued that NAFTA would launch a race-to-the-bottom in wages, destroy hundreds of thousands of good
U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards.

Nafta produced results that were exactly the opposite of what was promised. For instance, domestic industries were dismantled as multinationals imported parts from their own suppliers.
Local farmers were priced out of the market by food imported tariff-free. Many Mexican farmers simply abandoned their land and headed north.

Free trade aggrements (FTAs) continue to be signed. Our jobs are exported and foreign workers are imported in each of these agreements. Three FTAs were passed last week - South Korea, Colombia, and Panama. Expect those economies to collapse within 5 years. Our economy will continue to be drained for decades.

Companies such as Ace Ltd., Citigroup Inc. and Pfizer Inc. have led the effort to get the South Korea deal passed, while Caterpillar Inc., General Electric Co. and Whirlpool Corp. were among the biggest backers of the accord with Colombia.
So, what do we get? Pink slips.

More than 1,700 union members were killed in Colombia in the past decade, the most in the world and 63 percent of the global total, based on union school figures.

United States Coast Guard officials say they have recovered 7.5 tons of cocaine from a drug submarine in the Caribbean Sea.
Niles said the five sub crew members, who were allegedly transporting the cocaine from Colombia to Mexico, were stopped by the Coast Guard as they tried to escape in a yellow life raft.
"Colombia" as in Colombian Free Trade Agreement.;security=1601&news_iv_ctrl=1761

the annual costs of illegal immigration at the federal, state and local level to be about $113 billion; nearly $29 billion at the federal level and $84 billion at the state and local level

A 1997 study by the American Academy of Sciences found that the cheap labor of illegal aliens and poor immigrants caused a 44 percent decrease in wages among the poorest Americans from 1980 to 1994.

Graph: Percent of the Population, by Race and Hispanic Origin: 1990, 2000, 2025, and 2050

Source: U.S. Census Bureau, Population Division
Questions? / 1-866-758-1060

Tuesday, May 1, 2012

Blast From The Past

This 2001 warning from went unheeded, leading to worldwide economic collapse.

Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions from Americans
Sen. Gramm, White House Must Be Investigated for Role in Enron's Fraud of Consumers and Shareholders
December 2001
Public Citizen's
Critical Mass Energy & Environment Program

Summary of Findings

  • The combination of unregulated state wholesale electricity markets and federal deregulation of commodity exchanges has removed accountability and transparency from the energy sector, allowing corporations to manipulate price and supply of electricity and natural gas through the exercise of significant market power. California's recent energy crisis and Enron's bankruptcy would have been impossible under a regulated system. [This refers to the repeal of Glass-Steagall Act.  See The Unravelling of America - Part I.  Unfortunately, this deregulation was not limited to energy trading.]

  • Enron developed mutually beneficial relationships with federal regulators and lawmakers to support policies that significantly curtailed government oversight of their operations.

  • Enron's business model was built entirely on the premise that it could make more money speculating on electricity contracts than it could by actually producing electricity at a power plant. Central to Enron's strategy of turning electricity into a speculative commodity was removing government oversight of its trading practices and exploiting market deficiencies to allow it to manipulate prices and supply.  [Wall Street can do this, too.]

  • Dr. Wendy Gramm, in her capacity as chairwoman of the Commodity Futures Trading Commission (CFTC), exempted Enron's trading of futures contracts in response to a request for such an action by Enron in 1992. At the time, Enron was a significant source of campaign financing for Wendy Gramm's husband, U.S. Senator Phil Gramm.

  • Six days after she provided Enron the exemption it wanted, Wendy Gramm resigned her position at the CFTC. Five weeks after her resignation, Enron appointed her to its Board of Directors, where she served on the Board's Audit Committee. Her service on the Audit Committee made her responsible for verifying Enron's accounting procedures and other detailed financial information not available to outside analysts or shareholders.

  • Following Wendy Gramm's appointment to Enron's board, the company became a significant source of personal income for the Gramms. Enron paid her between $915,000 and $1.85 million in salary, attendance fees, stock option sales and dividends from 1993 to 2001. The value of Wendy Gramm's Enron stock options swelled from no more than $15,000 in 1995 to as much as $500,000 by 2000.

  • Phil Gramm is the second largest recipient in Congress of Enron campaign contributions, receiving $97,350 since 1989.

  • Days before her attorneys informed Enron in December 1998 that Wendy Gramm's control of Enron stock might pose a conflict of interest with her husband's work, she sold $276,912 worth of Enron stock.

  • Enron spent $3.45 million in lobbying expenses in 1999 and 2000 to deregulate the trading of energy futures, among other issues.

  • In December 2000, Phil Gramm helped muscle a bill through Congress without a committee hearing that deregulated energy commodity trading. This act allowed Enron to operate an unregulated power auction -- EnronOnline -- that quickly gained control over a significant share of California's electricity and natural gas market.  [Gramm's bill was Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall).]

  • Phil Gramm's legislation was in conflict with the explicit recommendations of the President's Working Group on Financial Markets, which is composed of representatives from the Department of Treasury, the Board of Governors of the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working group expressly recommended against deregulating energy commodity trading because the traders would be in strong positions to manipulate prices and supply.

  • From June 2000 through December 2000 -- prior to the bill's passage -- California experienced significant price spikes but only one Stage 3 emergency (requiring "rolling blackouts"). After passage of Gramm's energy commodity deregulation bill in December 2000, Stage 3 emergencies increased from one to 38 until federal regulators helped end the crisis by imposing price controls in June 2001. Phil Gramm's legislation, for which Enron was the primary lobbyist, allowed Enron's unregulated energy trading subsidiary to manipulate supply in such a way as to threaten millions of California households and businesses with power outages for the sole purpose of increasing the company's profits.

  • Because of Enron's new, unregulated power auction, the company's "Wholesale Services" revenues quadrupled -- from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001. This remarkable revenue increase came on top of the record revenue gain that Enron posted from 1999 to 2000, when full-year "Wholesale Services" revenues increased from $35.5 billion to $93.3 billion -- a 163 percent increase.

  • Investigations by state and federal officials concluded that power generators and power marketers intentionally withheld electricity, creating artificial shortages in order to increase the cost of power.

  • Enron took advantage of lax oversight following deregulation and formed a complicated web of more than 2,800 subsidiaries -- more than 30 percent (874) of which were located in officially designated offshore tax and bank havens.

  • President Bush's presidential campaign received significant financial support from Enron ($1.14 million).

  • Upon assuming office in 2001, Bush promptly scrapped plans put into place by former President Bill Clinton to significantly limit the effectiveness of these countries as tax and bank regulation havens. This action came at the height of high West Coast energy prices, probably allowing Enron to siphon billions to its offshore accounts.

  • At the same time, the Bush administration and certain members of Congress waged a legislative and public relations campaign against the imposition of federal price controls in the Western electricity market. Such price controls remove the ability of companies exercising significant market share to price-gouge by effectively re-regulating the market. Bush's opposition to price controls unnecessarily extended the California energy crisis and cost the state billions of dollars.

  • When federal regulators finally imposed strict, round-the-clock price controls over the entire Western electricity market on June 19, 2001, companies operating power auctions (like Enron) no longer had the ability to charge excessive prices and no longer had incentive to manipulate supply.

  • While price controls clearly saved California, Enron suffered because it could no longer manipulate the market and price-gouge consumers. With no significant asset ownership to offset its losses, Enron's unregulated power auction quickly accumulated massive debts. At the same time, the curtailed revenue flow made it more difficult for executives and members of the Board to conceal the firm's accounting gimmicks. Amid the turmoil, CEO Jeff Skilling resigned in August. But shareholders and federal regulators did not learn of the severity of Enron's financial trouble until November 2001. At this time, Enron's top executives continued to receive significant bonuses.

  • Due to Wendy Gramm's position on Enron's Audit Committee, she had intimate knowledge of Enron's financial structure and had access to sensitive financial information not available to Wall Street analysts or average shareholders. It is therefore probable that she knew of Enron's possibly fraudulent practices for some time and that her husband would have known as well. Enron's 874 tax haven subsidiaries allowed Enron to funnel billions of dollars to offshore accounts.

  • The Gramms' close involvement with Enron's corporate and legislative activities, the Gramms' possible knowledge and/or connection to criminal misconduct relating to Enron's collapse, and the effects of Enron's layoffs and other economic impacts on Senator Gramm's constituents may have been the leading factor in Gramm's decision on September 4 not to seek re-election to the Senate in 2002.

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