Business, Immigration, and Political Dysfunction

I had not intended it this way, but this will be my second item in just a week on political dysfunction in Washington.

I participated yesterday in a superb forum on the prospects for immigration reform, hosted by former Treasury Secretary Bob Rubin and organized by the Hamilton Project at the Brookings Institution. The presentation featured an extremely thoughtful presentation by economist Giovanni Peri proposing a pilot project for a scheme to auction visas, which has the potential to regulate more effectively demand and supply for new immigrant workers, and to raise extra revenue from the companies that benefit. It deserves serious attention.

I moderated a panel that featured former Senator Chuck Hagel, National Council of La Raza President Janet Murguia, UNITE HERE President John Wilhelm, and Glenn Hutchins, the co-founder of Silver Lake, a big private equity investor in technology companies. I wanted to come away encouraged. While immigration reform is a poster child for political dysfunction, Wilhelm was optimistic about the political winds gradually shifting in favor of some action. Murguia was far less dismissive than I thought she would be of Senator Marco Rubio’s recent proposal for a DREAM Act that did not provide an automatic path to citizenship for undocumented young people brought here illegally as children. Instead, while criticizing some aspects, she welcomed it as a proposal worthy of discussion.

But what stuck with me were comments made by Glenn Hutchins of Silver Lake, who works closely with the technology companies that are scouring the world for talented engineers. Wilhelm, who played a key role in bringing the union movement around to support immigration reform, commented that one of the reasons immigration has been stuck in Congress is that business has simply not made it a high enough priority. “The business community has got to put its political muscle where its economic interests lie,” he said.

Hutchins response was both witty and inciteful, and worth quoting at length:

“The vast majority of business people have this quaint notion that their role is to run their business and the politicians’ role is to run government. And coming to Washington and being told the reason why government is not running well is because business is not involved is, well….. an interesting set of insights. We do come. The typical business person comes to Washington with the notion that this is something we ought to do. They are then treated sort of like the bright eighth grader on the school trip – what a cute little kid, tap him on the head – ‘don’t you realize that nothing gets done it this town. Just go away and let us wallow in dysfunction, and by the way leave a campaign check at the door.’"

“There is a very broad and growing view in the world of people who get things done,” he continued, “that nothing gets done here, and it’s largely not worth your time. “

If Hutchins is right, and I think he is, there should be alarm bells going off everywhere. The issue is not whether business has enough influence in Washington – compared with any other organized group, it probably has too much. The problem is that even business, with all its political muscle, can’t get Washington to move on whole range of issues. Even where business and unions have come together -- in supporting expanded infrastructure investment, for instance -- nothing happens.

And the reality is that many U.S. businesses need the United States less and less. Marschall Smith, general counsel at 3M who spoke on an earlier panel, said the company has simply been unable to attract the number of advanced scientists and engineers and skilled technicians it needs in the United States. “The result is we’re being forced to export R&D to China and India, notably, and elsewhere around the world because we can get the scientists there. And of course if the scientists and the labs are there, the low-skilled jobs spring up when we open a factory. We’re an American company being forced overseas when we could do a better and more efficient job in the United States, because we simply can’t get the people.”

It is comforting to hope that political stasis in Washington has few costs because, after all, the private sector has always been the more dynamic part of American society. Comforting, but wrong. Business can now go and be dynamic somewhere else while Washington “wallows in dysfunction.”