Open Letter on Immigration

Alex Tabarrok has an economists' letter on immigration, of which I approve:

Marginal Revolution: Open Letter on Immigration: Dear President George W. Bush and All Members of Congress: People from around the world are drawn to America for its promise of freedom and opportunity. That promise has been fulfilled for the tens of millions of immigrants who came here in the twentieth century.

Throughout our history as an immigrant nation, those who are already here worry about the impact of newcomers. Yet, over time, immigrants have become part of a richer America, richer both economically and culturally. The current debate over immigration is a healthy part of a democratic society, but as economists and other social scientists we are concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary.

Overall, immigration has been a net gain for existing American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy.

Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.

Immigration in recent decades of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to be small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.

While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy.

Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system that enables Americans to be more productive with high-wage skills.

We must not forget that the gains to immigrants from coming to the United States are immense. Immigration is the greatest anti-poverty program ever devised. The American dream is a reality for many immigrants who not only increase their own living standards but who also send billions of dollars of their money back to their families in their home countries--a form of truly effective foreign aid..

America is a generous and open country and these qualities make America a beacon to the world. We should not let exaggerated fears dim that beacon.

Comments

[sm]

I'm only speaking for myself here, but...

Please send some of those immigrants to Canada. Send the smart ones. Send the talented ones. Send the determined ones.

I don't care how dark they are.

Build your Fortress America and let us have the cream of the global crop.

Please.

[Paulster]

"The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis."

Does this mean: So long as there are no unions and no minimum wage?

Just trying to understand the details of this 'hard-won consensus that economists have come to'.

[Bruce Webb]

The really cruel irony for the Economic Right is that they are simultaneously arguing that more brown people now are a threat to American jobs but that lack of workers twenty years down the road is the prime threat to Social Security. Well you really don't get to have it both ways. Though they will try.

Similarly they are trying to sell tax cuts on the grounds that they spur productivity. They are trying to sell privatization on the grounds that productivity is headed into the toilet and will remain there forever. Once again you don't, or at least shouldn't, and until they pry this keyboard from my cold dead hands, won't get away with selling two totally contradictory messages.

Either the economy is expanding briskly or it is on the verge of contraction to below trend. Either the problem with America is too many workers dragging down wages, or a looming shortage of workers that drives covered worker ratios to troubling levels.

These are competing economic narratives and only the blandest of the blind (hi Bill O'R) can simultaneously hold both in their minds at the same time.

You can make a case that the American economy will go into the toilet when the housing bust and unsupportable account and trade deficits drag us down. Well fine, check out the intelligent commentary at CR. Or you can argue that the economy is booming because of Bush Tax Cuts and what we need is more and more of them. Check out any number of wingnut sites.

The problem is that you can't wedge Social Security Privatization between them. "If Privatization is Necessary" because the economy is going to implode "then Privatization won't work" because you don't get 6.5% stock returns in a recession/depression "If Privatization would work" because we are posed on an era of unprecedented productivity due to tax cuts then "Privatization is not Necessary" because tiny levels of productivity going forward rescue the system.

People laugh at the formulation but never seem to bring numbers to resolve the contradiction. Are tax cuts working to boost productivity or not? And quantification is good.

[Tom Hilton]

"Immigration in recent decades of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to be small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent."

Here's what I've been wondering: is it the *immigration* that lowers wages, or the *illegality*? Arbitrarily calling some group of people 'illegal' creates a class of workers who have no bargaining power with their employers (see, e.g., this story: http://tehipitetom.blogspot.com/2006/05/immigration-and-illegality.html)--which means employers can get away with paying them sub-minimum wages, which means employers have a huge incentive to hire them rather than 'legal' workers. Make everybody 'legal' and that incentive goes away, and the depressing effect on wages goes away. I think.

Am I wrong about this?

[Bruce Webb]

"Does this mean: So long as there are no unions and no minimum wage?"

Well I would flip that around "So long as there is no union busting and no political power keeping minimum wage off the table"

We can argue who actually has the pricing power here. Your implicit argument that unions and minimum wage laws are the problem ignore the history of Employer/Labor restrictions on wage fixing. As far as I know (and I know a certain bit) the English Statute of Laborers forbid either employers or employees from conspiring to set wages. Yet while attempts to apply this statute in its various formulations right up into the 20th century were constantly employed against workers, I am not aware of a single example of it applied against employers. Ever.

You can Google "Statute of Laborers" and "Black List" and get back to me. Good luck and write when you find results.

[Barry]

Brad, you are aware that medium wages for workers in the US have been flat or falling for decades now, with the exception of a few of the Clinton years.

Why are you surprised that people become nativist, under those circumstances? They're aware that things aren't going well; they're lied about the real causes; they seize upon any explanation.

Notice that there was less conscern during the mid/late 1990's? IMHO, this wasn't a coincidence - people were doing better, and had that confidence.

[dale]

"The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis."

That quote caught my eye too. Is that statement true? Then of course, there are jobs and then there are jobs.

[anne]

"The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis."

Phooey, phooey, phooey. This means absolutely no safeguards for workers, no protections, no balance with management, no limits to the poverty of conditions that workers will be subject to as long as there are workers desperate enough to submit.

[save_the_rustbelt]

"Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis."

Ohio has 160,000 fewer jobs than the day George Bush took office. We did open six new Wal-Marts Superstores today.

American citizens are being run out of the construction business by hoards of illegals who don't know what OSHA or workers comp is (wow, call the grammar police).

We need a reasonable flow of legal immigrants. We don't need chaos.

[Matt]

Sure, we can create jobs for everyone in North America. So what?

You have to show that 400 million Americans are individually more productive than 250 million Americans, otherwise, why not just help the immigrants develop their own economies?

Look, the problem is Mexico, let's not fake that. Mexico is just south of us, they are our neighbor. Why do we want to bring 43% of Mexico up here? Why not ship educational expertise down there, match our economic policies, and otherwise help them get jobs before they some up here?

If we are claiming that mass concentrations of people are more productive, then the logical outcome is to create four or five mega industrial populations centers around the world.

I do not get what these economists are trying to tell me? Where is the productivity gain?

[anne]

Minimum wage, no; health care, no; retirement benefits, no; safety protections, no; equal oppotunity protections in hiring, no; protections against discriminatory firing, no. Free the labor markets is the cry. Free workers. Freedom now and forever. Freedom from and for what, and for whom?

[anne]

When we are told, "the current debate over immigration is a healthy part of a democratic society," know we are about to be told, "but the only argument that should matter is mine." Wish a free labor market, then provide the sort of individual safeguards we find in the Nordic countries where individuals are so carefully protected.

[Matt]

OK, here is the producivity gain.

These economists are claiming that the 50 million substinance farmers and low prouctivity workers in Mexico have a higher marginal cost to our economy down there than if they were up here. I think that is it, any gueses?

My theory is that these economists sense we will ultimately be responsible for Mexican productivity, so it is cheaper to just move them all up here. I guess the alternative is for us to go down there and fix things, but that might mean a costly military advenure.

If we move them up here, what guarantees do we have that another 50 million will not be ready for the move 20 years from now? I mean, if fixing mexican productivity is the problem, then aren't we stuck? We would have to go down there.

[monkyboy]

Shorter Tabarrok:

As long as us high-paid professionals can continue to limit the number of people who can work in our professions...send us all the nannies, gardeners and fry cooks you got.

[anne]

http://www.ksg.harvard.edu/ksgnews/Features/opeds/041806_borjas.html

April 18, 2006

For a Few Dollars Less
George J. Borjas - Wall Street Journal

What happens when immigrants enter the labor market? The 1964 edition of Paul Samuelson's influential introductory economics textbook gives the common-sense answer: "By keeping labor supply down, immigration policy tends to keep wages high. Let us underline this basic principle: Limitation of the supply of any grade of labor relative to all other productive factors can be expected to raise its wage rate; an increase in supply will, other things being equal, tend to depress wage rates." Mr. Samuelson wrote this just before the 1965 policy shift that sparked the resurgence of immigration, so he emphasized that restrictions "keep wages high." Today we are concerned with the mirror-image implication: As immigration increases the size of a skill group (such as low-educated workers), the wage paid to that group should fall.

Despite the intuition behind Mr. Samuelson's conclusion, economists have found it surprisingly difficult to document that immigration does, in fact, lower the wage of competing workers. In 1997, the National Academy of Sciences concluded that "the weight of the empirical evidence suggests that the impact of immigration on the wages of competing native workers is small."

Recent research has finally begun to demolish the peculiar (yet influential) notion that an influx of more than 16 million foreign-born workers, which increased the size of the workforce by nearly 15%, had little impact on wages. In part, the problem has been that economists were looking for the wage effect in all the wrong places.

Immigrants cluster in a small number of cities. A third live in three metropolitan areas (New York, Los Angeles and Chicago). In the past, the stereotypical study exploited this clustering by correlating wages and immigration across cities. A negative correlation, indicating that wages are lower in cities penetrated by immigrants, would suggest that immigrants reduce the wage of competing workers. In fact, the estimated correlations bunched around zero, creating the impression that immigrants had little impact.

This inference is not correct for two reasons. First, immigrants are not randomly distributed across cities. If, as seems sensible, high-wage areas attract immigrants, there would be a spurious positive correlation between immigration and wages. This positive correlation could easily swamp any negative wage effect that immigrants might have had.

Natives also respond to immigration....

Because local labor markets adjust to immigration, I have argued that the impact of immigration is best measured at the national level. In fact, by examining national wage trends for narrowly defined skill groups for the last 40 years, the wage effects of immigration become quite visible. These trends suggest that a 10% increase in the size of a skill group (for example, a 10% increase in the number of workers who are high school graduates and are around 30 years old) reduces the wage of that group by 3% to 4%.

It turns out that this wage response is roughly what one would have expected to find if one looked at the vast academic literature that estimates adjustments in labor demand (a literature that typically has little to do with immigration). In short, the national wage effects replicate what we think we know about labor demand in the U.S. labor market.

Although immigrants affect the wage of competing workers, they have little impact on the wage of other skill groups. A 10% increase in the number of workers who are young high school dropouts, for example, raises the wage of college graduates by only half of 1%. High-skill workers have little to gain, at least in the labor market, from the immigration of low-skill workers.

My Harvard colleague Lawrence Katz and I recently examined the impact of the 1980-2000 immigrant influx (and particularly Mexican-origin immigration) for U.S. wages. The results are that, in the short run -- holding all other things equal -- immigration lowered the wage of native workers, particularly of those workers with the least education. The wage fell by 3% for the average worker and by 8% for high school dropouts....

[dale]

"Minimum wage, no; health care, no; retirement benefits, no; safety protections, no; equal oppotunity protections in hiring, no; protections against discriminatory firing,"

I think one might predict, given the racist nature of our society- especially the southern, conservative, red state-confederate portion- that increased immigration might even make a stronger social democratic safety net even more unlikely.

I would hope that every liberal who supports liberalized immigration, would, at the same time, insist upon greater protection for all workers and firmer social-democratic foundations for a more egalitarian and secure society. It may only work if we do them together.

[Steve Peterson]

The George Borjas articles must be the most frequently cited texts on the internet lately -- since they're the primary economic study that show significant negative effects of immigration, and even then the effect is limited to those without a high school diploma.

Note that even the unions have come out in favor of loosening immigration laws.

The rest of the studies show even smaller decreases in native wages, again mainly limited to people without high school diplomas. The other cost of immigration lies in social services -- though those costs are questionable given the benefits elsewhere and don't take into account that one of the big costs, educating children of immigrants, is an investment that has in the past, and will in the future pay off lucratively, since second generation immigrants move right into solid paying middle class jobs that help fund future medicare and social security -- programs extremely necessary for the lower and middle-lower income people who are supposedly most threatened by immigration.

The arguments that oppose the easing of immigration policies are some of the most poorly informed I've ever seen. While Borjas's report is certainly important and useful, he's not the only person who's ever done a study, and the majority of the other studies come to starkly different conclusions:

http://www.rand.org/pubs/monograph_reports/MR854.1/

http://www.ssab.gov/brief-1-immigration.pdf

http://www.bls.gov/news.release/forbrn.nr0.htm

http://www.labor.ca.gov/panel/impactimmcaecon.pdf

[Matt]

Thanks for clearing things up Anne. Perhaps the cost of mobility for natives who lose wages must be factored in; for they can be forced to migrate themselves after an immigrant influx.

[John Faughnan]

I'm a bit suspicious about the "wage reductions for high school dropouts" part. It's included but then quickly dismissed in this note and everything like it that I've read. My radar tells me that there's something suspect there -- something that makes economists want to drop it quickly, even though they feel obliged to mention it.

I wonder if the data is old, or if there's really not all that much research, or if there's newer contradictory data that's being excluded.

I'd very much like to read a serious discussion around those numbers.

[Sam Taylor]

Reading Brad's post and the comments, I am reminded of the small book on my old bookshelf titled "The Crisis of Vision in Modern Economic Thought".

No one pretends these are simple problems. But equally, there seems to be no one with a vision that allows us to lurch toward a better way to deal more effectively and humanely with the ambiguous reality we face every day.

I continue to be impressed with how barren of ideas worth pursuing the dismal science remains. While I have none to offer (at least none that are mathematiclly rigorous), I am not a professional economist, the high priests to whom we seem to have advocated such issues.

One can argue that either we ordinary humans should expect the priests to do their job or we should fire them, but that is a major philosophical question beyond this post...or perhaps any post.

[CapitalistImperialistPig]

I keep seeing this 0 to 8 % figure, but little justification for it. Is it based on comparing countries with restricted immigration to those without? Or is it a purely theoretical construct.

In any case, I think economists consistently miss a crucial point - the impact of population growth on resource consumption and environmental devastation. Economists think they are shouting "hurrah for growth," but it sounds more like "hurry up Armageddon" to me.

Economics has a very shaky status as a predictive science, and these economic impact numbers seem awfully speculative.

[Zathras]

Is it not the case that the discussion about whether large numbers of unskilled immigrants lower wages missing an important variable?

The missing variable is productivity. It's hard to find this noted by economists, including those who run weblogs. I can tell you, though, that in the construction industry around Atlanta, which employs large numbers of Mexican workers, employers can't say enough about how hard their Mexican employees work, how dependable they are, and how few problems they bring with them to the job site.

Part of this is probably due to many Mexicans being in this country by themselves, without their families. But only part. In this sector at least, it isn't a question of immigrant labor driving down wages for native-born Americans. Employers would prefer to hire immigrant labor even if they couldn't pay lower wages -- because they get more out of Mexican laborers than they can out of local workers.

[John Emerson]

"Immigration in recent decades of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to be small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent."

I'm sure that "studies have shown" this, but I do not believe the studies. In any case, immigration is only part of a continued, multi-pronged attack on American labor, and not just unskilled labor. Hence the country-club conservative support for immigration, along with the other parts of the attack.

"While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices."

What does "small" mean here, anyway? I'm sure that if the number were really small, a more exact number would have been given. In any case, the "small" group making the sacrifices is the most vulnerable group in American society. A group which Democrats used to be able to claim to represent: the unemployed and the working poor.

[david]

I'm surprised that Tabarrok didn't say "scientifically proven." I look forward to his redistributionary educational policies, any day now I suppose.

Keep going Anne.

[Steve Peterson]

For those asking size of American workforce having less than a high school diploma:

"Overall, 5.3 million immigrant workers do not have a high school diploma, accounting for 39 percent of all U.S. workers who have not completed high school."

http://www.urban.org/publications/310880.html

That would work out to roughly 8 million natives.

[andres]

Much as I sympathize with Tabarrok's letter (and by implication, with Brad's own position on the subject)I don't think I can fully endorse it because it says nothing about changing the economic policies in Mexico (including those of our multinational corporations) that lead to such high immigration, legal an illegal, across the border. Also, Anne is right in pointing out that immigration without decent enforcement of labor standards will only hurt low-skill Americans even more.

It is not enough to plead with politicians not to make things worse; one also has to present them with a plausible alternative on improving the situation.

[JRossi]

This whole discussion misses the point. The main problem with too many immigrants is not a matter of economics--it's the blight of overpopulation. This country is too crowded already. We don't need a whole bunch more people here. Our natural environment does not need a whole bunch more people here. I shake my head when I hear economists say that Americans benefit from immigration. Not American plants and animals, not American wilderness areas.

[derek]

My goodness what a farrago of unsupported assertions. That's not "an economist's letter on immigration", except in so far as the person who wrote it happened to be an economist.

Yes, we already know wealthy employers like unorganized cheap labor, you don't have to rub it in. I happen to think the answer to that is to organize *all* the workers to defend their interest, including the immigrants, but that doesn't make pious cheap-labor republicanism like this letter any less pernicious a collection of falsehoods.

[anne]

Matt

"Perhaps the cost of mobility for natives who lose wages must be factored in; for they can be forced to migrate themselves after an immigrant influx."

An important equity consideration.

[anne]

The point is Alex Tabarrok is not Emma Lazarus despite the pretense. There is not the slightest concern with the well-being of American workers whatever the background in this letter and I thoroughly reject the pretense of sudden Statue of Liberty-like concern when there is no concern and never has been for workers whether in terms of job security or pay or benefits....

[anne]

Again, economists feel that a utilitarian argument is all that is needed but from the stance of a displaced or disadvantaged worker general utility gain is not enough. Where is individual equity?

[radek]

"Where is individual equity?"

Ummm, poor people earning higher incomes is not 'equity'????
I'm gonna say it again just cuz it doesn't seem to get through. If you're gonna oppose immigration based nationalistic/xenophobic/self-interest terms, fine. You're an asshole but at least you're an honest asshole. If you're gonna oppose it by cloaking yourself in the shroud of "i care for the poor" then you're worse then an asshole, you're a dishonest hypocrite.

[anne]

Support immigration and trade, globablization in any form, but doing so from the stance of utilitarian philosophy pays no attention to the needs of an individual. As though economics has adopted a philosophical base that rejects humane philosophy from Maimonides to Kant to Stuart Mill to James to Rawls to Amartya Sen and Anthony Appiah.

[anne]

Health care, retirement benefits, fair wages, work place safety, equity in hiring, equity in loss of work, fair unemployment insurance and education after loss of work, low or no tuition at public universities....

[Barry]

radek, STFU. When Republicans who delight in screwing the poor suddenly act concerned about the poor, we know that we're about to be conned.

[anne]

When the Chief Executive of UnitedHealth is given a bonus of $1.6 billion on top of an insane salary, there is something dreadfully wrong about the idea of only needing a free free freeing of the labor market, and the justification of current labor market imbalances with management is comically bizarre.

[lise]

Barry has a fine eye for the "comically bizarre." Where then is individual equity?

[Steve]

Wait, is this country argueing over immigration or *illegal* immigration? I thought we could all agree that lawful immigration is good, its the illegal immigration that may or may not be good?

people's confusion confuses me...

[t_do]

"In any case, I think economists consistently miss a crucial point - the impact of population growth on resource consumption and environmental devastation. Economists think they are shouting "hurrah for growth," but it sounds more like "hurry up Armageddon" to me."

I don't understand this argument at all. A) Malthus was dismissed long ago, but also, B) We would expect population growth and direct environmental degradation of immigrants to be higher if they stayed in their low-income countries than if they were in the US.

[anne]

A proper attempt at humane utilitarian thought, easily applied to immigration:

http://www.nytimes.com/2004/09/09/business/worldbusiness/09outsource.html?ex=1252382400&en=75e9cfc07d57793a&ei=5090&partner=rssuserland

September 9, 2004

An Elder Challenges Outsourcing's Orthodoxy
By STEVE LOHR

At 89, Paul A. Samuelson, the Nobel Prize-winning economist and professor emeritus at the Massachusetts Institute of Technology, still seems to have plenty of intellectual edge and the ability to antagonize and amuse.

His dissent from the mainstream economic consensus about outsourcing and globalization will appear later this month in a distinguished journal, cloaked in clever phrases and theoretical equations, but clearly aimed at the orthodoxy within his profession: Alan Greenspan, chairman of the Federal Reserve; N. Gregory Mankiw, chairman of the White House Council of Economic Advisers; and Jagdish N. Bhagwati, a leading international economist and professor at Columbia University.

These heavyweights, among others, are perpetrators of what Mr. Samuelson terms "the popular polemical untruth."

Popular among economists, that is. That untruth, Mr. Samuelson asserts in an article for the Journal of Economic Perspectives, is the assumption that the laws of economics dictate that the American economy will benefit in the long run from all forms of international trade, including the outsourcing abroad of call-center and software programming jobs.

Sure, Mr. Samuelson writes, the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that "the gains of the American winners are big enough to more than compensate for the losers."

That assumption, so widely shared by economists, is "only an innuendo," Mr. Samuelson writes. "For it is dead wrong about necessary surplus of winnings over losings."

Trade, in other words, may not always work to the advantage of the American economy, according to Mr. Samuelson.

In an interview last week, Mr. Samuelson said he wrote the article to "set the record straight" because "the mainstream defenses of globalization were much too simple a statement of the problem." Mr. Samuelson, who calls himself a "centrist Democrat," said his analysis did not come with a recipe of policy steps, and he emphasized that it was not meant as a justification for protectionist measures.

Up to now, he said, the gains to America have outweighed the losses from trade, but that outcome is not necessarily guaranteed in the future.

In his article, Mr. Samuelson begins by noting the unease many Americans feel about their jobs and wages these days, especially as the economies of China and India emerge on the strength of their low wages, increasingly skilled workers and rising technological prowess. "This is a hot issue now, and in the coming decade, it will not go away," he writes.

The essay is Mr. Samuelson's effort to contribute economic nuance to the policy debate over outsourcing and trade. The Journal of Economic Perspectives, a quarterly published by the American Economic Association, has a modest circulation of 21,000 but it is influential in the field.

Indeed, Mr. Bhagwati and two colleagues, Arvind Panagariya, an economics professor at Columbia, and T. N. Srinivasan, a professor of economics at Yale University, have already submitted an article to the journal that is partly a response to Mr. Samuelson. Theirs is titled "The Muddles Over Outsourcing."

The Samuelson critique carries added weight given the stature of the author. "He invented so many of the economic models that everyone uses," noted Timothy Taylor, managing editor of the Journal of Economic Perspectives.

For generations of undergraduates, starting in 1948, the study of economics has meant a Samuelson textbook, now in its 18th edition, with William Nordhaus, a Yale economist, as a co-author since the 12th edition. Because he has taught at M.I.T. for six decades, the elite ranks of the economics profession are filled with Mr. Samuelson's former students, including Mr. Bhagwati and Mr. Mankiw.

According to Mr. Samuelson, a low-wage nation that is rapidly improving its technology, like India or China, has the potential to change the terms of trade with America in fields like call-center services or computer programming in ways that reduce per-capita income in the United States. "The new labor-market-clearing real wage has been lowered by this version of dynamic fair free trade," Mr. Samuelson writes.

But doesn't purchasing cheaper call-center or programming services from abroad reduce input costs for various industries, delivering a net benefit to the economy? Not necessarily, Mr. Samuelson replied. To put things in simplified terms, he explained in the interview, "being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses."

The global spread of lower-cost computing and Internet communications breaks down the old geographic boundaries between labor markets, he noted, and could accelerate the pressure on wages across large swaths of the service economy. "If you don't believe that changes the average wages in America, then you believe in the tooth fairy," Mr. Samuelson said.

His article, Mr. Samuelson added, is not a refutation of David Ricardo's 1817 theory of comparative advantage, the Magna Carta of international economics that says free trade allows economies to benefit from the efficiencies of global specialization. Mr. Samuelson said he was merely "interpreting fully and correctly Ricardoian comparative advantage theory." ...

[John Emerson]

"I'm gonna say it again just cuz it doesn't seem to get through. If you're gonna oppose immigration based nationalistic/xenophobic/self-interest terms, fine. You're an asshole but at least you're an honest asshole. If you're gonna oppose it by cloaking yourself in the shroud of "i care for the poor" then you're worse then an asshole, you're a dishonest hypocrite."

I love you, Radek, you worthless piece of shit!!! LOVE you! Everyone else wants me to be civil, but not you!

I don't see why a nation's immigration policy shouldn't favor citizens of that nation. Ethical altruism is fine, but it's not a policy. Economists concern for the global poor is fake too -- what they're calling for is a global race to the bottom for wages, which won't end until global full employment is achieved, at which point economists will get to work figuring out ways to prevent the dread wage-price inflation (which will have been resurrected by then under a different name).

[Matt]

Reading Anne's summary of Paul Samualson's articles reminds me of the missing variable in the equation economists always forget.

Globalization of trade really reached its final conclusion with WW2 and the end of the cold war, events which were substatially paid for by government via taxes. So, in regards to the expese of creating the global environment we have to ask who got the greatest marginal return from their taxes.

WW2 was substantially paid for by excise taxes, at the time, in spite of the high marginal income tax. Then came the tax cuts of Kennedy, Reagan and Bush. The effect of these tax cuts was to shift the government cost of globalization from the higher income sector to the middle income sectors,

Who gains under these conditions? Walmart executives and shareholders pay 30% of their net for the establishment of the global trading system, but they collect nearly 80% of the gain from globalization, in their sector.

WalMart clerks, as a class, pay 50% of their net for globalization expenses, but they probably garner more like 20% of the gain.

Whenever the government changes policy, or shifts expenses from the provate sector to government, the system need to establish that the differential rates of return, or loss, from the shift transfered equally across all income sectors. Otherwise, we end up with the system we have now where the income earners at the upper end of the food chain can shift corporate expenses to government and accelerate their rate of return.

This whole problem is related to the growth of government when taxes are flattened, there is a tendency to shift corporate espenses to government.

[anne]

http://www.calvorn.com/gallery/photo.php?photo=6466&exhibition=7&u=99|5|...

Scarlet Tanager Taking a Bath
New York City--Central Park, Azalea Pond.

Matt, nicely done; asking for an accounting that does not mask individual gains and losses. Such an accounting is entirely realistic.

[derek]

Help me out here, radek; if I'm supposed to be in favour of bussing in union-busting blacklegs when they're from the next country over, why would I not have to support it when they're only from the next town over? Yes, yes, we understand that *you* think undermining workers is a good thing, but explain again why *I* should, in terms that don't make a religious appeal to the panglossian Adam Smith Fairy.

When did destroying the power of the poor to strike for a higher income ever get the poor a higher income?

[dale]

"The global spread of lower-cost computing and Internet communications breaks down the old geographic boundaries between labor markets, he noted, and could accelerate the pressure on wages across large swaths of the service economy."

If the old geographic barrier of labor markets are breaking down, what of the globalization of Capital. Are returns on investment going to be re-invested in the US? What even defines an "American" business now? Would IBM or Intel qualify as an American business? They, themselves, seem to be running away from the US label.

And if labor and capital are less and less functions of nationality then where do the benefits of trade (and immigration) go? Does comparative advantage then lie within individual firms and their investors?

It seems to me that in our present context comparative advantage, for the most part, means cheap labor, minimal regulation.

[Steve Peterson]

"Help me out here, radek; if I'm supposed to be in favour of bussing in union-busting blacklegs when they're from the next country over, why would I not have to support it when they're only from the next town over? Yes, yes, we understand that *you* think undermining workers is a good thing, but explain again why *I* should, in terms that don't make a religious appeal to the panglossian Adam Smith Fairy."

I wish people would stop saying that relaxing immigration rules is union-busting when the:

AFL-CIO
United Farm Workers
Service Employees International Union (SEIU)
Hotel and Restaurant Employees (HERE)
and the Laborers' International Union of North America

ALL SUPPORT IT.

http://www.pww.org/past-weeks-2001/Farmworker%20union.htm

http://www.newsmax.com/archives/articles/2006/1/20/132759.shtml

I guess the unions are all union busting blacklegs?!?

[radek]

Barry: "When Republicans who..."

What makes you think I'm a Republican? For that matter I don't see any Republican's calling for open borders. This is the whole point of this hypocrisy; when it comes to immigration supposedly enlightened Democrats turn into nasty Republicans for some reason.

John, I love you too. I guess your position would put you in the 'asshole, but an honest asshole' category. I can sort of respect that. And I have no idea how you know for sure that my concern for the poor is fake. I've always believed it to be genuine but hey, John Emerson says otherwise so it must be so.

Lise, next time just stick to the much shorter "me too!"

derek - first the stupid ad hominen. I *don't* think underming workers is a good think. I *do* think providing poor workers with opportunities is a good thing. The *panglossian Adam Smith* *blah* *blah* *blah*... what the hell's that got to do with anything? Or are you arguing that Mexican workers come to US because they want to be worse off? Second, for the help you asked for; If the workers can come here legally then they can join unions. Hell, even the unions themselves realized this at some point and switched to a pro-immigration position in the mid 80's.

As to the rest... *sigh*

[Ari]

Thanks for many interesting comments here. Steve Peterson and Radek claim that unions are supportive of immigration, but from what I can tell they support allowing legalization of immigrant status so that more immigrants are eligible for union membership and there is less competition from illegal immigrant workers. Unions correctly wish to strengthen themselves. Am I right?

[lise]

Radek, you were only complaining in the beginning when no one was arguing for harming workers here or abroad. The complaints seemed harsh with no need. The question addressed is how to have immigration that is helpful to immigrants but does not hurt "native" workers.

[Firebug]

The economics "profession" is full of smug, self-satisfied BS and it should be destroyed completely. We would be much better off with no economists at all, with only pragmatism to guide us.

Immigration drives down wages. If it didn't, big business wouldn't be in favor of it. It's that simple. Our obligation is to Americans first and foremost. Mexicans have their own government, and it is the job of that government to look out for their interests. If it isn't, then they should kick it out and elect one that will, like the Bolivians and Venezuelans have done.

Tabarok's vacuous statement that "the American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis" misses the point completely. It doesn't matter how many jobs there are if most of them pay a sub-living wage. We're interested in living standards, not raw numbers of jobs. I don't care if there are more jobs if they are worse ones.

Furthermore, immigration makes it harder to ever create a social democratic welfare state. Most of the welfare states that exist in Western Europe are monocultural and monolinguistic. It's a lot easier to convince people to pay higher taxes for the sake of their neighbors and friends than it is to convince them to pay high taxes for the sake of illegal Mexicans streaming across the Rio Grande. It's hard enough to convince many Americans that native-born blacks, whose families have been in the US for hundreds of years, are "us". How much harder to convince them that illegal migrants who refuse to speak English and live 20 to a single-family house are "us"? They look, smell, and act like third worlders. And I do not want them here.

[dale]

Here's an interesting post from Ezra Klein over at TAPPED http://www.prospect.org/weblog/
"NEW RULE. ... I think a rule needs to be adopted: If you don't care about income inequality normally, you're not allowed to make it your central argument against immigration. Frum is a guy who, throughout his career, has argued that income inequality has simply been a surge of salaries at the top. And he's been similarly unconcerned about mobility (which has decreased across the board, not just for Mexicans). The rich get richer, but the poor don't get poorer, so why worry? And to show how attentive he's been to the issue, searches on his blog for "inequality" or "mobility" turn up, literally, nothing. But when the subject turns to immigration, both become issues of paramount importance."

This may or may not apply to anyone here, but it's a useful way to judge the authenticity of conservative concerns for the welfare of the immigrant poor.

[Steve Peterson]

"Thanks for many interesting comments here. Steve Peterson and Radek claim that unions are supportive of immigration, but from what I can tell they support allowing legalization of immigrant status so that more immigrants are eligible for union membership and there is less competition from illegal immigrant workers. Unions correctly wish to strengthen themselves. Am I right?" -- Ari

That seems to be the main point from the AFL-CIO.

The UFW appears to have a broader, pro-immigration stance. I suspect that's because many of their recent, legal immigrants are sympathetic to others wanting to come here as well, even if that might depress their wages a little.

[Antoni Jaume]

"Most of the welfare states that exist in Western Europe are monocultural and monolinguistic." ?

I do not think that's true. France still has speakers of a germanic language in Alsace, a Celtic language in Brittany, Basque in the South-West, Catalan in Roussillon, plus a sizable Arabic population. Welsh and Scottish are still spoken in the UK. Germany has quite differents languages. Belgium has Flemish and Walloon (and German). Italy has various romance languages plus Greek and German. Switzerland has French, a Germanic language, Italian and Romanche. Scandinavian countries and Finland have Germanic and Fino-Ugric languages. Spain has Castillian, Catalan, Basque and Galician. Etc.

DSW

[anne]

http://www.calvorn.com/gallery/photo.php?photo=5303&u=17|4|...

Prothonotary Warbler Perched in Willow
New York City--Central Park

Interesting comments :) The questions revolve around the socio-economic structure we need to comfortably negotiate globalization.

[radek]

"Radek, you were only complaining in the beginning when no one was arguing for harming workers here or abroad."

No, I got annoyed by anti-immigrationists raising "equity concerns".

Oh and to anne. It's not a utiliterian argument. If anything, it's a Rawlsian argument.

"I also don't think that comparative advantage works very well in a world of low wage workers and mobile industries. Absolute advantage over high wage countries seems more apropos."

No comperative advantage means no incentive to trade in the first place. Absolute advantage is irrelevant. Also Samuelson's argument - as far as I can tell from the description of it - is not about factor price equalization or changes in distribution of income. It's about terms of trade effect, one of the few valid arguments against free trade. It's pretty old school.

"They look, smell, and act like third worlders. And I do not want them here."

This is an honest statement. It is also repulsive.

"NEW RULE. ... I think a rule needs to be adopted: If you don't care about income inequality normally, you're not allowed to make it your central argument against immigration"

Bad rule. Pointing out other's hypocrisy does not make one a hypocrite. It's perfectly fine for somone (not me) to say:

*I don't give a fig for equality, I want market efficiency. Immigration improves efficiency so I'm for it. Some of my opponents on the other hand claim to care about inequality yet even though immigration is good for equality they are against it. Something's fishy.*

(Since personally I care about both I'm very strongly for it)

[anne]

Interesting argument, and I will consider carefully :)

[andres]

"Besides most economists are Johnny-one-notes, they never talk about how to fix the dam or control the waters. They think that nothing can control a global economy. They treat it as a force of nature. They talk about its creative destruction. Their only suggestion to save yourself from its destruction is to get an education. If you take their classes they will teach you that. But how can that be the answer if the leveling of wages effects all wage earners. Knowledge just isn't as powerful as it used to be. Perhaps colleges should charge less to acquire it, that is if you can actually get it there."

--wjd123

"The economics "profession" is full of smug, self-satisfied BS and it should be destroyed completely. We would be much better off with no economists at all, with only pragmatism to guide us."

--Firebug

As a recovering economist, let me assure both of you that your monolithic descriptions of the economics profession are wild oversimplifications. There is no dearth of strong economists who have serious reservations about immigration (e.g., Krugman in his last article, and Samuelson above) and even favor more restriction/enforcement. And there are many committed groups of economists who are taking on the professional majority's free trade/globalization dogma.

_However_,

Just because a non-dogmatic economist decides that immigration has bad effects and may even have negative overall net welfare effects does not mean that he concludes that a fortified wall should be built across the border in the hope that it will more effectively enforce immigration restrictions. You don't have to be a dogmatic libertarian to realize that government repression is not a long-run solution to such all-encompassing social problems.

Firebug comes closer to the truth when he says that Latin Americans need to elect better governments, though I doubt that the approach of Chavez and Morales will really solve poverty in either country. What is needed is Latin American governments working in concert with US corporations, and if the latter don't cooperate, just remind them that NAFTA doesn't have to last forever.

[radek]

Thanks anne. I'm gonna end this on that polite note.

[andres]

[Maybe one of these days, I'll grow a thick enough skin to ignore the following, but until then, let me flame away.]

"It's hard enough to convince many Americans that native-born blacks, whose families have been in the US for hundreds of years, are "us". How much harder to convince them that illegal migrants who refuse to speak English and live 20 to a single-family house are "us"? They look, smell, and act like third worlders. And I do not want them here."

Hmm. Let me hazard a guess that to look, smell, and act like a third worlder is tantamount to having skin that is light brown or darker, to smell as if you actually have to _sweat_ in order to earn an honest day's wage, and to act as if you don't appreciate the local uniformed authorities treating you like scum.

Bad news Firebug, but the majority of black people (whose families have lived here for hundreds of years) look, smell, and act like "third worlders". And, like the Mexicans, they refuse to speak "proper English" in spite of over 200 years of residence. So it's time to deport those n******s, right?

Also, a friendly reminder that many white Africaaners, French-descended west Africans, blond Mexicans (yes, there are a few, descended from European families), and light-skinned creole-descended residents from Mexico to Chile are proud to call themselves Latin Americans or Africans but do not appreciate being told that they smell bad and act bad or that they live in a third world country, and a few of them even have something you lack--a sense of solidarity sufficient enough to complain if their brown-skinned neighbors are treated badly. Fortunately for them, they usually have enough money to stay at home or emigrate legally, and they don't have a visible skin-color reminder of their immigrant status. If only those *#*$ Irish had been dark-skinned, right?

Perhaps we should toss you in the trunk of a car, dump you in downtown Matamoros without any sort of i.d., and let the locals and the border guards decide what you look, smell, and act like. But truly bad odor does not arise from one's armpits, if you get my meaning.

[CapitalistImperialistPig]

Steve - "I don't understand this argument at all. A) Malthus was dismissed long ago ..."

If you think Malthus can be dismissed, you fail to understand much. Malthus and Darwin, whom he inspired, are everywhere confirmed. Did you miss the Malthusian catastrophes in Rwanda and Burundi? Are you unaware of the ongoing Malthusian catastrophes in Sudan, Congo, and Haiti? Have you not noticed that every country with a high and increasing standard of living has a very low population growth rate? Have you noticed that every country with a high population growth rate, including fabulously oil rich Saudi Arabia has seen living standards plummet as population exploded? Notice too, if you will, that China's explosive economic growth ignited just when it introduced the most draconian population control in the world.

Why is it, I wonder, that economists seem sostrangely blind to all the history of cultural collapse triggered by population explosion and resource overexploitation. Read Jared Diamonds "Collapse" for penance.

Your point B is also mistaken, but rather than refute it let me merely note that if immigrants stay home, they pollute their own country, not mine.

[Lord]

Why do so many economists think the bigger the gdp the better, that the US is better off than Luxemburg? Most citizens believe the bigger the gdp per capita the better, and Luxemburg is better off than the US.

[radek]

wjd123, I didn't mean to imply that the quote about about smelling like third worlders was from you. It wasn't done out of malice nor dishonesty. It was carelessnes however, and you're right, I should have labeled the authorship of each part I was responding to. For that I apologize.

I'll leave Samuelson alone for now until I can actually read what he's saying. I know the relevant definitions though, don't worry.

[Scott Brison]

urging America's leaders to sanity:
http://safepose.com/

I don't agree with all of it, but the main points are sound. An excerpt:

People from around the world are drawn to America for its promise of freedom and opportunity. That promise has been fulfilled for the tens of millions of immigrants who came here in the twentieth century.

Throughout our history as an immigrant nation, those who are already here worry about the impact of newcomers. Yet, over time, immigrants have become part of a richer America, richer both economically and culturally.