Pundit’s Mailbag —
Immigration As An Economic Issue
Jim Prevor’s Perishable Pundit, June 14, 2007
With the immigration compromise on life support and Lou Dobbs saying Give it a rest, Mr. President, we received a letter on immigration from Rick Eastes of Rixx International Marketing Co., in which he draws to our attention an article in the Economistentitled Guests vs Gatecrashers.
The piece is subtitled, The uncomfortable economics of immigration reform, and the first two paragraphs go like this:
HOW much of a jerk do you have to be to oppose immigration? That question is mischievously posed, and ingeniously answered, in a recent post on “YouNotSneaky”, an economics blog.
The blog’s author points out that a low-skilled worker can make $9.34 an hour in America, compared with just $2.56 in Mexico. He also assumes that migrants depress the wages of low-skilled Americans by 5% — a widely cited estimate. Thus Mexican workers gain dramatically by moving north, whereas low-skilled Americans lose out slightly at worst. To justify opposing immigration, the blog concludes, you must attach at least 20 times more weight to the well being of a native-born American than to a Mexican.
Rick encourages us to read the complete article and sends along these thoughts:
This Economist article is a good expression of the immigration issue as “economic” and how scarce labor resources stretch to meet economic demands.
The final part of the article makes a critical point. As the ‘comprehensive’ immigration legislation is now to be presented, it will cost more to administer in total economic terms than the true short-term costs to society — and still will not likely effect the movement of labor regardless.
Many of our legislators need to drop the ‘racist rhetoric’ about “English only” and start examining how capital and resources are being allocated. There are virtually no incentives to keep manufacturing jobs in-country allowing corporate profits (and their taxes) to escape to China and other low wage economies. The reality is that work performed by labor, legal or illegal, in the United States generates income, profits, and tax revenues which aid the total US economy in the aggregate.
I suggest that our legislators need to learn to ‘follow the money’ in coming up with an immigration policy that can work and be sustained in the future.
— Richard A. Eastes
Rixx Intl. Marketing Co. Inc.
The article end that Rick refers to runs like this:
In the short term the fiscal burden imposed by illegal immigrants may outweigh the economic gains they bring. In other words, the average native-born American has a higher pre-tax income thanks to the country’s “broken” border, but his post-tax income may be slightly lower. All told, Mr. Hanson thinks that illegal immigration might cost native-born residents some 0.07% of GDP.
But that net cost, if it exists at all, is clearly less than the price of keeping illegal workers out. Since 2001 Congress has more than doubled the amount of money spent on securing the borders and enforcing immigration laws. Mr. Bush’s 2008 budget proposes spending $13 billion, or 0.1% of GDP. The senators’ plans would be even more expensive. A needlessly cumbersome guest-worker plan and a costly war on gatecrashers are bad ideas — even if you don’t give a fig for the welfare of would-be migrants.
The Economist piece is an interesting one but strikes us as avoiding the issue as Americans would see it. Sure, one consideration is economics, and whether, financially, immigration increases or decreases the income of Americans that are here today.
The blog referenced in the Economist article takes it one step further and says that, morally, we ought to allow immigration because the economic benefit to the immigrant is so much greater than the cost to existing citizens.
Even assuming the economics are correct — and they are hotly contested — it is a complicated moral issue. The issue revolves around what ethicists would call “the relevant moral community” — in other words what group should we be concerned about?
If we proved that 20 poor children would be better off if you adopted them, but your current children would be worse off, even if the total well being of the world was improved by your adopting these children, should you adopt the children?
Many of us would think it grotesque to do so because we would think that “the relevant moral community” is your own family. That is who you are responsible for; that is who you should be thinking about in making decisions.
Equally, it is unclear to what degree the well being of non-citizens should be included in calculations regarding immigration to America.
The closing point of the article — that restrictions on immigration are expensive and possibly more than the cost of taking care of immigrants — is intriguing. Certainly some people oppose immigration or wish to restrict immigration because they fear an economic burden being imposed on our society by immigrants. This provides a useful counterbalance to that thought process.
Yet all this, even if true, seems to be avoiding an important point. In New York City, a common housing option is a co-op. In a co-op one doesn’t actually buy a unit as one does in a condo. One buys shares in an entity that owns the whole building. When one goes to buy someone’s unit, what one is actually buying is the shares the seller owns.
The co-op board must approve all buyers and can turn them down for any reason or no reason at all. A co-op board does not have to explain its reasoning. The members just vote yes or no. This means that people may get turned down because of their race, religion or other factor.
Yet we allow it. Why? Because in buying into a co-op one is really being accepted into a partnership, and we accept that people are allowed to select their partners. So an Italian guy can want to be business partners with an Italian guy just because he feels more comfortable, and that is considered OK.
In a democracy, when we open the doors for immigration, we are not just accepting economic inputs like capital or labor. We are in a very real sense accepting partners in the running of our country.
Rick’s mention of “English Only” is instructive because imagine Americans are presented this choice:
Option 1: Your income over the next 30 years will increase 2% a year and the U.S. will remain much as it is today in terms of spoken language.
Option 2: Your income over the next 30 years will increase 3% a year and the U.S. will be a society where Spanish is the most commonly spoken language.
Surely there are many, many Americans who would forego added income to maintain the kind of country they are comfortable in.
Still others would argue that the math is wrong, that economic growth is impossible without political stability, and a bi-furcated country is less likely to provide that stability.
In any case, this is why guest worker programs are politically appealing; they provide a way to get needed labor without having to make someone your “partner” in running the country.
Of course, the core issue blocking an immigration compromise is the lack of credibility of the U.S. government. If we do have a guest worker program and the guest worker doesn’t show up to leave the country, will anybody look for him?
Although conservatives have opposed the compromise bill, there is much in it for conservatives to like. Because the government has no credibility on these issues, however, the Republican base isn’t paying attention.
Until this should change, any “grand compromise” is going to be very difficult to pass.
Many thanks to Rick for passing on this thought-provoking article.