Posted on 05/28/2006 9:32:58 PM PDT by Lorianne
Winston Churchill famously said "If you put two economists in a room, you get two opinions -- unless one of them is Lord Keynes, in which case you get three." Churchill, however, was wrong. Brad DeLong worked for the Clinton Administration and regularly calls for the impeachment of President Bush. In contrast, Greg Mankiw speaks warmly of President Bush and headed his Council of Economic Advisors. Readers of their respective blogs (DeLong, Mankiw) will know that no love is lost between these two. Yet, both these economists were early and enthusiastic signatories to my Open Letter on Immigration (I didn't tell them that the other had signed until the letter was publicized, however!).
DeLong and Mankiw are not alone. In a survey, economists and the general public were asked whether "too many immigrants" was a reason for bad economic conditions with 2 being a major reason and 0 not a reason at all. The public rated immigration a 1.23, economists just immigration just a 0.22.
Why do economists think more favorably of immigration than the general public? I think there are three reasons: theory, empirical research, and ethics.
In terms of theory, the public focuses on the idea that "immigrants will take our jobs." But immigrants buy our products too so the primary effect of immigration is simply to increase the size of the market. Moreover, few people complain that in twenty years time our jobs will be threatened when all the babies born this year start working! Yet, population growth and immigration are very similar economic forces. Jobs can be a problem in a recession or if labor markets are not free and flexible but these problems are not caused by immigration and ought to be addressed directly.
What about wages? Economists do recognize that immigration can lower wages; but unlike the general public they also know that immigration can increase wages. Clearly, the immigration of a high-skilled worker can increase wages for Americans. Google, Yahoo and Sun Microsystems? All founded by immigrants. But the immigration of a low-skilled worker can also increase wages for Americans. More low-skilled workers mean lower prices for services such as day care or dry cleaning and this means that higher skilled Americans can spend more time doing the jobs at which they are most productive. Immigration, like trade, increases total production -- instead of moving the goods we move the workers.
The fact that immigration and trade are similar also means that even if immigration lowers wages, restricting immigration won't necessarily raise wages. With fewer low-skilled immigrants in the United States the incentive to move production overseas will increase.
Economists have extensively investigated the wage question with special attention being placed on the effect of low-skilled immigration on the wages of U.S. high school dropouts. The results from both proponents and opponents of immigration are surprisingly similar. Studies by David Card (UC Berkeley) suggest a zero effect of low-skilled immigrants on low-skilled workers. Studies by George Borjas (Harvard) suggest a wage decline of 7.4%. Borjas acknowledges that his figure is probably on the high side as it doesn't take into account increases in the capital stock brought about by immigration. Card's studies are probably on the low side because they assume that labor markets in different cities are not at all connected. Most economists are happy at some number in between.
High school dropouts have it hard already so even a small decline in wages is not something to be ignored. But is reducing immigration really the best way to help high school dropouts? How about encouraging them not to drop out instead? Why must we pit the poor against the much poorer?
Economists are probably also more open to immigration than the typical member of the public because of their ethics -- while economists may be known for assuming self-interested behavior wherever they look, economists in their work tend not to distinguish between us and them. We look instead for policies that at least in principle make everyone better off. Policies that make us better off at the price of making them even worse off are for politicians, not economists.
Immigration makes immigrants much better off. In the normal debate this fact is not considered to be of great importance -- who cares about them? But economists tend not to count some people as worth more than others, especially not if the difference is something so random as where a person was born.
Economists do sometimes distinguish between the rich and the poor, but high school dropouts in the United States are rich compared to low-skilled immigrants from Mexico. It's a peculiar kind of ethics that says we should greatly penalize very poor immigrants in order to marginally benefit relatively rich Americans (peculiar at least if one is not stuck in the Robbers Cave).
Immigration benefits not only the immigrants but also their families back home because of the billions of dollars of their own money that immigrants send to their families. Remittances to Mexico in 2004, for example, amounted to 16.6 billion dollars -- to put this in perspective that's about the same as all direct foreign investment in Mexico. Remittances far exceed foreign aid and remittances go directly to poor people and not to corrupt governments and dictators. Why ruin the world's best anti-poverty program?
Economists, of course, don't have all the answers nor do they agree about everything. Immigration is bound to have important effects on politics and culture, for example, even if no one understands what these effects will be. The Open Letter on Immigration was written not to end debate but rather to say 'Let us debate. But let us make it an informed debate.' I'm proud that economists have something important to add to that debate.
Clearly the wretched of the earth, would all be better off repairing to the Fruited Plain. If only it were all that simple. It isn't. The article is a gentle polemic, and observes in passing the stagnation to mild minus in low skilled wages on the Fruited Plain. But that too will pass in time. Of course in time, the low skilled workers on the Fruited Plain will be dead. All must pass, in time.
The author doesn't say how many economists were surveyed.
But as far as the two economists who were named, the leftist Democrat goofball naturally wants to add as many ignorant and illiterate voters to the Democrat rolls as possible, and the Republican Bush guy wants to reflect his boss's soft stance on illegal aliens. It's not surprising that they agree.
Great post!
If it wasn't for the Irish Immigrants, we wouldn't have had Andrew Jackson, or Ronald Reagan (or Kennedy for that matter). If it wasn't for the German immigrants we wouldn't have Eisenhower, or Nimitz. The Irish left an ossified society, riven by class and religion. The Germans left an ossified society, riven by class, religion, and constrained by socialism, and militarism.
The Irish left the bad aspects of their society behind them, but contributed to our culture. So did the Germans.
Why should the Mexicans be different?
Immigrants generate profits, and the profits increase the capital stock. Of course, a more salient figure, is the per capita capital stock, when it comes to standard of living.
"Why ruin the world's best anti-poverty program?"
"......16.6 billion dollars sent back to Mexico"
"Total cost to American taxpayers, about $32 billion a year we pay the cost of illegal immigration. When this study was done, the population of illegals in the United States was about 5 million. Now the population has doubled, and the costs have more than doubled."
http://www.house.gov/poe/remarks/immigration71205.htm
Let's see 32 x 2 = 64+ billion, maybe it is not the "world's best anti-poverty program" what say we send them home, with an irrevocable agreement to give them 16.6 billion dollars, thus saving the tax payers about 75%?
Arrrrgggg .... Talking about immigration as one blob, without distinguishing between *legal* and *illegal* immigration, is very frustrating.
We are debating about whether we will have a functioning system of immigration at all, with option A being "Enforce the law" and option B being "amnesty the lawbreakers".
This is not about whether immigration (legal) is good.
It's about whether the US gets to decide who comes in or whether the gatescrashers decided who stays.
Thus, the difference between legal and illegal immigration is crucial.
Sen Talent's excellent speech on the Senate bill:
http://cboldt.blogspot.com/2006/05/senator-talent-on-s2611.html
To answer your first question, in general it's called the Optimal Employment Theory. If you leave every free to find their optimal employment by keeping labor markets free of restrictions on risk taking, and can accept a ~5% unemployment rate to account for those in transitions, the individuals and the economy as a whole will both benefit.
There are severe limitations when projected at a national and not global level though, i.e. individuals are actually competing against everyone in their profession the world over in certain fields, allowing only sub optimal career development, when this happens, people agitate about immigrants and outsourcing. When an influx of immigrants, as stated in the article, allows a janitor to rise up above his level of competence to be a manager over 20 immigrant janitors paid minimum wage or lower, it creates a ripple efect locally and other higher than min. wage janitors either hire their own immigrant cleaning crews or are forced to accept the lower wages or seek other employment. Economists in general believe there is equal oppurtunity, not equal outcomes, and the janitors who lose jobs are "increasing economic efficiency." Of course, Tenured Econ professor jobs aren't under wage pressure from immigrant Econ professors. Yet.
"Why should the Mexicans be different?"
How many ILLEGAL german, irish, italian, etc. cut in front of the line coming over?
Did we have bilingual education and services for them? Did they demand it?
Did they ever threaten to secede and form a separate country in the parts of the US where they concentrated? Did they refuse to learn our language and customs?
Did they overrun our hospitals, schools, social services to the breaking point??
L
ARRRRGHHHH! Can we QUIT with the fake Pollyanna speeches about how great someone's immigrant grandpa was.
America today has 1+ million immigrants each year, legally, and maybe 500,000 illegal immigrants coming each year.
Legal immigration has happened, is happening, will happen.
THIS IS NOT ABOUT BEING AGAINST LEGAL IMMIGRATION!
The question for America today is this:
- Do we have an immigration system where WE get to decide who becomes an American through a system of laws?
- OR, Do we hae an immigration system where visa-overstayers and border-crossing lawbreakers get to decide who lives in USA?
"Why should the Mexicans be different?"
They dont HAVE to be different.
They JUST have to come here LEGALLY.
They JUST have to want to be AMERICANS.
(Those Mexican flags at the rallies kond of had me wondering).
Hmmmm...his piece is curiously mute on the public cost of the upkeep of these widgets, er, immigrants. Sorta shoots the hole economic boon theory when the widgets draw huge public subsidies.
Where have you been? Ever heard of ILLEGAL IMMIGRANTS?
Why should the Mexicans be different?
1. They are from a neighboring country.
2. Just as the Irish have traditional grievences with the British, the Mexicans dislike us. They hate us for defeating them and conquering the Southwest, which they consider stolen. They resent us for our wealth, which they consider stolen from them.
YOu want an analogy, look at the Goths and Rome.
This website can be good but tends toward smart Alec libertarianism. This essay is too cute
Alexander Taghi Tabarrok (b. 1966) is a Canadian economist and co-owner, with Tyler Cowen, of the popular economics blog Marginal Revolution.
Both Cowen and Tabarrok are professors at Virginia's George Mason University and fellows with the school's Mercatus Center. In addition, Tabarrok is director of research for the Oakland, California based think tank the Independent Institute.
Globalisation Institute
Academic Advisory Council
Professor Alex Tabarrok
http://tinyurl.com/nb2qo
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.