Importing Poverty: The Cheap Labor Trap

AmericanEconomicAlert.org ^ | Monday, September 05, 2005 | William R. Hawkins

[Alouette]

Outsource the lawyers.

[GOPJ]

Thanks for the ping.

[Clintonfatigued]

I am also worried about free trade, which is linked to the issue of border security. In your opinion, are the effects of free trade policies so extensive that it's beyond repair, or can corrective action be taken to alleviate these problems? If you believe the problem can be fixed, what actions would correct the situation?

[A. Pole]

If you believe the problem can be fixed, what actions would correct the situation?

Tariffs, enforcing immigration laws.

[Clintonfatigued]

You're right. It's so simple, yet obvious. What's the point in having immigration laws if they're going to be ignored. And the cautious, judicious use of tariffs is very much a part of the American tradition.

[RFT1]

Those that promote unrestricted trade and unrestricted immigration have no idea about the big picture, and that being in a republic, where the people still have the vote, the more stressed a nation becomes, the more appealing it becomes for those to exploit economic tensions and fears. So while many may quote the WSJ and Limbaughs(and even on immigration he is starting to question the Bush admin) one liners, the stark reality of the siatuation is this situation can not be sustained.

It is sad that the political endgame will end badly for anything called conservative, despite the fact that such immigration polices are hardly conservative by any classical sense of the word, and I hate to say this, but if big business, the rich, agri-business, even to a large extent small business gets hit by more regulations and taxes than ever before, I wont shed a tear.

I have had it frankly, and I have had it for quite some time, along with many others who are traditional conservatives, and while I will NEVER vote for Democrats, or support them in any way, that does not mean I have to support mainstream Republicans. To paraphrase a line from a movie this summer "I wont kill you, but I dont have to save you"

[fallujah-nuker]

"...while I will NEVER vote for Democrats, or support them in any way, that does not mean I have to support mainstream Republicans. To paraphrase a line from a movie this summer "I wont kill you, but I don't have to save you""

I agree, as Hippocrates said: "...make a habit of two things—to help, or at least to do no harm."

[Dat Mon]

YOU SAID..."Get a better education - get a better job. Start your own business. Stop whining." Good advice. I did that myself. So now lets talk about the article that was posted. Key point of the article IMHO..... "If one looks around the world at those foreign societies with the worst living standards, their problem is clearly not a lack of cheap labor. Indeed, their problem is that cheap labor is all they have. What they need is capital investment in advanced methods. Economic theory, however, argues that managers will use the least-cost method of production, and when labor is the abundant factor, labor-intensive methods will be chosen over capital-intensive methods that use relatively expensive technology. This can restructure an entire economy in the wrong direction. America's shift from a manufacturing economy where scientific progress is most fruitful, to a service economy dominated by cheap labor fits the model of a country in long-term decline." This is an excellent point, and one I agree with, being an engineer. Throughout history, machines have been invented to replace labor intensive operations, the result being that economies become more productive. Importing cheap, uneducated, non literate, nonenglish speaking manual labor is going in the wrong direction...its merely a short term solution to improving productivity. Can or will you now comment on this point?

[Dat Mon]

Apologize...somethins' not right with the formatting.

[Age of Reason]

Get a better education - get a better job. Start your own business. Stop whining.

Yesterday I couldn't spell engineer.

Now I are one.

[Age of Reason]

I seem to remember that the black death of the late middle ages, by reducing the number of peasants, helped to break the grip of feudal lords over the common man.

Because with the labor pool reduced, the value of a peasant's labor rose dramatically--to the point where the great landowners competed for their labor.

This broke the hold of the feudal lords over their peasants.

In fact, many peasants became so wealthy and land so cheap, that some actually came to own the farms on which they and their forbears had worked in great poverty.

[Once-Ler]

A labor surplus in a capitalistic economy is the formula for civil and political unrest.

There is no labor surplus. There is in fact a huge demand for unskilled labor. We can meet that demand so that business can hire more management, or let the business move to where the workers are outside the US and outsource the management positions as well.

I believe that most people who are not succeeding in this economy should look into the mirror instead of pointing their fingers at Dubya or DC.

[janetgreen]

What's the point in having immigration laws if they're going to be ignored.

A question that is on the lips of conservatives throughout America. George W. Bush refuses to answer that question with anything other than another amnesty.

[Once-Ler]

"Just out of curiousity, can you name one member here who is part of the "free trade/open borders" crowd and ping him or her to this thread? I have yet to meet one."

You need to get with Once-ler, he was wanting to get together a ping list...

Actually I was making fun of the ping lists, but humor is difficult with just the written word and some of my audience ain't too bright.

I'm also not for open borders and I don't know anyone who is.

I think illegal immigration should to be stopped. It is a danger to our security. Terrorists may be slipping in, and not being spotted because a family of 7 is caught instead.

I support Dubya's guest worker program to eliminate the job vacuum our shrinking native population is causing. With this one step I believe we could eliminate over 50% of the illegal flow across our borders. Perhaps much more. I am not for indiscriminately letting any one across the border. I'm for allowing workers in, not criminals and terrorists and I expect checks and registration for all guest workers.

I think it makes little sense to solve the problem of ( picking a number out of thin air ) 200,000 criminals and terrorist crossing our border by expanding the problem and trying to stop 3 million illegal crossings every year. It's like trying to stop excessive speeding by arresting everyone driving over 55MPH. Can it be done? Maybe but it will cost a lot of freedom if we give Government complete control of our lives. I remember the out cry when Dubya wanted to pass a Patriot Act designed to catch terrorists. Now we want to give them the power to investigate and capture 20 million people. That is gonna be a tough sell for some.

[WatchingInAmazement]

I seem to remember that the black death of the late middle ages, by reducing the number of peasants, helped to break the grip of feudal lords over the common man. Because with the labor pool reduced, the value of a peasant's labor rose dramatically--to the point where the great landowners competed for their labor. This broke the hold of the feudal lords over their peasants. In fact, many peasants became so wealthy and land so cheap, that some actually came to own the farms on which they and their forbears had worked in great poverty. 71 posted on 09/06/2005 8:35:55 PM PDT by Age of Reason

If I had one wish today, it would be that everyone reads and understands what you've said here. You've earned your name. Thanks. Our handlers are very arrogant and act as if they have actually created some new marvelous economic system. And we are so arrogant that we believe we can't become serfs.

[Pelham]

Good post.

[meadsjn]

the availability of cheap, unskilled workers with limited educations slowed the adoption of new technology. The paper, "Immigration, Skill Mix, and the Choice of Technique" by FRB economist Ethan Lewis, concluded, "Using detailed plant-level data from the 1988 and 1993 Surveys of Manufacturing Technology, we found in both 1988 and 1993, in markets with a higher relative availability of less skilled labor, comparable plants – even plants in the same narrow (4-digit SIC) industries – used systematically less automation. Moreover, between 1988 and 1993 plants in areas experiencing faster less-skilled relative labor supply growth adopted automation technology more slowly, both overall and relative to expectations, and even de-adoption was not uncommon." De-adoption! There is no positive spin for a retreat from technological progress.

That's an fair analysis of a civilization in decline.

[MarkL]

Something that this article doesn't seem to mention is just how many people escaped poverty. The article seems to assert that once you've sunk into poverty, that's it, there's nothing more that you can do, and you'll be destitute for the rest of your life, as will your children.

It seems that people in the US (and most capitalistic societies) are moving into and out of "poverty" all the time.

Mark

[junta]

Yeah but we need "cheap labor" so this country can be divided and more easily ruled by the axis of venality the WSJ/NewRepublic/WeaklyStandard/NYTs editorial junta.

[1rudeboy]

I'm also not for open borders and I don't know anyone who is.

I figured as much. Personally, I believe any attempt to link proponents of free-market theory with advocates for illegal immigration is a product of an over-active imagination and a lazy intellect. Witness what happened above . . . someone shoots off his mouth (if that is possible on the 'net), and then runs for cover. It truly makes one question, are these people merely against illegal immigration, or something else?