Posted on 06/03/2007 8:15:24 AM PDT by westcoastwillieg
Unskilled Immigrants + Large Welfare State = Higher Taxes
The above equation shows why free market enthusiasts should oppose the current immigration bill. Yes, historically immigration has helped the U.S. economy. But our large welfare state combined with the importance of education to wealth creation provides a compelling reason to oppose importing unskilled immigrants and citizens. The benefit an immigrant provides to an economy comes from the value of his work. The lower an immigrant's skill, the less value the economy derives from his presence.
Some immigration advocates, though, claim that the U.S. economy "needs" unskilled immigrants to work at critical — if low paid — jobs. This, however, is an economically silly argument. If a job offers low wages either it is relatively unimportant for the economy or many people are willing to do it.
A hundred years ago human muscles played a relatively large role in powering our economy. At that time a strong, hardworking, but uneducated immigrant could make great contributions to our economy. Today, however, when our economy mostly runs on educated brains, we receive far less benefit from importing uneducated workers.
Much of the cost of new immigrants comes from the government services they consume. In 1900 the U.S. provided relatively few government benefits to anyone, so poorly paid immigrants couldn't become too much of a burden on the economy. Today, however, government spending is about five times larger (as a percentage of the economy) than it was in 1900. And legal immigrants today have the right to consume considerable government services.
Indeed, according to the Heritage Foundation's Robert Rector, in 1994 the average low-skilled immigrant household received $30,160 in direct governmental benefits. But this same average family paid only $10,573 in taxes. As a result, low skilled immigrants are net tax eaters. (But read this for a contrary view.) The difference between the taxes paid by unskilled immigrants and the government benefits these immigrants receive is mostly made up by taxes imposed on U.S. citizens. Such additional taxes slow our economy.
Political Dynamics
Although very pro-immigration himself, economist Bryan Caplan provides a powerful argument against allowing millions of new uneducated illegal immigrants to become citizens. As he explains in The Myth of the Rational Voter, the lower a person's level of education, the less likely he is to politically support intelligent economic policies. So providing a path to citizenship for millions of uneducated illegals may eventually provide millions of votes for harmful economic policies.
Unskilled immigrants also cause political harm by increasing income inequality. Not only do the immigrants themselves make far less than the average American does, but they also lower the wages of unskilled native-born U.S. workers with whom they compete for jobs. Greater inequality fuels class warfare politics. And class-warfare politicians such as "Two Americas" John Edwards always support increased government benefits for the poor and thus push for higher taxes on the most productive Americans.
50 Million New Immigrants
The current immigration compromise is supposed to limit future illegal immigration in return for legalizing about 12 million current illegals. But it's foolish to think that implementing the current compromise won't increase future legal and illegal immigration. As economist Thomas Sowell writes:
"The big talking point of those who want to legalize the illegal immigrants currently in the United States is to say that it is 'unrealistic' to round up and deport 12 million people. Back in 1986 it was 'unrealistic' to round up and deport the 3 million illegal immigrants in the United States then. So they were given amnesty.... [W]ill it be 'unrealistic' to round up and deport 40 million or 50 million illegal immigrants in the future?"
Amnesty sends a loud signal to the world's poor that if you smuggle yourself into the U.S. you will eventually be legalized. Amnesty furthermore creates incentives for politicians to support further immigration.
As more immigrants become voters, there is greater voter support for allowing in more immigrants. Even if the current immigration compromise had effective measures against future legal and illegal immigration of unskilled workers, politicians would soon back out of this compromise in response to immigrant voters' demands to let in their relatives.
Politics rewards intensity. For example, although milk subsidies are harmful to almost all Americans, dairy farmers care far more about milk subsidies than do milk drinkers. As a result, politicians eagerly support milk subsidies.
Similarly, recent immigrants care vastly more about chain migration than do most other Americans. (Under chain migration the extended family of an immigrant has the right to move to the U.S.) New immigrants will fight much harder for the U.S. to increase chain migration than native-born Americans will fight to limit such immigration. Consequently, if the U.S. gives 12 million illegal immigrants voting rights, it might become politically impossible for the U.S. Congress to limit future chain migration. As a result, providing a path to citizenship for 12 million illegals today may well provide a path to entry for 50 million new unskilled immigrants over the next few decades.
Charity to Foreigners
The best reason to support the current immigration compromise is that it will significantly improve the life of many immigrants, even if it does harm current U.S. citizens. But the greatest benefit that the U.S. provides the world is our technological innovation. The entry of high-skilled immigrants greatly helps such innovation, but such immigrants don't enter the U.S. illegally and so won't benefit from the current proposed amnesty. Massive low skilled immigration doesn't promote innovation and by causing taxes to be raised will likely slow technological progress in the U.S. And if, say, this delays the discovery of a cancer vaccine or AIDS cure by even a few months, then enacting the immigration bill will on net harm non-Americans.
Excellent!
His book applies game theory to the workplace which helps to explain his approach to the immigration problem.
Nailed it!
Thanks for posting. This is a rational economic argument which makes sense. It is by no means the only argument against illegal immigration, but certainly one which gives opponents no traction to resist. It is also reasonable to make cultural and political arguments, which add to the weight of this critique. Care should be exercised to minimize the emotional content of such arguments, however, lest our opponents be given an excuse to slander us as “racists.” That they will do so anyway, even if the facts do not support the accusation, is a given. Do not let it concern you overly.
We Americans own our country and have a right to determine whether or not non-owners can or should live here - no less than a homeowner determines who resides in his or her own home. It’s that simple.
Wrong on both counts. America is bankrupt. It's creditors have been calling the shots since 1933 (the same limousine liberals and internationalists who advocate more social spending, now for obvious reasons).
Gov bean counters can only go to 12 million.
Good article, and one more point not expressed in it:
The children of many of the unskilled but willing-to-work immigrants assimilate into American culture in negative ways. They neither want to study or want to work as manual laborers.
So the ‘jobs Americans won’t do, still won’t get done by legal residents when this current wave is too old or tired or savvy to work.
The author is obviously bigoted, racist, and a nativist.
Nope. We’re not bankrupt, and its not even close. That capital flows internationally has been the case since before the founding of this country. Its pure ignorance to argue otherwise.
Well, it is very simple, Solvency, solvency, solvency. We are bankrupt. We are insolvent on every level of our national life, whether it is corporate, whether it is just plain you and I out here with the level of debt that we have piled up, private debt, credit cards and what not, or whether it is the Government. We are insolvent.
You're just about 74 years late in realizing that it's already happened.
You know, I seem to remember that there was a time like that in the good ol' USA. That's when it happened.
Economists and business people know that the proper use of debt (and I am not saying all we are doing is proper) is a benefit to a business or a corporation. That is why we have had a national debt practically the beginning of our Republic.
Economists are virtually all brainwashed by the same BS. BTW, I have a degree in economics from Claremont, with emphasis upon money and banking.
Our current national debt is about $7 trillion.
You are counting the entire economy against only the Federal debt. Considering that you have neglected our Federal unfunded liabilities, underfunded state and local pensions, underfunded insurance, and massive individual debt, etc., this is a totally dishonest factoid. Try again.
This is within our ability to pay.
Add it ALL and get back to me when you've compared our liabilities, cash flow, and net uncollateralized assets.
As he says, the BEST reason is charitable ... and it harms current US citizens.
As he says, the BEST reason is charitable ... and it harms current US citizens.
Plus the SS system making our country go broke. We need to end ss and the ss number.
Well I have an MBA myself, and I guess I took the classes that provided the answers that you didn’t get as an undergrad. Over-generalizations like “Economists are virtually all brainwashed” don’t make your case. Assets still equal liabilities plus equity as they always have, and while our government doesn’t account for liabilities well, you are grossly understating the value of American assets. The Feds own millions of acres of land, not counting property plant and equipment, much less other assets.
Thank you RKV
That is just not true, in a technical sense. Every day we are able to pay our bills, and we will be able to do so every day for years and year and years. So, whether you buy into the overallview of Carry-Okie or RKV, it is simply inaccurate to say that we are insolvent.
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