Posted on 05/29/2006 8:16:18 PM PDT by SirLinksalot
Why Ruin the World's Best Anti-Poverty Program?
By Alexander Tabarrok
25 May 2006
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.
Professional economists or other social scientists interested in signing the open letter may do so by sending an email with their name and affiliation to OpenLetter@Independent.org.
Alex Tabarrok is Associate Professor of Economics at George Mason University and Research Director at the Independent Institute, sponsor of The Open Letter on Immigration.
This nonsensical OBL drivel was already posted.
A helpful hint: if you chastise someone for a "duplicate" post, emulate upchuck. If it's too much work, don't do anything.
looks like duplicate crap to me...
Much like your enlightened post.
it's about 23 hours old (the duplicate link) read it.
23 hours old?! Holy crap! That's certainly plenty of reason to chastise someone for posting a duplicate without providing a helpful link to said duplicate. After all, that might actually involve learning some basic HTML, and spending more than 25 seconds on a hit-and-run. But, we're not really friends here, eh? It's easier to chastise and run, without contributing to the FR.
"National sovereignty? Bad idea. The whole earth should be one single economic zone."
This is just another example of the adage "When all you have is a hammer, everything looks like a nail."
ok
I wasn't chastising for the duplicate post, I was merely pointing it out. The chastising related to it being drivel.
It certainly is nonsensical. Comparing the next generation of children to adult immigrants is just stupid. The implication that we have some obligation, as a nation, to fund an "anti-poverty" initiative for Mexico is ridiculous. And besides, it seems not to be working.
The author must surely be a wonderful person--clearly a better man than I.
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.