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Monday, March 27, 2006

The immigration debate - and what Krugman has to say (and observations by Myerson):

This blog considers large-scale immigration to be detrimental to the interests of the poor (by depressing wages) and to the quality of life for everybody else (sharp increases in population tax the infrastructure - plainly evident in places like So. California). That over the decades, it has been business interests which like to see an increase in the pool of workers (can anybody say H-1B?). Liberals who elieve in a regulated economy, who believe that a regulated economy helps reduce the harsh Social Darwinism of the free market, see regulation necessarily extending to issues like immigration. Unfortunately, there are lots of down-and-out racists who also don't want any of 'them folks' coming here. So it's difficult to have a calm debate on the topic. But that doesn't mean it should be ignored.

Along the lines of examining the likely outcome of large-scale immigration, you should take a look at Paul Krugman's most recent NYTimes Op-Ed, North of the Border.

Some excerpts:
  • ... the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.
  • ... many of the worst-off native-born Americans are hurt by immigration - especially immigration from Mexico. Because Mexican immigrants have much less education than the average U.S. worker, they increase the supply of less-skilled labor, driving down the wages of the worst-paid Americans. The most authoritative recent study of this effect, by George Borjas and Lawrence Katz of Harvard, estimates that U.S. high school dropouts would earn as much as 8 percent more if it weren't for Mexican immigration.
  • ... modern America is a welfare state, even if our social safety net has more holes in it than it should - and low-skill immigrants threaten to unravel that safety net.     ... low-skill immigrants don't pay enough taxes to cover the cost of the benefits they receive.
  • ... the political threat that low-skill immigration poses to the welfare state is more serious than the fiscal threat ...
  • ... we'll need to reduce the inflow of low-skill immigrants. Mainly that means better controls on illegal immigration.
  • ... Mr. Bush's plan for a "guest worker" program is clearly designed by and for corporate interests, who'd love to have a low-wage work force that couldn't vote.     What about a guest-worker program that includes a clearer route to citizenship? I'd still be careful.     ... it could all too easily end up having the same effect as the Bush plan in practice - that is, it could create a permanent underclass of disenfranchised workers.
About the current hot topic, Krugman says:
... the harsh anti-immigration legislation passed by the House, which has led to huge protests - legislation that would, among other things, make it a criminal act to provide an illegal immigrant with medical care - is simply immoral.
The recent Republican bill that would make it a felony to be an illegal immigrant is a waste of everybody's time. And there is the mean-spirited sanctions against helping. The place to put the pressure is on the employers, to insure that they pay good wages to the existing pool of citizens. Hiring illegal immigrants is effectively 'outsourcing at home', and oursourcing of all types (manufacturing, white collar) threatens whatever progress that's been made over the past 100 years by unions and the college educated. Now (actually it's been going on for a long time), cheap immigrant labor threatens the poor.

And do you want to know why we have so many illegal immigrants - mostly from Mexico? Blame NAFTA. In February, Harold Myerson of the Washington Post wrote a fascinating essay, NAFTA and Nativism, describing how NAFTA allowed cheap, subsidized U.S. agribusiness to sell to Mexico, undercutting whatever stability there was in that country with their farmers. So what did many of those displaced agricultural workers do? Head north. And business interests throughout the U.S. cheered. Myerson:
The North American Free Trade Agreement was sold, of course, as a boon to the citizens of the United States, Canada and Mexico -- guaranteed both to raise incomes and lower prices, however improbably, throughout the continent. Bipartisan elites promised that it would stanch the flow of illegal immigrants, too. "There will be less illegal immigration because more Mexicans will be able to support their children by staying home," said President Bill Clinton as he was building support for the measure in the spring of 1993.

But NAFTA, which took effect in 1994, could not have been more precisely crafted to increase immigration -- chiefly because of its devastating effect on Mexican agriculture. As liberal economist Jeff Faux points out in "The Global Class War," his just-published indictment of the actual workings of the new economy, Mexico had been home to a poor agrarian sector for generations, which the government helped sustain through price supports on corn and beans. NAFTA, though, put those farmers in direct competition with incomparably more efficient U.S. agribusinesses. It proved to be no contest: From 1993 through 2002, at least 2 million Mexican farmers were driven off their land.

The experience of Mexican industrial workers under NAFTA hasn't been a whole lot better. With the passage of NAFTA, the maquiladoras on the border boomed. But the raison d'etre for these factories was to produce exports at the lowest wages possible, and with the Mexican government determined to keep its workers from unionizing, the NAFTA boom for Mexican workers never materialized. In the pre-NAFTA days of 1975, Faux documents, Mexican wages came to 23 percent of U.S. wages; in 1993-94, just before NAFTA, they amounted to 15 percent; and by 2002 they had sunk to a mere 12 percent.

The official Mexican poverty rate rose from 45.6 percent in 1994 to 50.3 percent in 2000. And that was before competition from China began to shutter the maquiladoras and reduce Mexican wages even more.

So if Sensenbrenner wants to identify a responsible party for the immigration he so deplores, he might take a peek in the mirror. In the winter of '93, he voted for NAFTA. He helped establish a system that increased investment opportunities for major corporations and diminished the rights, power and, in many instances, living standards of workers on both sides of the border.

So long as the global economy is designed, as NAFTA was, to keep workers powerless, Mexican desperation and American anger will only grow.
Free trade with countries of significantly different standards of living, when implemented quickly, simply gives the advantage to business. (A slower phase-in does not. Gradual adjustments are made while the 'lesser' country catches up.) Don't forget, Bush is a big fan of NAFTA, CAFTA, and anything else like it. Whose interest do you think he is representing?

Whatever your opinion is on the issue, don't look for much sense to be made on either side of the debate. Many tired and discredited arguments will be heard, and probably the net result will be hard feelings all around.

How to solve the problem? It isn't a 'solution' in the complete sense, but if the U.S. experiences a sharp recession, the current fueled-by-borrowing economy will no longer be a magnet.



4 comments

I think that what is depressing the wages of poor citizens and permanent residents is the absurdly low minimum wage and the exceptions to minimum wage laws.

That and 90% of worthwhile trade and mid-level professional jobs going overseas.

It's kind of difficult to see how one might peg either of those problems on Jose Schmole, who came across the border for a few months to work on a harvest crew and found himself unable to get back into Mexico because he needed to present his entry visa to exit.

By Blogger Jeremy, at 3/27/2006 7:39 AM  

...low-skill immigrants don't pay enough taxes to cover the cost of the benefits they receive...

Neither do low-skill, low income Americans.

Similarly, one could argue that migration from low income, low skill states to high income, high skill states should be regulated for the same reasons. Or from low income towns to high income cities. etc.

By Anonymous Jack Awl, at 3/27/2006 9:43 PM  

Another consideration is that overzealous immigration opponents can be their own worst enemies.

For example, the H1B regulations of which you complain require employers to pay prevailing wages and to demonstrate they could not fill positions with citizens.

Offshore outsourcing of jobs has no such safeguards whatsoever.

By Anonymous Jack Awl, at 3/27/2006 10:11 PM  

For example, the H1B regulations of which you complain require employers to pay prevailing wages and to demonstrate they could not fill positions with citizens.

The regulations indeed say that, but they're hardly enforced.

By Anonymous Anonymous, at 3/28/2006 5:35 PM  

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