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Posts Tagged ‘supply and demand’

Immigration and human capital

In economics on May 14, 2010 at 3:23 am

“Free trade is a lot like technology. It lowers the price of things for consumers, expands markets for businesses and provides jobs.” — Drew Carey

“Illegal immigrants are taking jobs away from hard-working Americans.” The claim is repeated often — but is it true?

Some fans of a Facebook page created “for conservative Americans” apparently think so. While perusing the discussions tab, a thread titled “Top Ten Myths About Immigration” caught my eye. The title seemed oddly out-of-place for a conservative group.

The creator of the discussion simply reposted information from the Justice for Immigrants website. Basically, the post attempts to debunk popular myths about immigration. One reoccurring falsehood is that undocumented workers are flooding the workforce with cheap labor, thus stealing jobs from American citizens.

But an understanding of simple supply and demand economics renders this argument void.

The fact is, immigrants would not be able to come to this country and work if it weren’t for market demand. And the market is controlled by consumers, so ultimately, it is American consumers who create job opportunities for their Mexican neighbors.

The argument that somehow an increase in population depletes the number of available jobs is completely illogical. If this were fact, the reverse argument — that a decrease in the population makes more jobs available — would also be true. Job availability has nothing to do with population. It has everything to do with the condition of an economy.

Human beings are not a burden, they are a benefit. Labor, or human capital, is a valuable resource for an economy. And an economy that has jobs available for labor to fill is a healthy one. Robinson Crusoe author Daniel Defoe thought so:

“People are indeed the essential of commerce, and the more people the 
more trade; the more trade, the more money; the more money, the more 
strength; and the more strength, the greater the nation…All temporal 
felicities, I mean national, spring from the number of people.”
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Open immigration; a win-win situation?

In foreign policy, racism on November 22, 2009 at 10:59 pm

People are indeed the essential of commerce, and the more people the more trade; the more trade, the more money; the more money, the more strength; and the more strength, the greater the nationAll temporal felicities, I mean national, spring from the number of people. — Daniel Defoe

Growing up in a conservative household, I was taught the value of free-market economics and limited government from a young age. Government was a thing to be feared and restricted. Human beings, on the other hand, should be allowed maximum freedom — at least in the area of economics. But when it came to the issue of illegal immigration my parents sang a much different tune. In their minds, illegal immigration was a scourge on America’s land that bankrupted both the economy and American culture.

Ironically, most conservatives today share the sentiments of my parents. Why is it that those who are the loudest advocates for laissez-faire capitalism are also the loudest advocates for protectionism? If conservatives truly believe in the power of the “unseen hand,” why do they not extend it beyond America’s borders?

The necessary, logical conclusion for those who truly believe in the free-market is that legal immigration is beneficial for a society. Conservatives need to revisit their belief in supply-and-demand. Perhaps then they would realize it is the demand of American consumers that brings immigrants to our country.

In an interview with New York Times’ blogger, Melissa Lafsky, British economist and journalist, Phillippe Legrain, makes the case for freer immigration which he believes increases prosperity:

“We tend to think it’s fine that foreign financiers cluster together in New York, I.T. specialists in Silicon Valley, and actors in Hollywood, while American bankers ply their trade in London, Hong Kong, and China; surely the same logic should apply to Mexican construction workers, Filipino care workers, and Congolese cleaners coming to the U.S. After all, they are all simply service providers plying their trade abroad.”

Jason L. Riley, author of the book “Let Them In: The Case for Open Borders,” agrees with Legrain. As a conservative member of The Wall Street Journal’s editorial board, Riley finds the anti-immigration attitudes rampant among his fellow conservatives troubling.

“Most of the anti-immigrant sentiment comes out of the political right,” Riley said in an interview with the Telegram’s Robert Z. Nemeth. “As a free-market conservative, I find that disturbing.”

Riley Argues that there is no correlation between an increase in population and poverty. He compares the influx of Mexican immigrants to that of the Italians, Germans and Irish.

“Scapegoating foreigners for domestic problems, real or imagined, is something of an American tradition,” Riley said.

“Scapegoating” is quite popular in America today as Mexican immigrants are blamed for crime, job loss and the demise of American culture. As the saying goes, “there is nothing new under the sun.” Since its inception, fear and nativism have directed America’s immigration policies. In the 19th century, Bejamin Franklin spoke out against the influx of German immigrants coming to America:

“Why should Pennsylvania, founded by the English, become a colony of aliens, who will shortly be so numerous as to Germanize us instead of our Anglifying them, and will never adopt our language or customs, any more than they can acquire our complexion.”

Illegal immigration is a problem as it allows for millions of undocumented persons to live in the shadows of a nation. However, immigration is the result of market demand. Americans need to realize legal immigration is a benefit, not cost, to them.

Watch Jason Riley at The Cato Institutes’ book forum.