Open borders, wages, and economists

by Chris Bertram on August 22, 2012

How would open borders affect the well-being of the world’s population? I’ve spent much of today reading what some economists have to say about this and there seems to be something of a consensus that if people were able to move freely across borders, to live and work where they chose, then the people who moved from poor countries to rich ones would enjoy massive benefits. One author, Michael Clemens, raises the possibility of a doubling of global income (PDF); another, John Kennan, envisages a doubling of the incomes of the migrants . Either way, the gains are huge: put those poor people into the institutional and capital contexts of wealth countries and they would do much much better.

What there seems to be much less agreement on is the effect of open borders on the wages of the non-migrant population of the wealthy receiving countries. Clemens and Kennan generally concede the possibility of some small depressive effect but argues that it would be temporary and/or could be compensated for at a policy level by suitable taxes and transfers. This is a radically different story from that told by, for example, Ha-Joon Chang, in his book 23 Things They Don’t Tell You About Capitalism . Chang’s third “thing”, “Most people in rich countries are paid more than they should be” contains a parable of two bus drivers, Ram in India and Sven in Sweden. They do similar jobs, but if anything Ram’s requires more skill as he “has to negotiate his way almost every minute of his driving though bullock carts, rickshaws and bicyles stacked three metres high with crates.”(25) Yet Sven is paid 50 times more than Ram is (and it would be easy to find examples where the pay divergence is much larger, perhaps as much as 1000 times between unskilled labourers in poor and wealthy countries). Chang things it implausible that Sven embodies more human capital than Ram does as a result of education and training, since most of his Swedish education is irrelevant to what he does on the job.

So if Chang is right, an open border policy would have a massive depressive effect on the earnings of non-migrant workers in wealthy countries since other people would be happy to take unskilled or low-skilled jobs for much less than the current wage (but more than they could get at home).

Given the massive aggregate welfare gains from migration, perhaps supplemented by other thoughts about human rights and freedom of movement, some peope will argue that open borders is the right policy regardless of its effects on the poor citizens of wealthy countries. And they may be right about that. But clearly if we are to wage a political battle for more liberal immigration policies in Festung Europa and the United States, then the truth about the benefits or harms to the existing population is important. It is one thing to say to an electorate that free migration will probably not harm them (and may even benefit them) and quite another to say that such harms as they suffer are swamped by the benefits in a global utilitarian calculus. The first stands a chance of democratic success; the latter, realistically, has none.

Both Clemens and Kennan, in assessing the benefits and harms, concentrate almost exclusively on income, discussing cultural, environmental and other harms in the receiving nations only superficially. Chang, who opposes open borders, but supports some “improvement” in existing migration policies given more weight to these factors as well as expressing concerns about “brain drain” from poor countries (which the other two economists are inclined to minimize as a factor). Clearly an assessment purely in wealth and income terms can’t be the whole of the well-being story, since population movements on the scale that Phelps and Kennan contemplate typically come with other problems, such as serious ethnic conflict. But I tend to agree with all of them about the massive potential benefits to those of the global poor who would get the chance to move. It would be nice, however, if economists could come to a consensus about the economic effects on the poor citizens of wealthy states.

{ 259 comments }

1

piglet 08.22.12 at 5:01 pm

“One author, Michael Clemens, raises the possibility of a doubling of global income”

Sure. Just moving to a different place makes people more productive, creates jobs, etc. While that may be true under some circumstances, as a recommendation for large-scale economic development it’s so absurd it could only come from an economist. “If only everybody had a college degree, we’d be doing so much better” – “if only everybody moved to the US or Western Europe, we’d be doing so much better”. Yikes.

2

Rakesh 08.22.12 at 5:04 pm

Sorry can’t read post now.
There could be a major depressive effect if borders were open de jure or defacto and movement were costless.
I think Ha-Joon Chang may have in mind what Rowthorn may have said about importance of immigration control; of course Chang’s point is that since the Western countries welcome state intervention in the regulation and creation of markets, they should tolerate state intervention of many types elsewhere. He’s making an anti-Washington consensus point. Which to him is most important since he probably believes that open borders would improve the lot of very few in poor countries and that the more important intervention would be in the abandonment of neo-liberal economics in the poor countries.
There is a fantastic paper on migration with the title something like From Proletarians to Migrants by Branko Milanovic.

3

Josh G. 08.22.12 at 5:15 pm

Clemens and Kennan, like so many other anti-restrictionists before them, fail to realize that “suitable taxes and transfers” are never going to happen, at least not in the United States. These claims can only be considered a mendacious distraction at this point.
Chang fails to realize that what he is thinking of as “open borders” is actually a form of trade and labor flow control that is specifically designed to hurt the working class and aid the privileged. As Dean Baker has pointed out, the working class is relentlessly exposed to worldwide competition over jobs and wages, while many other parts of society are not. Doctors, lawyers, and accountants don’t currently face the same competition from cheap immigrant labor that blue-collar workers do. Hollywood, Microsoft, Apple, et al. are protected from the disruptive effects of technological change by active government policy (copyrights and patents).
The problem which Clemens, Kennan, and Chang all fail to see is that our existing system is socialism for the rich and capitalism for the poor. The wealthy and well-connected are insulated from market discipline while everyone else is exposed to its full rigor. Until and unless this is fixed, the working class in America and other First World countries will, quite rationally, continue to oppose immigration, trade with the Third World, and other forms of disruptive change.

4

Bill Harshaw 08.22.12 at 5:23 pm

Seems as if Chang’s comparison is somewhat flawed. The Indian bus driver has many more visible obstacles to navigate, but the US bus driver has many more invisible ones. I’m thinking particularly legal rules and norms for the US driver, but perhaps also cultural. That doesn’t account for the wage differential, but it does diminish it IMHO.

5

Doctor Memory 08.22.12 at 5:33 pm

First principles, folks: should labor have more, the same, or fewer rights than capital? If capital gets to dissolve borders for its own purposes, should labor be imprisoned behind them?

If the only context in which Sven and Ram can potentially recognize their necessary mutual solidarity is the one in which a capitalist-funded-and-directed army keeps them thousands of miles apart, we may as well give up on the entire project of human liberation and accept our chains meekly.

6

Sarang 08.22.12 at 5:40 pm

I really don’t buy the bus driver parable. A large and increasing fraction of low-paid work is in the service sector — barbers and checkout clerks and the like — and it’s fairly obvious that immigrants have less “human capital” for these jobs.

I partly agree about the mendacity of “taxes and transfers” — though I think a tax that is narrowly targeted at immigrants, and perhaps disguised as a fee, might be politically feasible. At least in the US (and other countries with a complicated history re race relations), there is a separate political economy point to be made, which is that serious restrictionist programs inevitably have a large racial component — this is what you are trying to airbrush with the “cultural factors” label — and the rallies of any party with a serious restrictionist platform are going to be scary for minorities.

7

Bruce Wilder 08.22.12 at 5:44 pm

Can you improve a bouillabaisse by purée?

It’s a strange model that would lead anyone to conclude that limitless migration would add much to human welfare. What’s the mechanism? What increases actual production/productivity?

Would it be congestion? Oh, wait, that reduces productivity!

Would it be the substitution of labor for capital? Doesn’t that just erase the basis for technical advance?

Open borders is just one more brand of neo-liberal idiocy. Beware.

8

Tim Worstall 08.22.12 at 6:03 pm

The other point that Chang makes about Sven is “the primary reason Sven is paid fifty times more than Ram is that he shares his labour market with other people who are way more than fifty times as productive than their Indian counterparts”.

It isn’t Sven’s productivity as compared to Ram’s that determines their wages. So it’s not immediately obvious that open immigration would reduce high income country’s incomes for poor people.

Or as Paul Krugman has put it, average incomes are determined by average productivity in an economy. As he’s gone on to point out, as soon as average productivity in China is the same as that in the US then so will wages be: Chinese wages will rise to American ones.

Finally, Migration Watch (not exactly happy about the idea of free immigration) calculated the figures for the influx of Poles etc with the UK’s early acceptance of A8 free movement of labour. Even they had to grudgingly agree that the effect on UK natives was a very slight (£4 a year I seem to recall) positive, not a negative at all. When you add the obvious benefit to the immigrants it seems like a good idea really.

Finally finally, when some places did indeed have free immigration (umm, 1880s US perhaps?) did native wages decline? Those of the Amerinds obviously did but I think we might take that as being for other reasons?

9

Matt 08.22.12 at 6:13 pm

The sort of assumptions required by Clemens (and Kennan to a lesser degree, I think) don’t even hold up within single countries, where there is no legal restriction on movement, and many fewer non-legal barriers, such as differences in culture, education, language, and so on. It seems very plausible that increased migration would be good for the global poor. That’s one reason why I support it (though not the only reason, of course.) But it makes me sad to see people who otherwise are rightly deeply suspicious of the sort of assumptions found in this sort of argument willing to buy them when they seem to support a position that they would otherwise like.

Tim at 8- the US in the 1880’s didn’t have free immigration- there were already restrictions on immigration from Asia at that point (the full Chinese Exclusion Act was enacted in 1882, and it was a strengthening of an earlier act from 1880. There was also some modest restrictions on others before this, though very mild by modern standards.) One major reason (though not the only one, of course) why the Chinese were feared was that they were driving down wages of other recent immigrants from Europe, so recent European immigrants and their immediate descendents were among the most vocal supporters.

10

Chris Bertram 08.22.12 at 6:18 pm

Tim: the sentence that you’ve quoted is indeed there, on p.29, in the context of Chang explaining that poor countries are poor because of the low productivity of their rich people (compared to top managers at Ericsson, Saab etc.), and it is confusingly expressed “the primary reason”. However on p.26 Chang is explicit about his view:

bq. The main reason that Sven is paid fifty times more than Ram is, to put it bluntly, protectionism – Swedish workers are protected from competition from the workers of India and other poor countries through immigration control.

So the sensible way to take him, I think, is as saying that _given_ that Sven is in a smaller pool with some very productive people, Sven is able to enjoy the higher wages, but that if that pool were connected to the ocean, Sven’s wages would decline.

11

Tim Wilkinson 08.22.12 at 6:22 pm

I agree with Josh and Bruce. Opening borders without first getting the capitalists under control is a mug’s game. For one thing to the extent that it did have an effect in migration, it would reduce the likelihood of investment in currently poor areas, and cream off the most productive people from those areas. The impact on the current unit of such socialist and social democratic measures as still remain, the nation state, would be to weaken its obligations to citizens: jobs are available elsewhere, so on your bike. We have open borders, and non-citzen migrants don’t get unemployment benefits, for example, so why should citizens? And voting rights?

It may be that, according to one of those inconsistent triad arguments, the demise of the nation state would mean democracy and globalisation would be compatible, but that doesn’t mean democracy would in fact be forthcoming. Those arguments assert a maximum, not a minimum, of two out of three. And of course the ascendant Hayek/Nozick/etc tendency says that the unfettered capitalist market is the real democracy.

12

Zamfir 08.22.12 at 6:41 pm

The bus driver argument could just as well be made about those supposedly productive rich people. Indian businessmen or doctors face tougher conditions than their Swedish counterparts as well. It’s exactly the easier conditions that allow Swedes to be more productive.

There’s a nasty but oh so common trick to look at a well-functioning organization, then conclude that the top created it and the bottom should be lucky to be allowed in.

13

Josh McCabe 08.22.12 at 6:50 pm

They’re dated now but a couple of representative papers in the debate on this subject are:

Borjas, George (1995) “The Economic Benefits of Immigration.” Journal of Economic
Perspectives. Vol. 9 (2): 3-22.
Card, D. (1990) “The Impact of the Mariel Boatlift on the Miami Labor Market.”
Industrial and Labor Relations Review. Vol. 40: 195-211.

Most economists find positive impacts on wages as immigrants end up being complements instead of substitutes. Borjas, who I believe is more critical, does find some downward pressure on wages for people with high school diplomas or less but its small. I take a lot of these estimates with a grain of salt though because they can vary widely based on the kinds of assumptions made in the models.

14

john c. halasz 08.22.12 at 6:56 pm

Maybe if we exported all our economists to places where they could not get a job, the income of the world would double.

15

lark 08.22.12 at 7:40 pm

There is the assumption that the benefit is smooth and rising. That is, if letting 1 million immigrants in is good, then letting 100 million in, is much better.

That obviously won’t work, after a point, and no one knows what that point it. It is possible that the reason you haven’t seem big negative effects is because that point hasn’t been reached.

As a non-economist, it appears that these sorts of open borders ideas (free trade, free movement of capital, etc) are associated with the weakening of the middle and working classes in the richer countries. These ideas have already done severe damage.

I think economists should devote themselves to repairing this damage, rather than indulging their desire for fantasy play in the dungeons of neoliberalism.

16

Martin Bento 08.22.12 at 7:42 pm

The only thing that has ever brought working people, even including professionals, a decent income outside of short-lived booms is some form of rentier status. That’s what union do: employers must negotiate with these particular employees, rather than finding others wiling to work for less. That gives current employees the ability to extract rent because of their exclusive position. Credentials and licensing have the same effect. Being in a certain country, which can exclude denizens of other countries, is a third variant. All of these turn workers into rentiers, and all have victims – for unions, the union worker gets his raise at the expense of the unemployed guy who would take his job for less money.

Nonetheless, as the history of unions has shown, creating such rentiers can have spillover effects that raise general wages. When the unemployed guy finally does get a job, it will probably be at a higher wage if the local workforce is largely unionized, even if his specific job is not unionized. By making specific groups of workers rentiers, one can move towards strengthening the hand of other groups of workers and ultimately all
Open borders destroy the prevailing form of rentier status for labor that exists in the world

IF Sven and Ran see their wages converge to the global median, both will end up earning much closer to Ran’s than Sven’s current wages. Since Sven’s wages are elevated by rents that would be eliminated, all such elevated wages should be removed from calculation of this median. The likely result then is that Ran’s positions improves little and Sven’s declines a lot. Of course, this might be hard to realistically picture in contemporary Sweden, but so is a policy of letting the hundreds of millions that might want to migrate there in. You can’t propose something as radical as that and evaluate the results as though they were operating in a status quo situation.

17

T. Bailey 08.22.12 at 7:57 pm

From the perspective of a Canadian immigration lawyer, this is a very interesting conversation. Canadian immigration law is currently undergoing a serious re-focussing on recruiting a skilled labour force, with only some of the foreign workers having an opportunity to stick around for the long term i.e. permanent resident status). Labour is highly controlled — down to each individual employment contract, in fact — by the federal government. Foreign investment, of course, is free to come and go as it pleases (relatively speaking).

I’m not a neo-liberal at all, but I’m personally in favour of something like open borders — namely, an attempt to level the playing field between labour and capital. The idea expressed above that we should wait until the capitalists are brought under control is basically an ever-receding goal, at least in Canada. The capitalists own the system, and have burned the bridge to the past; there is no bringing them under control, because it is a basic belief here that if capital is threatened in any way, then all of society will collapse. At best, we could hope for a change in the system where people who were admitted into Canada had a chance to establish themselves on their own terms, and could remain if they could show they were established. Not quite the same as open borders, but more empowering to the individual immigrant, at least.

18

William Timberman 08.22.12 at 8:16 pm

I seem to remember many liberal apologists for Clinton’s support of NAFTA saying that if we helped fix the Mexican economy, Mexicans would stay home, and we wouldn’t have to put up with them here. Mmm…. said I, even if that were an entirely honorable motive, which it obviously isn’t, it still doesn’t seem to be exactly what NAFTA is designed to do.

What was being sold then, and is still being sold under ever new proprietors, is more like the primitive accumulation of capital, except that a) it isn’t at all primitive, and b) we aren’t allowing the dispossessed to flee to our cities to work for a starvation wage.

Apart from capitalists, the big winners here seem to me to be the Pentagon planners, as Mike Davis describes them in Planet of Slums. If so, then open borders are unlikely to accomplish much more than bringing the war we’re waging on the rest of the world home to us. Living in Arizona, as I do, I’m reminded almost hourly that this is what’s really worrying the (white) people here who once thought that surrendering to capitalism would be both their final act of attrition and their ticket to paradise.

19

William Timberman 08.22.12 at 8:19 pm

And yes, attrition was originally a Freudian slip, but I liked it, so I left it in.

20

Martin James 08.22.12 at 8:52 pm

Lant Pritchett in Let Their People Come that there is enough gain from moving labor that you can have a compromise that pays the people harmed by lower wages and still have people willing to migrate.

There are many reasons why people have lower productivity in their home country but for small island nations a lack of resources is certainly one. The injustice of a global system that doesn’t allow children born in say, Haiti, to leave is far greater than any other type of injustice currently existent.

21

aepxc 08.22.12 at 8:57 pm

Seems to me to be just more evidence for the idea that the value that one can capture in a relatively complex and interconnected economy is much more dependent on the amount of capital one’s efforts are amplified by (either through direct control or through indirect availability), than on anything else. This, to me, is what Chang is picking up on.

Re-deriving the world from scratch, it seems obvious that in order to maximise both fairness and economic efficiency, capital and labour must face similar (low) levels of restrictions on their freedom (though even in the total absence of administrative restrictions, labour will, unfortunately, still face cultural and language barriers in a way that capital will not). Of course, such an approach would also tend to suggest that all humans start out their economic lives (i.e. the point at which they are able to actually start earning or producing value) with similar amounts of capital under their control/deployed for their benefit. Kennan and Clemens describe special cases of economic improvement as a result of inter-generational decentralisation of wealth (no one inherits the wealth or poverty of their nations of birth any more), but this would be as true within countries as between countries. Indeed, with the poorer people in rich nations much more likely to owe their financial success to capital that is implicitly present rather than under their explicit control, it is difficult to imagine how a flood of similarly capital-poor people from poor nations would not devastate them economically.

22

Chris Bertram 08.22.12 at 9:37 pm

(aepxc noticed that in the original post I unaccountably wrote “Phelps” for Clemens. I’ve edited the OP and subsequent comments to fix this.)

23

Eric Titus 08.22.12 at 9:51 pm

A number of the comments (Tim Worstall, T. Bailey) have stated that open borders are advisable to level the playing field between capital and labor. Within the US, for example, capital and labor are both fairly mobile. When Boeing decides to move a plant to South Carolina, does it help workers in Washington that they could move to SC and apply for their jobs again? Will labor mobility actually counterbalance capital mobility? Generally, labor movements use the “mobile capital” idea to support international coalition-building, not free movement/transfer of workers.

24

Bruce Wilder 08.22.12 at 9:51 pm

Martin Bento: “the union worker gets his raise at the expense of the unemployed guy who would take his job for less money.”

Of course, that’s the analysis, which the bought-and-paid-for Tyler Cowens of this sad, demented profession, would offer. Doesn’t make it so; doesn’t even make it coherent, as a logical explanation or analysis.

25

Bruce Wilder 08.22.12 at 9:56 pm

aexpc: “it seems obvious that in order to maximise both fairness and economic efficiency, capital and labour must face similar (low) levels of restrictions on their freedom”

If that sort of nonsense seems “obvious”, then neoliberal propaganda has done its work well.

Turn it around, and imagine that Labour can muster levels of organization and (political) power similar to Capital, and, from that position, act as a genuine, balancing countervailing power. How can that happen, how could that manifest, without restrictions on Capital?

26

Bruce Wilder 08.22.12 at 10:01 pm

Martin James: “The injustice of a global system that doesn’t allow children born in say, Haiti, to leave is far greater than any other type of injustice currently existent.”

And, the insistence that Haiti be governed by the most vicious plutocrats imaginable, irresponsible (but Good Catholic) cretins, who have deforested, overpopulated and immiserated that country with (almost) the worst governance imaginable?

27

Martin Bento 08.22.12 at 10:08 pm

Bruce: if I am willing to do a union worker’s job for 8 $ an hour, and the union pushes for him to get 10, and the company cannot fire him and hire me because of the union, he is profiting at my expense – he is able to get more benefit, because I cannot get more benefit for myself (than otherwise, not necessarily than him) – that is perfectly coherent and correct. It is also, as I said in the next paragraph, not the whole story, as unions can improve the bargaining position of labor generally, but it is certainly coherent and true as far as it goes. Simply pointing to the fact that neo-liberals say something is not a refutation, and we will not get anywhere denying that these conflicts exist.

28

Martin Bento 08.22.12 at 10:11 pm

Bruce, further, what is the difference between a union saying I cannot take a union worker’s job, and a country saying I cannot enter the country to take a native worker’s job. Both are protecting incumbent workers at the expense of potential workers.

29

Barry 08.22.12 at 10:15 pm

“Clemens and Kennan generally concede the possibility of some small depressive effect but argues that it would be temporary and/or could be compensated for at a policy level by suitable taxes and transfers”

They’re lying ; this will never happen.

30

Eric Titus 08.22.12 at 10:15 pm

@Martin
That’s a strange definition of victimhood (i.e. getting paid above-market wages). In your scenario, had the union not bargained for higher wages, the worker (not you) would be making $8/hr, but with the bargaining he makes $10/hr. You might as well argue that you are victimizing people by living in your apartment just because someone else would gladly pay more for it.

31

Barry 08.22.12 at 10:18 pm

Adding on to Matt’s comment @9, Tim – the USA spent the 1800’s acquiring a rather large amount of resources and redistributing them to Caucasians. Trying to run Simplistic analyses is – well, simplistic :)

32

Eric Titus 08.22.12 at 10:19 pm

@Martin. That’s a lot of empty philosophizing. You might as well argue that borders and racial discrimination are logical equivalents.

33

Doctor Memory 08.22.12 at 10:38 pm

Eric Titus @23 asks “When Boeing decides to move a plant to South Carolina, does it help workers in Washington that they could move to SC and apply for their jobs again?”

The history of internal migration in the US suggests to me that if you rephrase the question as “does it help workers in Washington that they could move anywhere else in the US to take another job?” then the answer is self-evidently “yes.” Minimally, I would love to see someone make the affirmative case that their lives would have been improved by requiring that they stay in Washington.

34

Rakesh 08.22.12 at 10:40 pm

Borders are protectionism–that’s Chang’s point. An extremely consequential form of protectionism. They protect arbitrary privilege. It’s unfair at the least not to pay at least some compensation for the privileges secured arbitrarily through the protection of borders and reservation of labor markets for people who inherit citizenship through a lottery based on the status of the parents to whom they were born and/or or the territorial space into which they happened to be born (Ayelat Shachar). And it’s grievously unfair for a powerful protectionist country (protectionist both in its immigration policy today and generally in its development policy last century) to take advantage of political power to deny other countries the form of protectionism or government regulation that they need for basic development.

35

L2P 08.22.12 at 10:41 pm

“The injustice of a global system that doesn’t allow children born in say, Haiti, to leave is far greater than any other type of injustice currently existent.”

I’d put it no higher than maybe 37th, in a 3-way tie with “Having to Live in North Korea” and “Forced into a Lifetime of Subsistence Farming at Age 8,” all of which are several spots below “Kidnapped into Pre-Teen Prostitution” and “Conscripted into the Lord’s Army.” But to be fair, it’s more of an injustice than “Didn’t Get Tickets to Taylor Swift,” so that’s something, right?

36

Eric Titus 08.22.12 at 11:01 pm

@Doctor Memory: “does it help workers in Washington that they could move anywhere else in the US to take another job?” then the answer is self-evidently “yes.”

If geographical mobility helps workers’ bargaining position vis-a-vis capital, it does so only in the most marginal sense. One can make a case that the geographic mobility of workers in the US is as beneficial to capital as labor (i.e. workers being brought in to replace strikers, or bring down costs in boom towns).

37

Tim Wilkinson 08.22.12 at 11:06 pm

Martin – how are you defining rent @16? It is a central economic concept along with its close relative opportunity cost, and as with all these concepts is embedded in a framework of proprietarian market interaction, and would seem to eventuate in convoluted and as far as I can make out potentially insoluble counterfactuals (a bit like the idea of everyone being a price taker, there’s a problem with universalising a partial analysis). The idea of surplus, too, and of what counts as ‘voluntary’, baselines for deciding if a ‘game’ is positive sum, etc, all seem to have this aspect.

If we suppose the standard idea that a trade is positive sum, that there are ‘benefits of exchange’ to be divided up, then the idea that an employee receives a rent in the sense of a producer(?) surplus is only to say that not all the benefits of exchange go to the employer – so introducing sufficient competition between employees would remove the ‘rent’ accruing to the employee by bidding down wages to the point where all the bens of exch go to the employer.

You can go off into further flights of fancy about perfect competition bidding away the surplus/profit/benefits of exchange of the employer too, but then suddenly no-one gains anything from the employment contract, so presumably something has gone wrong. And I think the thing is that there is in the end no natural baseline against which to measure the (subjective) benefits of exchange to either party.

I’ve probably expressed that rather poorly, but I don’t think I’m missing anything (well I wouldn’t would I). And it is perhaps taking things rather far afield, but I think the answers to this kind of ‘puzzle’ are going to feed back into the more concrete issues under discussion.

38

Kenny Easwaran 08.22.12 at 11:18 pm

Zamfir at 12: When we talk about the rich people in Sweden being more productive than the rich people in India, it sounds like we’re saying something good about the Swedish people, but you’re definitely right that it’s just because they’re functioning in easier circumstances. Of course, productivity is often defined as the amount of value someone creates relative to their not working, rather than the amount of value they create relative to someone else working, or the amount of value they create relative to someone else working in different conditions, so those rich Swedish people really do count as more productive than the Indian ones, even though the Indian ones would likely be just as productive in the same circumstances. And of course, you can say the same thing about the bus drivers – Sven is driving lots of people to hospitals where they will receive adequate care, while Ram is driving lots of people to hospitals where conditions mean that they won’t, so Sven is doing something more “productive” in this sense.

Of course, lots of the productivity benefits of working in one city rather than another presumably have at least something to do with the actual set of people that are working in that city. Making everyone suddenly infinitely mobile would basically mean that now there’s no difference between working in Stockholm or Mumbai – you’d be working with the same people, operating under the same customs and rules, in both places. Some of this will occur by leveling up, but some will occur by leveling down (if suddenly people with red-light-running and tax-evasion norms move into your nice city), and some will presumably be just total changes and reorganizations of how cultural norms interact.

39

Bruce Wilder 08.22.12 at 11:31 pm

Martin Bento: “than otherwise”

Whether you realize it or not, you’ve hidden a potentially unlimited mass of logical inconsistency behind that seemingly innocuous phrase.

Economists have generated volumes of controversy, and propaganda, on this, and related subjects. The confusions attendant to the controversies seem to be a setup for the propaganda. Instead of distilling genuine and valuable insight, we are fed carefully distilled poisons, such as the fable of an ideal market of minimal rules and restrictions.

I don’t think we should be so eager to buy tendentitious or specious reasoning, masquerading as counterintuitive insight. So, a union forms and imposes restrictions on trade in the course of negotiating with an employer, which have the effect of raising wages, and you want the “freedom” to be a scab tool of employers, to reduce those wages. Somehow, you want to be congratulated on the economic “insight” that those higher wages come at your expense, not at the expense of the Capitalist Employers or their economic rents.

What would have to be true about “otherwise” for the Union worker’s extra $2.00/hr to be “at your expense” (that is, at the expense of a worker ‘willing’ to take the job for less)? That there’s a reserve army of the unemployed, and you can trade places with the Union worker, by eliminating his income, while increasing your own by somewhat less — and that’s socially desirable, because . . . ? Or, that there’s a fixed fund of wages, such that the Union only seems to be negotiating with the Capitalist/Employer, but is, in fact, engaged in a conspiracy against the public and other workers? Or, that there’s an avalanche of additional product output available, in the space between marginal labor product of $10/hour and $8/hour? How plausible is it, really, that a Union would negotiate away an avalanche of output for a lousy $2/hour? As opposed, to pressing management away from wasteful practices and management shirking, which lower marginal product, and tend to lower total output — that is, unions move employers toward an efficiency wage, and a fairer division of economic rents.

40

Tim Wilkinson 08.22.12 at 11:45 pm

Rakesh And it’s grievously unfair for a powerful protectionist country (protectionist both in its immigration policy today and generally in its development policy last century) to take advantage of political power to deny other countries the form of protectionism or government regulation that they need for basic development.

Yes, and, one might add, to deny them access to a fair share of the world’s physical capital. These are issues that neoliberal capitalists seem to overlook when, casting around for a way to help the world’s poor, they come up with globalisation of labour markets.

Bruce: yes, this is very much along the lines I was thinking of with the stuff about ‘rent’.

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JW Mason 08.22.12 at 11:49 pm

I feel there’s a lack of clarity about the theory behind the prediction that open borders would lower rich-country wages but raise global income overall. Why is there such a big difference in wages in the first place?

I suppose the implicit story is that the North has a big stock of capital relative to its laborforce and the South has lots of L relative to its K. Pool the world’s K and L and global output rises; marginal product of L rises in the South and falls in the North, while marginal product of K rises in the North and falls in the South.

So we immediately run into the problems that we always have with these kinds of stories. It is not obviously true that the marginal product of capital is higher in poor countries than rich countries. It certainly is not the case that we see the big capital flows from North to South that this would imply. More generally, K is endogenous — why don’t we have convergence, why doesn’t investment rise in the South and fall in the North until we reach the golden rule path in each country, at which point there is nothing to be gained from pooling the world’s K and L?

Why is it more likely that free flows of L would deliver these gains, than that free flows of K (or even just of goods) will? Why isn’t full capital mobility enough?

Maybe there are institutional obstacles that reduce the return to K in the south and prevent convergence. But in that case, it seems to me, there is no reason to expect a long-term fall in wages in the North as a result of open borders, given that K in the north is endogenous. To the extent that the wage premium in the north reflects institutions, the rule of law, and similar public goods, why do we expect immigration to reduce wages in the North?

Why does the North have these public goods while the South doesn’t?

How can we reconcile the idea that an increase in the supply of labor will reduce wages with central banks that believe in a NAIRU? If — in normal times — monetary policy is maintaining the level of labor market slack thought to keep prices stable, wouldn’t an increase in labor supply just allow faster growth?

On the flip side, what if workers in rich countries are not more productive, but are just getting a greater share of the world product thanks to their better position to claim a share of the rents flowing to elites? How much of the wage difference between the North and South really reflects productivity differences?

It seems to me one needs answers to these kinds of questions to say much about policy.

And then there are the political questions, which are the interesting ones. It’s hard to see a future for democratic politics in a world without borders…

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Martin James 08.23.12 at 12:09 am

L2P

I was thinking in total quantity rather than for an individual. Are your other examples rampant? I’m in the 1% so I’m sheltered about this stuff.

Also technically, you can’t be “forced for a lifetime” at one age, so your subsistence farming example seems a little mis/and/or over-stated.

Is what happened to Taylor Swift at the award show number 38 on your list?

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Martin James 08.23.12 at 12:14 am

B Wilder,

Insistence?!?

44

piglet 08.23.12 at 12:43 am

Easwaran 38: “Making everyone suddenly infinitely mobile would basically mean that now there’s no difference between working in Stockholm or Mumbai – you’d be working with the same people, operating under the same customs and rules, in both places.”

That doesn’t follow.

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Matt 08.23.12 at 12:47 am

That’s excellent, JWM- a much more careful version of what I was trying to get at above in my comment.

46

bjk 08.23.12 at 12:53 am

@2: Rakesh:
“Sorry can’t read post now.” It’s OK folks – thankfully, he was able to write a long and incoherent comment.

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bjk 08.23.12 at 1:07 am

Why the emphasis on bus drivers? If you want an optimal immigration policy that benefits immigrants and screws a group nobody cares about, here’s a better plan: any graduate of any law school in the world can work as a lawyer in the US, provided he or she passes the bar. If the bus drivers had come up with a plan like that, I don’t imagine there would be much support among the lawyers, but of course there are far more lawyers in Congress than bus drivers.

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piglet 08.23.12 at 1:17 am

“Most people in rich countries are paid more than they should be” contains a parable of two bus drivers, Ram in India and Sven in Sweden. They do similar jobs, but if anything Ram’s requires more skill as he “has to negotiate his way almost every minute of his driving though bullock carts, rickshaws and bicyles stacked three metres high with crates.”(25) Yet Sven is paid 50 times more than Ram is”

So Ha-Joon Chang’s point is correct – pay differentials are mostly if not always unfair, arbitrary, based on some mechanism of market valuation that doesn’t even pretend to adequately reflect each person’s contribution to society. That point can be made within as well as between countries. There are millions of people in the US or Europe whose jobs require more skill than, say, that of an academic economist (sorry this was just irresistible) yet they are paid less. The inequality between countries may be seen as a separate issue from just plain inequality but maybe that’s misleading. In any case, what is certainly misleading is the claim that migration, even if open borders were a realistic option (which it obviously isn’t), could be an effective remedy of global inequality. I suspect that mass migration is here romanticized as a mechanism of social improvement (perhaps similar to the way trade has been romanticized). Mass migration is a result of desperation and has many destabilizing effects. It is a symptom of global misery, not a solution to it.

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Bruce Wilder 08.23.12 at 1:28 am

JW Mason: “To the extent that the wage premium in the north reflects institutions, the rule of law, and similar public goods, why do we expect immigration to reduce wages in the North?”

A changing “ratio” of Labor to the “lump” of Capital plus Land, in all its various forms, including the public goods capital of institutions. Various mechanisms might trigger a cycle of entropy, which would erode the Capital or the productivity of the combination of Capital and Labor, or simply the capacity of Labor to negotiate a sustainable share of output.

Swamping of infrastructure, I think, is often imagined. Congestion effects, which reduce marginal productivity sharply, are a potential problem; some sectors, especially agricultural sectors, require an institutional mechanism limiting labor inputs, to maintain a large surplus to feed other sectors — the pressure for immigration originates in many middle-income countries, with a large legacy population in rural areas, whose very size depresses marginal productivity to subsistence levels; think about a country like Thailand, where almost one half of the population is stuck in dire poverty, down on the farm or on the margin in cities, without access to capital necessary to productive work. Thailand has First World capital to productively employ a lot of people, just not enough of it for the whole population, and as their agricultural sector advances, with investment in modern methods, it doesn’t require much labor; if Thailand does not have enough Capital to employ all its labor, why would we imagine some other country would have an available, idle surplus? The amount of Capital might vary, but the fact of a limit to Capital (severe limits to the effectiveness of substitution of labor for capital as a development strategy) must be universal, not subject to cure by migration.

JW Mason: “It is not obviously true that the marginal product of capital is higher in poor countries than rich countries. It certainly is not the case that we see the big capital flows from North to South that this would imply.”

Ha-Joon Chang, as I recall, is developing an interesting and multifarious story about how the terms of trade are affected by the sunk-cost, quasi-rent earning nature of Capital, in ways that make it a bit of a strategic challenge for a developing country to put in place a virtuous cycle of investment and development. His general thesis is that restrictions on trade and capital controls have been historically, and are now, vital levers for meeting that strategic challenge.

One might suspect that the neo-liberals are attempting to distract attention from the implications of that kind of strategic competititon, among nation-states.

JW Mason: “It’s hard to see a future for democratic politics in a world without borders…”

For the neo-liberal technocrats, this would seem to be a prime desideratum.

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JW Mason 08.23.12 at 1:42 am

Ha-Joon Chang, as I recall, is developing an interesting and multifarious story about how the terms of trade are affected by the sunk-cost, quasi-rent earning nature of Capital, in ways that make it a bit of a strategic challenge for a developing country to put in place a virtuous cycle of investment and development. His general thesis is that restrictions on trade and capital controls have been historically, and are now, vital levers for meeting that strategic challenge.

Yes, I think this is right. The obvious question is why the “labor-augmenting technology” that makes workers in the North more productive can’t be duplicated in the South. Kennan just assumes it they can’t be, even though he charmingly admits he has no theory about what that technology might be.

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prasad 08.23.12 at 1:59 am

As a non-economist, it appears that these sorts of open borders ideas (free trade, free movement of capital, etc) are associated with the weakening of the middle and working classes in the richer countries. These ideas have already done severe damage.

I think economists should devote themselves to repairing this damage, rather than indulging their desire for fantasy play in the dungeons of neoliberalism.

Or maybe many of those economists just aren’t patriots? Living predominantly in cosmopolitan college towns where they meet more foreigners than NASCAR fans, they care about utility, not the share thereof captured in their country. To the extent that they care about inequality, it’s principally global inequality, not that within societies that are already rich.

Good for them!

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Watson Ladd 08.23.12 at 2:03 am

Open borders would mean a great deal for the victims of Assad. They would also eliminate a great deal of human suffering involved with dealing with the INS which separates families. As for the welfare impact the US has had massive illegal immigration for the past decade. I’m sure studies have been done, and from what I remember hearing the net impact was slightly positive: the new immigrants consumed and provided new economic opportunities as well as working.

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LFC 08.23.12 at 2:08 am

JWM:
How much of the wage difference between the North and South really reflects productivity differences?

How much of the wage difference between North and South has ever reflected productivity differences, or at least in the last several decades? Wasn’t this one of the points of (a certain kind of) dependency theory? (I recall a discussion for non-economists in Harrington’s 1977 book The Vast Majority — one among many such sources, no doubt.) I’ve also never understood how the productivity of many service workers and professionals can be measured in a meaningful way, but that’s another question (and possibly/probably just a reflection of ignorance on my part).

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Matt 08.23.12 at 2:10 am

I’m sure studies have been done, and from what I remember hearing the net impact was slightly positive: the new immigrants consumed and provided new economic opportunities as well as working.

In the last big studies this was true of immigrants with a high school education or more, at least when you counted the effect of their kids. (Note that this was 20 years ago, so now it might take more education- I don’t know.) But, for immigrants with less than a high-school education (that is, a very larger percentage of the global poor), they had a net negative fiscal impact in the US, which has a comparatively stingy social benefit system, and this was so even when you take into account the impact of their kids, who are assumed to graduate high-school. What this means for policy I’ll leave for others, but there are serious issues to consider about the stability of the welfare state when thinking about this stuff.

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Eric H 08.23.12 at 2:12 am

When NAFTA opened the border, the first reaction was that the International Brotherhood of Teamsters claimed that Mexican trucks were unsafe. Then, when it was observed that some of them drove the same trucks and were subject to the same inspection criteria on this side, they said that the Mexican licenses were too easy to obtain. So while the borders were open, they weren’t exactly open; I see with a quick search that it is still going on a dozen and some years later, and it makes you wonder how many similar “safety” regulations have ulterior motives. I have no doubt that the Teamsters had financial backing from somewhere. The same thing is going to happen when Ram moves to Sweden.

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prasad 08.23.12 at 2:16 am

some people will argue that open borders is the right policy regardless of its effects on the poor citizens of wealthy countries. And they may be right about that. But clearly if we are to wage a political battle for more liberal immigration policies in Festung Europa and the United States, then the truth about the benefits or harms to the existing population is important.

A curious moral and political point: patriotic people in the United States likely care about the damage done to their existing lower classes by open borders, and may for that reason restrict immigration. But an American has no obvious reason to desire Europe to do the same, unless Americans also feel a special racial / religious solidarity with Europeans, which seems harder to justify. They should then regard opened borders between Europe and the rest of the world as a wonderful thing, and not unthinkingly enter into a first-world solidarity with the poor citizens of wealthy European countries.

The same point holds for outsourcing and other similar issues. Americans should, it seems to me, rejoice in jobs going from French workers to Chinese (or to gild the lily, Vietnamese or Algerians!) even as they bemoan losses in the US itself. Canadians should celebrate Apple moving jobs to China, and Germans should feel wonderful that so many American call center jobs have moved to India.

I wonder how many Americans/Canadians/Germans actually think like this [hardly any, is my guess]. Of those that don’t, I wonder how many have justified that to their own satisfaction. It’s not very easy – measures that significantly enhance total utility AND reduce global inequality are not that common.

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MPAVictoria 08.23.12 at 3:04 am

“When NAFTA opened the border, the first reaction was that the International Brotherhood of Teamsters claimed that Mexican trucks were unsafe. Then, when it was observed that some of them drove the same trucks and were subject to the same inspection criteria on this side, they said that the Mexican licenses were too easy to obtain. So while the borders were open, they weren’t exactly open; I see with a quick search that it is still going on a dozen and some years later, and it makes you wonder how many similar “safety” regulations have ulterior motives. I have no doubt that the Teamsters had financial backing from somewhere. The same thing is going to happen when Ram moves to Sweden.”

I am curious what you feel would be an appropriate response to the destruction of their lively hood? Should they just shrug their shoulders and tell little Billy that he isn’t going to get to go to college when he grows up and little Suzzy that it is too bad she can’t have braces?

Democratic governments are elected to represent the interests of their constituents. I know neo-liberals don’t care about such things but it needs to be said.

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JW Mason 08.23.12 at 4:05 am

How much of the wage difference between North and South has ever reflected productivity differences, or at least in the last several decades? … I’ve also never understood how the productivity of many service workers and professionals can be measured in a meaningful way

If you look at the papers Chris links to, you’ll see that they simply assume that wages equal marginal product, so all wage differences are explained by productivity, and productivity can be measured just by what people are paid.

Obviously, if you don’t make this assumption the gains from open borders are less straightforward. If, let’s say, workers in the rich countries are able to bargain for a larger share of the rents claimed by global monopolies (they “sell insurance against riot and revolution”) then, while it still can raise the income of individuals to move from poor countries to rich ones, there’s no global gains. Lots of people move from the countryside to the capital in very poor countries, but it’s very far from clear that this is because they are more productive in any material sense there. More likely it’s just to claim a share of the extractive wealth of the rich, if by picking through their garbage.

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rakesh 08.23.12 at 4:35 am

My comment 2 would be incoherent to someone who had not read HJCs book. He does not think Sven is overpaid. He is not calling for open borders. He is trying to get first workers to understand that they benefit and have benefitted from protection even though their govts prevent weaker states from adopting the forms of protection and regulation that they need to develop. At one level Chang is reviving antiRicardian inf industry arguments, and he does not want to hear free trade propaganda coming first world countries that are protectionist in ways they refuse to recognize. don’t have C book with me but I think the op badly misrepresents Chang by claiming simply that Sven is overpaid and implying that Chang wants Svens wage reduced b open borders. This is not his point iirc. Will check tomorrow

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Matt 08.23.12 at 4:50 am

How much of the wage difference between North and South has ever reflected productivity differences, or at least in the last several decades?

Less than all of it, more than none of it? If Ram’s brother works in manufacturing in India and Sven’s brother likewise works in manufacturing in Sweden, one notable difference is that Ram’s factory may face 5 hours of grid electricity unavailability every day. So either the Indian factory gets 5 hours less of use from its machinery each day or the failure is made up with power from small onsite generators, at costs that Swedes would find outrageous.

The problem of electric grid reliability can’t be corrected by a single manufacturer or even a coalition of them. The same goes for transportation infrastructure, police, courts, public health, basic education for workers, and other lubricants of civilization. At some point it goes from merely burdensome to intolerable, regardless of how low wages are. There are good reasons that manufacturers aren’t offshoring to Somalia, even though they would have the lowest regulatory compliance costs and taxes of anywhere.

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GiT 08.23.12 at 4:50 am

Marginal product theory of wages + theory of subjective value = The theory of subjective productivity?

You are only as productive as rich people want you to be. Another one of capital’s magic powers.

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William Guillotine 08.23.12 at 4:54 am

This debate would be more interesting if we advocated removing all tenure for economics professors, and then proposed unlimited immigration of anyone with an economics degree.
Let’s see what neoliberal theory says about this.

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Bob 08.23.12 at 6:54 am

Does Chang account for real wages in his calculations? Even if he does, individual productivity alone does not determine wages: average productivity is a huge factor.

Something missing from this story is the fact that many wealthy nations have welfare state policies that poor nations cannot afford. If we open our borders to immigration, then there is the potential for migrants to exploit those welfarist policies. We need to think carefully about this.

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Chris Bertram 08.23.12 at 7:03 am

Thanks to everyone, but specially to JWM, Matt and Rakesh for enlightening reponses to the question I originally posed.

prasad: ironically, the parochial assumptions are yours. I’m British and work in the UK, so the political problem I face involves persuading British and European electorates that immigration policy should be less exclusionary. The reason the OP is phrased like that is because pro-migrant activists face similar problems of persuasion in both Europe and North America.

MPA Victoria: well yes and no. Democratic government should, among other things, represent the interests of their constituents. Part of the point of the OP was to try to get at the facts concerning what those interests actually are. But it can’t be legitimate (imho) for governments to pursue those interests in ways that impose massive harms on outsiders as, arguably, hard borders policies do. More generally, I think the neoliberals (and libertarians etc) have us, the left (and US “liberals”), in a hard place over migration, because there’s a massive tension (even a contradiction) between our democratic and (some of our) solidaristic and communitarian commitments and our parallel commitments to internationalism and universal rights. Marx wrote in 1848 that “In the national struggles of the proletarians of the different countries, they [the communists] point out and bring to the front the common interests of the entire proletariat, independently of all nationality.” But the notion that the proletariat has a common interest, independently of all nationality, has proved tougher to hang onto that Marx would have supposed, as your contributions and those of some others demonstrate in connection with the migration debate.

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Martin Bento 08.23.12 at 7:26 am

The very first sentence I wrote in this thread was: “The only thing that has ever brought working people, even including professionals, a decent income outside of short-lived booms is some form of rentier status. ”. Reading comprehension test: do you think the author of that sentence is arguing against the ability of most people to earn a decent income or in favor of rentier status for workers? Since some people somehow missed this, let me make it as explicit as I can: I favor granting workers rentier status. That doesn’t I’m going to deny that rentier status is what we are talking about. My second paragraph read thusly:

“Nonetheless, as the history of unions has shown, creating such rentiers can have spillover effects that raise general wages. When the unemployed guy finally does get a job, it will probably be at a higher wage if the local workforce is largely unionized, even if his specific job is not unionized. By making specific groups of workers rentiers, one can move towards strengthening the hand of other groups of workers and ultimately all ”

Here’s Bruce’s response to this:

“you want the “freedom” to be a scab tool of employers, to reduce those wages. Somehow, you want to be congratulated on the economic “insight” that those higher wages come at your expense, not at the expense of the Capitalist Employers or their economic rents. ”

Do I really? Is that what the paragraph implies?

Tim, the definition of “rent” I am using is: benefit that accrues to someone due to exclusive access to a resource. In the case of a union worker, or the denizen of a country, said resource is a job, which the institution of the union or the country prevents others from taking. One does not have to buy into the whole econ 101 ball of wax to accept this definition, and if the whole objection is just to this word, we’re just arguing semantics anyway.

Let me lay this out schematically:

We have two potential situations:
a)the union worker gets the job at $10 an hour, and the unemployed guy remains unemployed and
b) the unemployed guy gets the job at $8 an hour and the union worker becomes unemployed.

If the union did not interfere in how jobs are normally allocated in our economy, b would be the case. Because of the union, a can be the case. The employer will pay $8 an hour regardless, and pay an additional 2 to the union guy. That means the union guy will get $2 at the employers expense. However, the union guy will remain employed and the other guy won’t, which would not be the case absent the union, so the difference in benefit between making $8 an hour and being unemployed is something the union guy is getting at the expense of the unemployed guy. This difference is presumably not 8 an hour, as this job is sufficiently unpleasant that people must be paid to do it – therefore, working at it is a cost – but not so unpleasant that no one would do it for 8 an hour. So the union worker is extracting rent – some from the employer and some from the other worker. Since this is a net benefit to the two workers considered together, I generally favor such an arrangement, but I’m not going to buy into some fairy tale where it has no disadvantages for anyone among the workers.

Now this does, as Bruce insists, presume many things about the economy: that there are unemployed people, that employers generally choose their employees, that property exists, that people are paid in money, etc. But these things are all true in our society. Acknowledging that they are true is not the same as arguing that they are good or necessary; it is just an acknowledgment of fact. Any counterfactual has to be bounded. If I am asking what difference the union makes by looking at what would be the case if the union were not there, asking what would be the case if the union were not there and there were no unemployed people is changing the subject, not some brilliant critique of the question.

For example Bruce wrote:

“What would have to be true about “otherwise” for the Union worker’s extra $2.00/hr to be “at your expense” (that is, at the expense of a worker ‘willing’ to take the job for less)? That there’s a reserve army of the unemployed, and you can trade places with the Union worker, by eliminating his income, while increasing your own by somewhat less”..

Yes, all those things are in fact generally true in our society

“—and that’s socially desirable, because . . . ”

I never said any of it was socially desirable, but I am not going for that reason to fail to acknowledge that it is true. You seem to be reacting to any acknowledgment that unions may not always and everywhere be in the interest of every single worker as some sort of general attack on unions. Related to this is Eric’s objection that in the absence of the union “the worker” is making 8 an hour rather than 10 and therefore “the worker” has suffered. But there is no “worker” in the abstract; there are two specific workers, and for one to gain the other must lose. It is true that, in the case of the union, more is gained on net than lost – it is a postive-sum game from the perspective of the workers – but that is not the same as a win-win situation (conflating these two is one of the common tropes of free trade enthusiasts); there are still losers.

All of which is tangential to my main point, which is that national restriction of immigration is, in terms of its labor market effect, the same thing. Workers in an advanced economy have privileged access to jobs there, which enables them to bid up wages higher than they otherwise would be. To some degree, this is to the detriment of those excluded who would like those jobs, but to some extent it is also to the detriment of the employers whose options are constrained, which to me makes it generally net desirable, because employees are otherwise in such a weak position vis a vis employers. The question, then, is how to enlarge the number of nations with sufficient national wealth that citizens can gain this kind of leverage.

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3Lllama 08.23.12 at 9:00 am

As a non-economist this is something I’ve been wondering about since reading Chang’s book, namely by how much would Ram actually be better off in real terms if he and all the other Indian bus drivers really did move to Stockholm?

Presumably better than nothing and unlikely to be by factor of 50, but by how much? He would have to pay higher prices, face large deductions and would probably need things that back in India might be unnecessary (many westerners would lose their jobs if they couldn’t run a car) or often acquired outside the cash economy (few westerners I know live close enough to family to do without daycare – which can take a huge chunk out of the incomes of the poorest).

Chang tries to get round this IIRC by using PPP, but how effectively does that accommodate the factors I’ve mentioned? I say this because when I migrated myself from London to Eindhoven twenty years ago many of the things that affected my quality of life took rather me by surprise and might belong to an economist’s unknown unknowns as well.

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Tim Worstall 08.23.12 at 10:31 am

By chance this was mentioned at Econlog:

http://www.ssc.wisc.edu/~jkennan/research/OpenBorders.pdf

“There is a large body of evidence indicating that cross-country differences in income levels are
associated with differences in productivity. If workers are much more productive in one country
than in another, restrictions on immigration lead to large efficiency losses. The paper quantifies
these losses, using a model in which efficiency differences are labor-augmenting, and free trade
in product markets leads to factor price equalization, so that wages are equal across countries
when measured in efficiency units of labor. The estimated gains from removing immigration
restrictions are huge. Using a simple static model of migration costs, the estimated net gains
from open borders are about the same as the gains from a growth miracle that more than doubles
the income level in less-developed countries.”

……

One conclusion of this paper is that open borders could yield huge welfare gains: more than
$10,000 a year for a randomly selected worker from a less-developed country (including nonmigrants).
Another is that these gains are associated with a relatively small reduction in the
real wage in developed countries, and even this effect disappears as the capital-labor ratio adjusts
over time; indeed if immigration restrictions are relaxed gradually, allowing time for investment in
physical capital to keep pace, there is no implied reduction in real wages.

Of course, any such paper is subject to the models used, the assumptions made etc. But he does seem to be saying that there is no (or very little) pain, only gain.

Another point to consider is that the legal restrictions on immigration are not the only restrictions. Just as with free movement of capital, we don’t find that all capital is suddenly invested abroad (as Adam Smith noted it wouldn’t be with the invisible hand comment). We’ve entirely free legal migration in the EU and we still don’t find that the entirety of Portugal is living in Sweden.

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Thomas Jørgensen 08.23.12 at 11:46 am

Theoretical underpinining of this proposal assumes behavior not in accordance with known patterns of homo sapiens. Migrations are the result of people being forced out of their homes, nearly always.
Sure, relocating the global poor to countries with functioning governments and social systems more conductive to a productive life would improve their lot, but the global poor would not move in the numbers assumed in this debate merely because of relaxation of legal controls. As a good example, Spain is notoriously lax in actually enforcing immigration controls, a largish percentage of the planet speak spanish and if you are an illegal immigrant on their soil, you can reasonably expect to have your presence there legalized via an amnesty after a while. But even at the height of the spanish boom, millions of the dispossed failed to show up in Spain. Individuals move to obtain a better life.
Peoples move because someone is going to kill them if they stay.

The most that could be expected from an open border system is a larger stream of remittance payments from the first to third world.

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chris 08.23.12 at 11:59 am

So if Chang is right, an open border policy would have a massive depressive effect on the earnings of non-migrant workers in wealthy countries since other people would be happy to take unskilled or low-skilled jobs for much less than the current wage (but more than they could get at home).

But that’s irrelevant. Sven’s wages aren’t set by the market — that’s why a bus driver is making decent wages in the first place! Sure, lots of immigrants would like Sven’s job, but that doesn’t mean they’ll be allowed to compete for it by depressing the wage, *because Sven lives in a country that has policies that protect worker incomes*.

Racing to the bottom isn’t inevitable. The countries that deliberately choose not to do/allow it *just happen* to be the high-wealth, high-productivity ones. Some people might consider this a lesson worth learning from, but not, apparently, economists.

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prasad 08.23.12 at 12:08 pm

Chris Bertram – I wasn’t accusing you of parochialism at all. My point was the following – even parochial people, provided they are only patriotic, and don’t care specifically about the first world, or the western world, or the christian world, should welcome / endorse / celebrate {open borders, outsourcing, offshoring, zero sum exchange} involving other rich countries and poor ones.

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bjk 08.23.12 at 12:24 pm

Why compare Sven and Ram? Why not compare Jose and Juan within the same country? There are large productivity differentials within the same industry in the same country. Brazil has highly efficient supermarkets next to vast favelas where retail is conducted by expensive street vendors. If the goal is to increase productivity, that’s the place to start. Second, what reason is there to believe that Sven is productive at all? The bus service is probably government run and subsidized by taxpayers. I know the Santa Claus temptation is hard to resist, but turning Ram from a productive bus driver in India to a net tax consumer in Sweden doesn’t sound like a benefit to anybody but Ram.

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Chris Bertram 08.23.12 at 12:34 pm

prasad: fair enough. But someone who believes that their own country has, on, say, grounds of democratic self-determination, the right to exclude would-be migrants will also presumably think that other similar countries have the same right.

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Metatone 08.23.12 at 12:34 pm

Surely the first question that needs to be asked is : what is the sustainable carrying capacity of the land of the country?

As an example of the direction of my thinking, there are good estimates that Spain’s population uses water at an unsustainable rate, right now. That asks big questions about whether the act of immigration is costless (as assumed in all of these studies.)

Without this, we really are in the heart of economics fantasyland where it’s assumed that all problems fix themselves through some magical invisible hand mechanism.

If you had a decent estimate of the maximum sustainable population of each country, then you could say that up to that level, some of the assumptions in papers cited in this debate might hold. But then that rather automatically nixes open borders overall.

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Metatone 08.23.12 at 1:02 pm

Moving on to assumptions in this debate. Here in the UK there are jobs where one could distinguish open-border like effects, because they are unskilled enough to be open to everyone. And unregulated enough that there is effectively always someone willing to do the work…

Cockle picking is one. Various forms of seasonal agricultural work – typically fruit and vegetable picking are others. I haven’t seen any good surveys to link to, but what I know anecdotally from family who live in an agricultural area is that wages have gone down by about 50%. And by no means are all the workers illegal immigrants.

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Stuart 08.23.12 at 1:04 pm

Surely nobody suggests that a workers marginal product is a suitable measure of their productivity? It represents the decision that managers face at the frontier of production, not the contribution each individual plays in a symbiotic process. Stylized example- you have nine workers trying to lift a precious but really heavy stone worth £100,000, Mr. Manager can see they can almost do it so he pays another man who joins the team and together they left the stone. The marginal productivity of that individual work is £100,000, but his actual contribution to production is probably something like £10,000 (under the assumption all the workers were roughly as strong) – since if he tried to lift the stone by himself he wouldn’t be able to do it.

If we want a measure of objective productivity to play a counter-factual role in debates over ‘fair wages’ it won’t have anything to do with marginal product.

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Nick 08.23.12 at 1:17 pm

Sven is much more productive than Ram because he is driving lots of people to much more productive jobs than Ram. So letting Ram move into a more advanced economy will mostly up his productivity, not so much into reducing bus driver wages.

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MPAVictoria 08.23.12 at 1:49 pm

“But it can’t be legitimate (imho) for governments to pursue those interests in ways that impose massive harms on outsiders as, arguably, hard borders policies do.”

The word impose is doing an awful lot of work here Chris. Are you imposing harm on the homeless by living in your house? Am I imposing harms on the unemployed by not offering to do my job for half the wages so my boss could hire another employee? We on the left should not be helping the 1% and the neo-liberals to destroy what is left of the labour movement which is exactly what open borders will accomplish.

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Watson Ladd 08.23.12 at 1:49 pm

Metatone, if England went back to medieval standards of living it would look like Haiti: each person would need more forest then there is room for on the island. Carrying capacity is technology dependent. For example, if Spain recycled its water, the limited rainfall would be less of an issue.

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LFC 08.23.12 at 2:00 pm

@58 and 60
thanks for the answers to my question re productivity/wages

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Metatone 08.23.12 at 2:03 pm

@Watson Ladd

Sure, but there are limits to recycling. They recycle quite a bit of water already.
Also, water recycling and sewage treatment are not free (especially regarding energy usage.) And that’s my point.

If the carrying capacity of the developed nations is large enough then we can think about open borders in the terms of these papers. But there’s enough evidence to suggest that this is not the case – world population is pretty big and a lot of the habitable areas of developed countries are already inhabited.

I’m happy to be shown that the carrying capacity is bigger than I think, but I think it’s reasonable to postulate that in any typical decade there is a maximum figure and without at least an estimate of it, there’s just a huge assumption that immigration is costless, being made without justification.

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Metatone 08.23.12 at 2:05 pm

Writing the last comment reminds me that a lot of the living standards difference between Sven and Ram could be explained in terms of energy consumption. I think that creates a dynamic which probably needs to be factored in before we assume “double global income.”

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Chris Bertram 08.23.12 at 2:14 pm

MPA Victoria: yes “impose” is doing some work, but so is your unargued-for presumption of entitlement to exclude and your analogy that excluding the homeless from your house is like excluding would-be migrants from national territory. But accepting the analogy for the sake of argument, it is very strange for the left to be making an argument that when the very wealthiest people exclude the poorest from their land they are only doing what they have a perfect moral entitlement to do. If that exclusion also condemned the poorest to high risk of disease and premature death and permanently stunted their life opportunities then talking about the imposition of harm wouldn’t seem inappropriate,

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Chris Bertram 08.23.12 at 2:17 pm

Metatone: environmental capacity of national territory takes us into new debates. But if it is limited (as it is) then surely the assumption that current occupants are the ones with an entitlement to it, whatever the cost to others, is one you need to argue for?

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Watson Ladd 08.23.12 at 2:22 pm

Metatone, the oceans contain more thorium then humanity will ever use. Each day the sun pours far more energy then mankind has used in all of its history onto the surface of the earth.

chris, poor countries tend to have much more regulation associated with starting businesses, hiring, and firing than rich ones. The effect is much economic activity takes place on the black market.

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James 08.23.12 at 2:27 pm

The Open Boarders theory is making the assumption that cultural costs are not going to transfer with massive immigration. If 300 million Chinese where to move to the US tomorrow, one would assume that the area settled by the new Chinese immigrants would contain the good & bad culture of the homeland. The bad culture, namely massive government corruption at an estimated cost of $1 dollar out of $8 dollars of economy, might effectively eliminate the US advantage in this area and result in both the new immigrants and the existing populous living under the current Chinese economic conditions.effe

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Roger Gathman 08.23.12 at 2:27 pm

Why are bus drivers the focus of this comparison rather than doctors? I think there the gains would be enormous. Unfortunately, Chang sort of damages his case by imagining that Western managers are more efficient or productive,when of course Western managers have simply, bluntly, protected themselves against the computerization that would do to top management what robots do to the assembly line. Eventually, investors might get tired of paying premiums to top management and start experimenting, tying their wages firstly to some low base- say, the lowest compensation package in the Fortune 550 – and then allowing expert systems people to put in place their programs that will do the simple thing managers do – make their companies float with their sector, up or down. At that point, we could have more immigrant software people doing most of the job of, say, the CEO of Oracle for about 3000th of the price.

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MPAVictoria 08.23.12 at 2:38 pm

“MPA Victoria: yes “impose” is doing some work, but so is your unargued-for presumption of entitlement to exclude and your analogy that excluding the homeless from your house is like excluding would-be migrants from national territory. But accepting the analogy for the sake of argument, it is very strange for the left to be making an argument that when the very wealthiest people exclude the poorest from their land they are only doing what they have a perfect moral entitlement to do. If that exclusion also condemned the poorest to high risk of disease and premature death and permanently stunted their life opportunities then talking about the imposition of harm wouldn’t seem inappropriate,”

So now the working class are the “very wealthiest people”? I hesitate to bring this up Chris but you have to admit that you personally are unlikely to be negatively effected by any open borders policy where someone who works as a butcher or a carpenter probably will be. Don’t you think their views should be taken into account?

I would also argue that the working poor don’t impose anything on anybody. It is the 1% who are imposing.

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Chris Bertram 08.23.12 at 2:49 pm

MPAVictoria: first, for the sake of clarity, let me just say that my own preferred view isn’t open borders. I’m discussing it here because the economic effects of such a policy are the subject of the papers by Clemens and Kennan. However, my preferred policy is so much more open than the existing ones that you probably wouldn’t like it either.

Second, the working class of the wealthiest countries are indeed wealthy in global terms.

Third, I’m for taking _everyone’s_ views into account, not just those who benefit from the status quo.

Fourth, see John Holbo’s post yesterday re “you wouldn’t like it if your were on the sharp end”.

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SR819 08.23.12 at 2:55 pm

I don’t think anyone has fallen for the illusion that the economists in question actually care about the welfare of the poorest people in the country. Economics is a tool for the 1%, and completely open borders would increase the power of capital at the expense of labour. What it would result in is a race to the bottom, with wages being undercut by immigrant labour until you have “factor price equalisation” in the words of neoliberal economists. Who does that benefit? Perhaps the immigrants would have small improvements in their situations, but the main benefits accrue to the capitalists, while the domestic working class would lose significantly. How can anyone on the left claim that’s a good thing?

Some on the soft left seem to dismiss these problems, by arguing that by unionising these immigrant workers, ensuring they know their rights etc, the undercutting of wages wouldn’t happen. However, they don’t seem to have considered that the immigrant workers may not want to be unionised, because they know that their willingness to work at a lower wage is highly attractive for employers. Once they get employment, they’ll be better off than they would have been back home, even if they are not being paid what a unionised domestic worker would have.

Do we really think that the migrant worker would feel a significant amount of sympathy for the displaced domestic worker? Some would, for sure, but in general I don’t believe we are at a stage where international working class solidarity is so strong as to undermine the collective power of capital. Perhaps it will be in the future, but it’s not the case now (one example: remember the Lindsey Oil Refinery wildcat strikes over the employment of Italian workers? How many of the Italian workers joined the British construction workers in solidarity? Very few).

It’s papers like these that make me despise the pseudoscience of economics. These snake oil salesmen do everything they can to dismantle the working class by pursuing policies in the interest of capitalists, like deregulation, privatisation, free borders etc. If we want to help the poor in the 3rd world, we should try to make scientific research more freely available, and offer technical assistance so that they can develop their own indigenous industries, improve crop yields, develop better infrastructure etc. These policies are what will truly help the poor in developing countries, not quick fixes like open borders.

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MPAVictoria 08.23.12 at 2:59 pm

“Third, I’m for taking everyone’s views into account, not just those who benefit from the status quo.”

Everyone’s but actual voters it seems….

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Metatone 08.23.12 at 3:00 pm

@Chris Bertram

Land carrying capacity isn’t just about justice – it’s about the assumption that there is no cost to immigration – which is the underlying assumption in all the “open borders” = “double world income” stuff.

In justice we should all share equally, but even then, it’s not obvious to me why open borders should be the sharing mechanism – that seems to result in some kind of darwinian situation where the strong push out the weak in each territory.

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Chris Bertram 08.23.12 at 3:03 pm

MPAVictoria: since, in the OP, I framed the political problem in terms of persuading the very voters you’re concerned about, that’s neither fair nor accurate, is it? To remind you of what I wrote:

bq. It is one thing to say to an electorate that free migration will probably not harm them (and may even benefit them) and quite another to say that such harms as they suffer are swamped by the benefits in a global utilitarian calculus. The first stands a chance of democratic success; the latter, realistically, has none.

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SR819 08.23.12 at 3:09 pm

@ Chris, you say that the working class in the wealthiest countries are wealthy in global terms, and that’s true, however they face a significant amount of exploitation in the workplace due to anti-Union legislation, the liberalisation of labour markets and having seen their pensions decimated, are now going to have to work longer due to the raising of the retirement age.

Furthermore, I don’t know if you’ve seen the documentary “Poor Kids” which was on the BBC, but that seriously highlighted that the conditions of the working class in some parts of the UK is genuinely appalling, not just relative to a person in India. Moreover, many of these people have been unemployed for a long time due to the failings of the neoliberal capitalist system. Surely putting more pressure on them by opening borders is hardly fair?

Having said all that, the basic point is that any policy to liberalise immigration, even slightly, would face enormous opposition. A February 2011 Ipsos Mori poll that an average of 75% of people in the UK believe that immigration is a “very big or fairly big problem”. Moreover, there is enormous support (over 70%) for the government’s cap on immigration, with opposition stronger amongst those in lower socio-economic groups than in higher. Even if more liberal immigration policies would have no negative effect on the working class, getting the people to support it would be close to impossible in the current climate.

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prasad 08.23.12 at 3:13 pm

@Chris Bertram

But someone who believes that their own country has, on, say, grounds of democratic self-determination, the right to exclude would-be migrants will also presumably think that other similar countries have the same right.

Indeed, but when did I say anything about rights, or democratic self-determination? I was pretty clear I was talking about attitudes. It’s not a great response to ‘X’ing is bad behavior’ to say ‘people have a right to X.’

There’s a tendency to regard any movement of jobs/money etc from the first to the third world through the lens of sympathy for the poor first worlder. For example, I’ve heard plenty of fellow visitors, but from western nations, talk with sadness about all the ordinary people hurt when foreign h1b’s take jobs from Americans. Or that immigrants set up 24×7 convenience stores in London and Berlin that locals cannot compete with. I’m suggesting that such a generic first world solidarity is wrong. Again, these people hold the -right- to say what they wants, and nations control their laws and borders and so on.

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Tim Wilkinson 08.23.12 at 3:13 pm

Martin B: protecting incumbent workers at the expense of potential workers.

But when potential workers become incumbent workers, they too become ‘protected’. And when an incumbent worker becomes a merely potential worker, they will no longer be ‘protected’. (A description is being treated incorrectly as a rigid designator.) In the case of a unionised (closed-shop) workplace, no particular person is being excluded; they just have to join the union when they take the job, just as they have to sign up to all kinds of other things. The ‘unionisedness’ or otherwise attaches to the workplace, not to individual workers incumbent or potential – and it’s there to prevent the employer from playing off one employee against another and grabbing all the ‘surplus’ for itself, at the expense of workers-in-general.

If the argument is instead Bruce’s fixed wage bill, and the claim that higher wages will increase unemployment, that’s a different argument, familiar from the business lobby. The workers of the world should disunite and submit to total domination of investment and employment decisions by capitalists, gratefully accepting (and fighting over) whatever scraps they are thrown.

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MPAVictoria 08.23.12 at 3:16 pm

“MPAVictoria: since, in the OP, I framed the political problem in terms of persuading the very voters you’re concerned about, that’s neither fair nor accurate, is it”

I stand corrected. My apologies. However you also said this in a later comment:

“But it can’t be legitimate (imho) for governments to pursue those interests in ways that impose massive harms on outsiders as, arguably, hard borders policies do.”

Which to me seems to implying that what the voters want doesn’t matter as it is illegitimate for a polity to have control over its own borders anyway.

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prasad 08.23.12 at 3:18 pm

Also, to reiterate, I am not accusing you of this kind of bias. I wouldn’t expect it from someone writing the original post.

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SR819 08.23.12 at 3:19 pm

@prasad, what’s wrong with showing some solidarity towards working class people from other countries who have lost their jobs due to international competition? Surely those on the left have been crying out for working class solidarity for a long time, rather than parochially only concerning themselves with what happens within their own country? Indeed, in my previous post I was sceptical whether such solidarity is at high enough levels these days, so any incident of working class sympathy is surely to be applauded.

With regards to call centre workers in India, many of those who end up doing these jobs are university educated and belong to the Urban middle class. So, in effect, when foreign H1Bs take American jobs, or when call centres are offshored, it is the American working class losing out to the Indian middle class. Surely you see why Leftists should show sympathy towards the American in this case, and not to the Indian? It is nothing to do with “First World Solidarity”, and everything to do with Class Solidarity.

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Random Lurker 08.23.12 at 3:32 pm

In theory, if an afflux of immigrant workers can lower the market power of indigenous workers, also an increase in population can: If Joe American’s job prospects are hurted by the competition of Juan Mexicano, they are also hurted by the competition of Tommy Newborn.
However, most people don’t see an increase in population as the cause of joblessness.
The reason is that, while Tommy contributes to the supply of labor, he also contributes to demand through his wage, so that if his wage has the same value of his productivity, there is no increase in joblessness.
The problem arises because Juan, for various reasons, is forced to accept a wage that is lower than his marginal productivity, and thus he produces a “lump of labor”. As a consequence, the solution to the progressive dilemma about immigration is, IMHO, very simple: “pay immigrants as much as natives”.

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prasad 08.23.12 at 3:34 pm

Re. Metatone and carrying capacity, I think the Sierra Club takes the spirit of this argument and sharpens it considerably by moving from ‘capacity’ talk to the change in environmental impact caused by the movement of a person across a border. They note that one important way of keeping American impact upon the climate low is to keep the population low, and of course immigration raises it. So there’s a minority position within that organization that calls for a sharp reduction in (say) Mexican immigration because Mexicans create far less CO2 emission (for example) in Mexico than in the US.

Assuming that’s factually right (and it seems plausible) this still strikes me as a morally horrid pose. Indeed, the argument carried out to consistency would also make these people try to keep -Mexico- from growing. But it does make the ‘sustainability’ type dilemma pretty vivid. Capacity is not the point; impact is, and open borders would increase the number of first-world lifestyles on the planet by a lot.

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Random Lurker 08.23.12 at 3:34 pm

“lower than his marginal productivity” -> lower than his production
lapsus

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Chris Bertram 08.23.12 at 3:43 pm

Those in the UK such as SR819 might care to look at Jonathan Portes’s blog today

http://notthetreasuryview.blogspot.co.uk/2012/08/cut-red-tape-to-boost-growth-start-with.html

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prasad 08.23.12 at 3:50 pm

@SR819

what’s wrong with showing some solidarity towards working class people from other countries who have lost their jobs due to international competition? Surely those on the left have been crying out for working class solidarity for a long time, rather than parochially only concerning themselves with what happens within their own country?

As posed, this question doesn’t address the problem, which is of greater solidarity with first world than with third world workers. The latter quite generically are poorer. As I said, the point is precisely to reject this kind of special affinity with those workers (from other countries; I’m stipulating the awesomeness of everything patriotic to make the ethical point) who look and talk like you do.

With regards to call centre workers in India, many of those who end up doing these jobs are university educated and belong to the Urban middle class. So, in effect, when foreign H1Bs take American jobs, or when call centres are offshored, it is the American working class losing out to the Indian middle class. Surely you see why Leftists should show sympathy towards the American in this case, and not to the Indian? It is nothing to do with “First World Solidarity”, and everything to do with Class Solidarity.

- Is it your impression that American IT workers are not college educated? In fact, they’ve had access to much better education than is available in India. That our lovable friends in Office Space are part of the American working class? We’re talking of white collar workers on both sides. But those in India are much poorer [in PPP terms, so don't bother;) ]. Why do you care about one and not the other? Again, assume you’re not American, or if you are, think of British jobs going to India.
– Doesn’t it bother you that you’ve found a class argument that opposes redistribution of income between North and South?
– When you’re talking say auto or textile jobs moving this kind of argument will seem even less plausible. Because then, in addition to jobs going from working to working class, the beneficiaries will typically have been absolutely poor, so the transfer helps furnish them with basic goods.

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Chris Bertram 08.23.12 at 3:50 pm

MPAVictoria: well there’s practical politics, which involves in this case, persuading the voters, and there’s what justice requires, which isn’t a matter of opinion for voters or anyone else. Practically, those of use who want _more_ open borders have to convince our electorates, but one of the arguments that we’ll use is that current policies are unjust.

Generally, it is highly problematic that electorates get to determine their own membership but then impose themselves coercively on other people. Take, for example, the case of apartheid South Africa, with its all-white electorate. Clearly, you wouldn’t think that legitimacy required consulting the whites about whether the franchise should be extended to blacks.

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Chris Bertram 08.23.12 at 3:57 pm

SR819 and MPAVictoria: those of you supporting, “from the left”, hard borders on nativist grounds, need to ask yourselves some questions. Particularly, you need to inform yourselves about the coercion, violence, and brutality directed against poor would-be immigrant outsiders, about the risks they are exposed to under the current system, and whether it is consistent with your values. Don’t think you can keep the huddled masses out without a lot of very nasty stuff being done to vulnerable people by state officials, and don’t will the end if you aren’t willing to will the means.

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SR819 08.23.12 at 4:13 pm

@ Chris Bertram
Having read Portes’ blog, he simply takes the standard neoliberal view that is common amongst all economists. He focuses solely on the effect of immigration on economic growth and efficiency. His focus is on aggregate outcomes, and does not seem to care about the unequal effects that a more liberal immigration policy would have. The little academic work that has been done on the effect of immigration on the wage distribution has found that it negatively affects the lower paid while benefiting those on higher incomes:

http://restud.oxfordjournals.org/content/early/2012/05/09/restud.rds019.full?sid=3c4add73-4d54-468c-92c2-48862e00c5d0

“As for the effects on native wages, we find a pattern of effects whereby immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution.”

So, if you want to liberalise immigration policy, be prepared for a widening of the income distribution. Surely no one on the progressive left can be happy with that? Is it any surprise that thinktanks like the Adam Smith Institute, the CBI etc are so in favour of more open migration? It’s not because they care about the global poor, it’s simply because a more open immigration policy will benefit their rich friends much more than it will help the working classes.

Regarding your second point, I know about the problems that immigrant outsiders face under the current system. I am completely opposed to the treatment many suffer at the hands of UKBA, and the last government’s treatment of Asylum Seekers (a different issue from migrant labour) was immoral, especially the locking up of children in detention centres.

However, this is not an argument for more open immigration. It is argument for the government to reform the UKBA, demanding that immigrant’s rights are respected, while also directing more money to areas where poor migrants (or 2nd/3rd generation migrants) are facing problems. In fact, given that you acknowledge there are certain tensions between native and migrant communities in some parts of the UK, surely that’s an argument for easing these tensions first before thinking about opening borders.

I am completely in favour of improving the lot of the poor in developing countries, you’d have to inhumane not to. However, I want to help them by assisting them in becoming self sufficient (through technical/scientific assistance, giving aid to poverty alleviation schemes, infrastructure projects, development of a welfare state etc). By using immigration as a tool for helping the 3rd world, you end with harming the very people in the developed world who are most vulnerable.

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Eric Titus 08.23.12 at 4:23 pm

Are workers who move shifting their economic position or their access to institutions?

When Ram moves to Sweden and gets a job driving a bus (or maybe as a backup bus driver because Sven already has the route), is he really adding to productivity? Maybe insofar as it could be said that he is driving more productive people to work, but how much productivity is the backup driver really adding (or alternatively a nanny/substitute teacher/yard worker). I’m not saying these jobs aren’t valuable, but the reason we are convinced that Ram would be doing more if he moved from India to Sweden is because our global economic system values the similar work differently depending on where it occurs. A part-time SAT tutor in the US is more valuable than a full-time teacher in many countries–would it really benefit the world if teachers, engineers, etc could move to the US and work on more trivial problems?

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MPAVictoria 08.23.12 at 4:24 pm

“SR819 and MPAVictoria: those of you supporting, “from the left”, hard borders on nativist grounds, need to ask yourselves some questions. Particularly, you need to inform yourselves about the coercion, violence, and brutality directed against poor would-be immigrant outsiders, about the risks they are exposed to under the current system, and whether it is consistent with your values. Don’t think you can keep the huddled masses out without a lot of very nasty stuff being done to vulnerable people by state officials, and don’t will the end if you aren’t willing to will the means.”

Needs more straw Chris.

I can, and do, oppose “the coercion, violence, and brutality directed against poor” people the world over. I support their right to unionize and to elect representatives who promote government action on their behalf. I just disagree with you that your open border polices would help anyone but the 1% in their never ending quest to crush the working class. Think of the company you are keeping with this viewpoint, Friedman and company, as wretched a hive of scum and villainy as has ever existed.

I would also love to hear how you think the welfare state would continue to exist if your plan became reality.

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Zamfir 08.23.12 at 4:30 pm

@Chris, you say that you personally do not want unrestrained immigration, just much higher levels than at the moment. What do you intend to happen if immigration flows are higher still than the levels that you consider good?

I don’t see how the policing should become any less problematic when it is combined with higher levels of permitted immigration.

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SR819 08.23.12 at 4:33 pm

@prasad

As posed, this question doesn’t address the problem, which is of greater solidarity with first world than with third world workers. The latter quite generically are poorer. As I said, the point is precisely to reject this kind of special affinity with those workers (from other countries; I’m stipulating the awesomeness of everything patriotic to make the ethical point) who look and talk like you do.

And what I’m saying is that you’re mistaken if you think that people are displaying a greater affinity/solidarity with the first world workers than the 3rd world workers. It is simply an opposition to the idea that the working class in developed countries have to be sacrificed for the poor in the developing world to improve their lot. This is to do with class solidarity and an opposition to seeing the poorest and most vulnerable people in the West see their economic and social conditions further undermined by globalisation. If it was the rich in the West whose income and wealth was being redistributed to the poor, you’d see the left support unequivocally that policy.

– Is it your impression that American IT workers are not college educated? In fact, they’ve had access to much better education than is available in India. That our lovable friends in Office Space are part of the American working class? We’re talking of white collar workers on both sides.

They may be college educated, but that doesn’t necessary make them part of the middle class. If we in fact look at the UK, many call centres opened up in places like Newcastle, a working class city. Many of the employees are part of the working class. Just because they are not working in manufacturing anymore doesn’t mean they are comfortable. In fact these workers face greater uncertainty and are more vulnerable, due to the casualisation of the service sector labour market.

The Indian call centre workers may be “poorer” in PPP terms, but their socioeconomic status is still higher in India than that of the displaced call centre worker in Newcastle. A call centre job in India is considered quite prestigious, and is a lot of the time the first step to an even more prosperous job. If you look culturally and socially, the Indian call centre workers live in the more affluent parts of the City, and their social network consists of the higher sectors of Indian society. The same cannot be said for the call centre worker from Newcastle. Therefore, it is entirely justified IMO to look at offshoring of jobs through a class perspective.

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liberal 08.23.12 at 4:47 pm

Wow. 110 comments, and no one appears to be addressing the question of land rent.

Chris Bertram @82 wrote,

it is very strange for the left to be making an argument that when the very wealthiest people exclude the poorest from their land they are only doing what they have a perfect moral entitlement to do

Look, if you’re going to be making arguments that it’s unfair that the people in the first world exclude people in the third from access to first world land, then you ought to be sympathetic to the same point within the first world.

Namely, there’s plenty of valuable land in the first world. Why don’t the not-quite-so-wealthy in e.g. the US get access to it?

Of course, free access of all to all cannot work. Thus, the right thing to do is tax the rental value of land at close to 100% as is practical, and return the proceeds (variously estimated at 10–20% of GDP, although admittedly not by ignorant neoclassical economists) to the people, either as an annual dividend, or as funding for the State to act on their behalf (or some of both).

Simply opening up borders will not only drive down wages of most people in the first world; it will likely jack rents up, to be captured by (current) landowners, in exchange for doing nothing.

Of course, most progressives/liberals fall into the Marxist fallacy of not distinguishing land from capital. (Yes, I’m sure Marx understood the difference, but he was interested in attacking both rent- and non-rent collecting “capitalists” instead of distinguising the two, as Henry George does.)

As long as we’re opening borders and all that, can we send some people to e.g. Saudi Arabia? Under the moral premises discussed here, they’ve no more right to their petroriches than we do.

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MPAVictoria 08.23.12 at 4:54 pm

“I don’t see how the policing should become any less problematic when it is combined with higher levels of permitted immigration.”

That question is so good I wish it were mine.

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Chris Bertram 08.23.12 at 4:55 pm

@Zamfir my position for the ideal case is that states have the right to exclude people, where exclusion doesn’t deprive the excluded of significant valuable options. Lots of gaps to fill in there, obviously. But the kind of people the state would have the right to exclude are the people they have no interest in excluding. So I see what you’re saying, but I think in practice my view doesn’t have enormous policing demands, though there will always be some. Transitional issues in a non-ideal world where some other states maintain hard borders are more difficult, I agree. However, I think that states which abide by reasonable constraints on what their officials may do, as I think they should, will be pretty leaky places.

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liberal 08.23.12 at 4:56 pm

Speaking of which, since first world nations aren’t going to open their borders anytime soon, we might as well revisit the ingredients for bringing nations out of impoverishment.

It’s pretty simple, and it’s been know for over 100 years:
(1) A strong liberal nation-state, which knows its limits (cf Stephen Holmes, _Passions and Constraint: On the Theory of Liberal Democracy_, for the need of states to limit (bind) themselves);
(2) The state recovering economic rents as a source of revenue and using the resulting wealth on behalf of the entire populace;
(3) Avoiding war as much as possible.

(2) was promulgated by Henry George, again, over 100 years ago. Recently Acemoglu and Robinson have said—as far as I can gather, haven’t read their stuff yet—the same thing. (While I think the A&R stuff sounds great, it’s not clear to me they’re saying it as well as Henry George did—George put great emphasis on the pure parasitism of rent collection, and I’m not sure A&R did that.)

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liberal 08.23.12 at 5:02 pm

Chris Bertram @105:

Particularly, you need to inform yourselves about the coercion, violence, and brutality directed against poor would-be immigrant outsiders, about the risks they are exposed to under the current system, and whether it is consistent with your values.

Boy, that’s an extremely easy one to answer.

Place the burden on would-be employers of “illegal” immigrants. Immigrants caught entering (or having entered) without papers, as it were, will be deported, etc, but in a warm, cushy, humane way, and prior to being “caught” should be treated well, have access to basic services, etc.

OTOH, people who knowingly employ undocumented immigrants should face stiff fines and long jail terms.

Yes, it might be difficult to create a regime where employers could be so punished (how do they decide who’s undocumented?), but it’s hardly impossible. (Well, on the practical end. Politically is another matter.)

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prasad 08.23.12 at 5:02 pm

The Indian call centre workers may be “poorer” in PPP terms, but their socioeconomic status is still higher in India than that of the displaced call centre worker in Newcastle. A call centre job in India is considered quite prestigious, and is a lot of the time the first step to an even more prosperous job. If you look culturally and socially, the Indian call centre workers live in the more affluent parts of the City.

- Why scare quote poorer? Poorer goes directly to lifespan, access to health, calories consumed, access to and quality of education yada yada. Positional goods matter, but they’re not the only things that matter, right?
– I don’t want to say within-nation-inequality is worthless as a measure, and that somehow only global-inequality matters, but walling off the global comparison seems quite questionable. Would you also extend your most recent argument and say that iPhone manufacture moving to China is bad because people making iProduct in the US would be low status, but this is a ‘prestigious’ job in China? With arguments like these, short giants will always get moral preference over tall dwarfs, provided only they are at first physically separated. And you can even ensure the perpetuation of this via open borders!
– In fact, since you began this discussion by talking about trans-national solidarity, it seems strange to walk it back when I point out that includes Indians fielding calls and making auto parts, Bangladeshis making tee-shirts and Chinese making iPads. You’re trying to occupy a fairly unstable intermediate place – you want to call yourself ‘leftist’ and care about class. You also want to care about people outside your own borders. You want to place yourself on the side of the poor in all rich nations. But you refuse to include nations that are poor. Or people in those poor nations, most of whom are a lot poorer than anyone you meet. Seems to me like a dose of a Peter Singer type expanding circle is called for.
– Finally, I’d say you’re right about IT jobs being prestigious in India, but your attempt to recast them as working class in the West rings very false in my ears.

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liberal 08.23.12 at 5:07 pm

Chris Bertram @113,

@Zamfir my position for the ideal case is that states have the right to exclude people, where exclusion doesn’t deprive the excluded of significant valuable options.

Oh, come on, the ideal case is that there are no states, but rather a single world polity.

Hopefully, we’ll get to that someday (well, as long as things are constructed to be beneficial), but in the meantime, the State is what we’ve got.

As such, it’s pretty reasonable to hope that a State will act for the greater good of its members. We could ask that it not do things of questionable value to itself that harm others (like going into Iraq and murdering hundreds of thousands of people), but otherwise it’s not too unreasonable to ask that the state put the welfare of its own citizens above that of others in most cases. (This leaves out thorny issues, of course, such as solving collective action problems that exist at global scale, etc.)

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Chris Bertram 08.23.12 at 5:08 pm

_OTOH, people who knowingly employ undocumented immigrants should face stiff fines and long jail terms._

Wow. Actually, not far from where I’m typing there’s a guy whose asylum request has been turned down, but who can’t be deported because he has no documents and he’s at risk in his home country. He has no right to welfare benefits and no right to work: he is destitute. My view is that someone who illegally employed him would be doing a good thing; your view is that such a person should be fined and imprisoned.

Eventually, this topic always brings out the most punitive and mean-minded characteristics in people.

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christian_h 08.23.12 at 5:12 pm

Arguments for exclusion based on the effect inclusion has on those currently barely clinging to being (socially and economically) included seem widely applicable: exclusion of women from the labour market, exclusion of black people from certain jobs, etc.. And yet, no one thinking of themselves as a principled leftist would defend those exclusions (one hopes – there certainly used to be those considering themselves left who did defend such exclusions). So why make an exception for exclusion based on some nebulous concept of national belonging? It is simply weird to me.

The only principled position for a leftist to take with regards to immigration is open borders, coupled of course with demands that labour be fairly compensated, that productive capacity be used for the benefit of all and not just the few.

And this applies before even getting into any discussion of the way immigration restrictions colonialism and imperialism, as well as racism, are inextricably intertwined.

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SR819 08.23.12 at 5:13 pm

You say the person employing him is doing a “good” thing, but it’s not through benevolence that he’s employing the illegal migrant worker. He obviously senses an opportunity to take advantage of cheap, compliant labour, unhindered by any employment protection regulations. Moreover, if the illegal worker complains about working conditions or wants to join a union, the employer will simply threaten to hand him over to the authorities. This is without considering the damage that employing undocumented workers does to the native working class, who are unable to find employment because their wages and conditions have been severely undercut.

I’m not saying the illegal worker should be deported if they are at risk in their home country. I believe they should be treated humanely, with respect, and if they are to work, they should be given the same employment rights as native workers, and it should be made illegal to employ them at lower rates of payment.

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prasad 08.23.12 at 5:14 pm

Sorry for the ugliness…I seem to be incapable of formatting my bullets to not collapse into one huge paragraph.

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Chris Bertram 08.23.12 at 5:19 pm

_You say the person employing him is doing a “good” thing, but it’s not through benevolence that he’s employing the illegal migrant worker. He obviously senses an opportunity_

Really? So if he says to me that he doesn’t want my charity and I say to him that, ok, he can dig my garden then and I’ll pay him for it, I’m “obviously” not acting benevolently.

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SR819 08.23.12 at 5:24 pm

I’m not sure I get your point; I’m not saying that every single example of illegal workers being employed is simply the employer looking to benefit economically. However, surely it’s true that, for the vast majority of cases, they are being employed because illegal workers have no rights and can be used to undercut wages? And the wider issue is that this use of undocumented workers does have a cost because native workers become excluded from the labour market. I am absolutely not blaming the illegal immigrant for that, but it surely cannot be described as a tolerable state of affairs? Surely there are better ways of helping Asylum Seekers than using them as cheap labour?

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Wonks Anonymous 08.23.12 at 5:28 pm

William Timberman, it just so happens that net migration from Mexico has recently gone negative in part due to Mexican economic growth (and the collapse in house prices which were boosting the construction industry, plus local anti-immigration laws). Although that doesn’t really have much bearing on the merits of NAFTA.

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MPAVictoria 08.23.12 at 5:32 pm

“Wow. Actually, not far from where I’m typing there’s a guy whose asylum request has been turned down, but who can’t be deported because he has no documents and he’s at risk in his home country. He has no right to welfare benefits and no right to work: he is destitute. My view is that someone who illegally employed him would be doing a good thing; your view is that such a person should be fined and imprisoned.”

So basically what you are saying is “You would support open borders if you were a refugee about to be deported.” Should I direct you to the same John Holbo post you directed me to?

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piglet 08.23.12 at 5:34 pm

CB: “those of you supporting, “from the left”, hard borders on nativist grounds, need to ask yourselves some questions. Particularly, you need to inform yourselves about the coercion, violence, and brutality directed against poor would-be immigrant outsiders, about the risks they are exposed to under the current system, and whether it is consistent with your values. Don’t think you can keep the huddled masses out without a lot of very nasty stuff being done to vulnerable people by state officials, and don’t will the end if you aren’t willing to will the means.”

I regard solidarity with immigrants and sans-papiers and rejection of the brutality of first-world border regimes as essential left positions. But that shouldn’t preclude us from rejecting the kind of bogus economic arguments you are discussing in the OP, especially the argument that mass migration could be an effective means of addressing global inequality (cf 48). There is no doubt a real tension between first-world self-interest (which isn’t, by itself, illegitimate) and international solidarity. As long as global inequality is as huge as it is (and getting bigger), and as long as most effective policy decisions are made at the national level, it is difficult to formulate a consistent left position that bridges that tension. One important argument here is the fact that the status of lack of rights of sans-papiers only benefits the capitalists exploiting them (e.g. http://www.monbiot.com/2004/05/25/the-immigrants-the-tabloids-love/). Giving them rights would be in the interest of labor, native or not. Another important argument is that improving living conditions in poor countries is infinitely preferable to mass migration. In a better world, people would be free to migrate out of curiosity or search for adventure or love but nobody would feel forced to leave their home out of misery and despair. How do we get there? Is advocating open borders a viable strategy for the left? Maybe it is but then it must be for humanitarian reasons. Adopting bogus neoliberal economic arguments is going to play into the hands of the other side.

The argument above, better fight the misery that drives mass migration, can obviously serve as an easy fig leaf for those who don’t give a damn about global injustice. On the other hand, advocating open borders can also turn into cheap posturing. One can advocate open orders in the safe knowledge that it’s never going to happen.

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Martin Bento 08.23.12 at 5:35 pm

TIm, the primary technique the Union uses to protect the wages of its members is exclusion of non-incumbent employees from those jobs. The exclusion is not directed at specific individuals, of course, but it is still exclusion and it is still arbitrary in the sense that it does not reflect any superiority of the incumbent employee either as a human being or as an employee. It is just necessary to cartelize workers in this way to achieve what the union wants to achieve. Likewise, it is arbitrary that people born in a country gain some claim on its overall productivity(not just their personal productivity) and others do not, but the exclusion is necessary to the claim. In other words, it is the overall productivity of the economy of the country (or the profitability of the firm) that creates a potential for wages to be bid up, but it is the constrained pool of employees that make that bidding effective.

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Chris Bertram 08.23.12 at 6:02 pm

_But that shouldn’t preclude us from rejecting the kind of bogus economic arguments you are discussing in the OP, especially the argument that mass migration could be an effective means of addressing global inequality (cf 48). _

Piglet, agreed. But we do need to know what the facts are about who would win and lose from a different migration regime. The truth about that affects what we can and should say to our electorates. I’ve no doubt that the two more free-market economists I linked to overstate the benefits and underplay the costs, but that there would be net benefits in a purely consequentialist calculus (which is not all that matters) seems very likely to me and there doesn’t seem to be anyone out there who is gainsaying that.

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SR819 08.23.12 at 6:12 pm

@ Chris Bertram, you’re right we need to know more about the distributional consequences of different immigration policies. However, the article I linked to in an earlier post suggests that immigration policy practised in the UK has led to a widening of income inequality, even if on average an increase in native wages is associated with more immigration.

Another study finds that it is in fact other earlier immigrants themselves that have seen their wages negatively affected by immigration:

http://personal.lse.ac.uk/manacorm/manacorda_manning_wadsworth.pdf

The few bits of evidence available suggest that the costs of more liberal immigration policy would be concentrated on those with the least power in British society.

Of course, the problem is that all these papers that we are quoting are economics papers, a discipline that has been completely discredited and deserves as much respect as Astrology. It would be good to see Sociologists or Demographists contribute to the debate, as they are likely to take a more holistic approach to understand the effects of different immigration policies (including, for example, socio-cultural, environmental effects), plus they are unlikely to be serving the interest of neoliberalism, as to much knowledge neither discipline has become as corrupted as economic (pseudo)science.

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Bruce Wilder 08.23.12 at 6:34 pm

Martin Bento @ 127

A fairly sensible analysis. But, the statement to which I objected earlier was that the higher union wage came “at the expense” of non-union workers. And, that, sir, is not a “fact”, nor is it a proper use of terms. To have an expense, is to expend assets (e.g. cash) for a business purpose, presumably generating revenues. The employing firm has an expense, and the rate of expense may have been increased by the Union’s success in raising wages, but the non-Union worker has no expense, factually or counterfactually.

At best, and giving you the benefit of the doubt, I tried to interpret your assertion as a metaphoric statement about what economists call incidence — that, somehow, indirectly, higher Union wages lower non-union wages. That would be more in the line of a generalization, and, as a generalization, it isn’t true. My complaint to the effect that what you said was incoherent, was addressed to the difficulty of coming up with a logically consistent incidence argument, where higher Union wages actually did lower non-Union wages. I cannot honestly say that there has never been such an instance, but I can say that where Unions do succeed in raising wages, it is not normally the case that the higher wages are observed to come from reducing non-Union wages. Usually, higher wages come out of economic rents, or the reduction in waste from moving toward a more efficient wage.

Admittedly, this is my hobbyhorse, and I have a bad habit of being long-winded and obscure. (Josh is my hero, in this; maybe I will improve, by emulating him.) Politics is a society thinking, and economics is the framework within which we think about some of the most important issues the society, collectively, decides. And, economics has been poisoned by a series of false tropes, such as, “higher union wages come at the expense of non-union workers”, which have no merit as propositions in economic analysis, but do fit neatly into the manipulative politics of plutocrats dominating a body politic, and immiserating the mass of people. The OP is a perfect example of how the Left fumbles around impotently, barely able to mumble incoherently, about basic policy propositions, because an aggressive neo-liberal / libertarian dialectic has hijacked the framework of economics and its conventional agenda, within which we would have to discuss and analyze ideas, such as the advisability of open borders.

The core of this poisonous apple, imho, is the false ideal of a “free” market, or, as another commenter put it, “it seems obvious that in order to maximise both fairness and economic efficiency, capital and labour must face similar (low) levels of restrictions on their freedom”, when, of course, such a thing should not be “obvious” at all, because it is simply not true.

Anyway, none of my passion on these issues is anything you should take personally. It was a common trope, which I hate, which you just happened to repeat, in the course of saying some other sensible things, which provoked me, and because I’m primed to be provoked, not because of anything about your general views, attitude or manner. I am sorry for the offense.

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MPAVictoria 08.23.12 at 6:45 pm

“I cannot honestly say that there has never been such an instance, but I can say that where Unions do succeed in raising wages, it is not normally the case that the higher wages are observed to come from reducing non-Union wages”

I remember reading a paper that linked unions with higher wages for non-unionized workers. Wish I could find it.

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Matt 08.23.12 at 7:02 pm

It would be good to see Sociologists or Demographists contribute to the debate, as they are likely to take a more holistic approach to understand the effects of different immigration policies

He doesn’t address all of the issues we’re interested in, but on this score you can do much, much worse than the work of Doug Massey at Princeton.

_Beyond Smoke and Mirrors_ is especially excellent.

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Martin Bento 08.23.12 at 7:05 pm

Bruce, “expenditure” is not the only possible meaning of “expense”, and it is not the meaning generally intended in the phrase “at the expense of “, rather the meaning is “to your detriment”. If I make a joke “at your expense”, it does not mean that I have cost you money. And the detriment to the unemployed worker I am talking about is not lowering his wages. I made clear, I think, that on average unions have the opposite effect, but also, as an unemployed person, he has no wages. It is maintaining him in a condition of unemployment. He is prevented by the union from taking the union worker’s job. That benefits the union worker, but is a detriment to him. IT doesn’t even matter for this argument whether higher wages create higher unemployment. In this particular situation, he is prevented from taking a job he otherwise could have. The benefit to the union worker exceeds the detriment to him, so I regard the situation as a net positive for the two workers considered jointly. But there is a detriment, there is a victim, there is someone at whose “expense” this occurs, and it is not solely the boss.

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Tim Wilkinson 08.23.12 at 7:08 pm

the primary technique the Union uses to protect the wages of its members is exclusion of non-incumbent employees from those jobs. The exclusion is not directed at specific individuals, of course, but it is still exclusion and it is still arbitrary in the sense that it does not reflect any superiority of the incumbent employee either as a human being or as an employee

You mean they exclude whoever-happens-at-a-given-time-to-be-unemployed from having-a-job-at-that-time? In that case I suppose it’s more or less true.

I’m less sure that this means that those with jobs should step aside, and that they should step aside in favour of those who want to get a worse deal by rejecting collective bargaining. But I’m sure the CBI etc. would agree that they should.

And just on that rent business, I don’t see that a unionised worker commands a rent in your sense of a return to an exclusive property in a resource (a sense which does not entail that any surplus/profit/more-than-minimally-motivating-reward is or isn’t being received). Treating ‘a job’ as a resource in this sense seems like a miscategorisation; and would not all wages come out as rents on this account?

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UnlearningEcon 08.23.12 at 7:15 pm

Bruce Wilder and MPAVictoria are correct that unions tend to increase wages and benefits for non-unionised workers, though not as much as they do for the unionised workers. Here is one paper:

http://www.epi.org/publication/briefingpapers_bp143/

In any case, Martin’s use of the phrase ‘at the expense’ is symbolic of a usual neoclassical thought experiment, in which the purveyor of the experiment declares that it is ‘obvious’ within the confines of their fantasy that their conclusion is true. Unfortunately the fantasy is still a fantasy, consistent or not.

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SR819 08.23.12 at 7:32 pm

UnlearningEcon is correct, which is why I think economics has absolutely nothing to offer us on any topic of interest. The academic papers linked to in the OP are so depressingly narrow in their scope and outlook. The same with most of the papers on immigration, with the focus on efficiency, economic growth, etc. None of the economic papers at all look at, for example, the effect of immigration on environmental pressures, sociocultural change, whether it undermines the ability of unions to organise labour etc etc.

The problem with economics is the way it frames debates. UnlearningEcon has given examples like the false dichotomy between “Government” and “Markets”, and you can add “Unions” vs “Unemployed” as another false dichotomy. Once these economists set the terms of debate, they try their best to force outsiders to stay within these parameters, and argue on their territory. The key, IMO, is to ignore economics altogether, because it’s a subject that has nothing to offer the Left whatsoever.

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Chris Bertram 08.23.12 at 7:40 pm

_The key, IMO, is to ignore economics altogether, because it’s a subject that has nothing to offer the Left whatsoever._

Oh dear.

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SR819 08.23.12 at 8:08 pm

@Chris Bertram

I stand by that statement. I would challenge anyone to name a single example where economics has been used to improve the lives of the common man and woman. Economic theory has been exclusively used to justify policies like privatisation, liberalisation of labour markets, the busting of trade unions, free trade that destroys industry and leads to loss of employment etc etc. Moreover, politicians’ single minded focus on economic growth is because of economists’ promoting this objective above other more important goals.

The framework that economics adopts is so narrow and is framed in such a way that if we use economics as a tool for understand the world around us, we will inevitably be led to advocating right wing policies that benefit corporations and those who already have a lot of economic power. This is why I don’t think those who wish to see a more just world can use economics to help guide their thinking. The subject is pure snake oil.

The interesting thing is that many other disciplines have now started to study the topics that economists used to look at (the disciplines of economic sociology, economic geography, economic anthropology have reversed the “economic imperialism” paradigm by studying economic topics but within their own disciplines’ framework) Surely the output of these sub-disciplines is likely to provide more interesting analysis than the tired, dogmatic rubbish that comes out of economics departments?

Steve Keen himself has said that economics research is a degenerative project, continually looking to protect the rotten core with more and more elaborate and obscure mathematical models. However, I do think economists are swimming against the tide, and eventually the public will be made more fully aware of the pseudo-scientific nature of the subject (through blogs like UnlearningEconomics) and then, I hope we see funding dry up and the discipline reduced in status to that of other pseudo-sciences like Astrology.

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dsquared 08.23.12 at 8:11 pm

with respect to:

The main reason that Sven is paid fifty times more than Ram is, to put it bluntly, protectionism – Swedish workers are protected from competition from the workers of India and other poor countries through immigration control.

There certainly are places – Geneva is not far off, for example, and Dubai is definitely there – where there is practically no native-born working class and all the menial jobs are done by immigrants at much lower wages than a native would accept.

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dsquared 08.23.12 at 8:13 pm

sorry – post praecox – I was going to go on to say that I couldn’t think of anywhere where the scenario Chang hypothesises of native unskilled workers being imiserated alongside immigrants is a reality.

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Gene O'Grady 08.23.12 at 8:16 pm

I wouldn’t go as far as SR819, but can Professor Bertram point me to a use of “incentive” that isn’t either a recipe for giving to the rich and powerful or taking/punishing those at the bottom, and not just at the bottom.

When I worked for the old AT&T and its immediate successors (responding to 135 and others), it was a truism among the first and second level managers (“What level are you?” may struck most sane observers as an insane obsession, but it was quite real) that they enjoyed far better wages, benefits, and work rules because of the unions.

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UnlearningEcon 08.23.12 at 9:06 pm

I think when SR819 says ‘economics’ he means ‘neoclassical economics,’ although other schools also fall into some of the same traps. I’m not sure why you think his statement is ‘oh dear,’ Chris – I think it’s true that treating the economy as a separate and mechanistic sphere conflicts with a lot of the left’s ideas.

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Tim Wilkinson 08.23.12 at 9:50 pm

there’s a guy whose asylum request has been turned down, but who can’t be deported because he has no documents and he’s at risk in his home country. He has no right to welfare benefits and no right to work: he is destitute. My view is that someone who illegally employed him would be doing a good thing

And so far as this is relevant to the discussion, presumably the idea must be that they shouldn’t be penalised. But rather than this decriminalisation of employing such people, wouldn’t legalisation be better on this account? And while we’re at it, why does this person – and indeed any immigrant under the open borders policy – not have the right to welfare benefits? Isn’t that unfair too? Is it really OK to create this class of people who are granted residence so long as they are working, but then effectively left to go home (whatever is left of it) when they are no longer required? The issue of what actually becomes of the nation state when the world’s population becomes cosmopolitan does need to be addressed, rather than sticking to one item taken directly from the supply-siders’ songsheet (like the wretch from the NIESR). As I and more recently piglet have pointed out, the exclusion of a class of workers who are not afforded protections and rights vis a vis employment is going to drive down hard-won conditions for all workers.

I note too that the point about creaming off productive people from underdeveloped areas hasn’t really been addressed – is this not going to reduce the likelihood of the place actually becoming developed? Even returning migrants in India have their NRI colonies. Why are these places not getting investment and development? Sticking to a policy of ‘free’ herding of itinerant workers because that provides them some short-term benefits, while ignoring the issue of unequal development seems a short-sighted goal, especially for those well-meaning types who have picked up this talking point because it appears to benefit some of the worlds (not-so) poor.

As Sen (who is not exactly a lefty extremist, perish the thought) points out:

the apologists of globalization point to their belief that the poor who participate in trade and exchange are mostly getting richer. Ergo–the argument runs–globalization is not unfair to the poor: they too benefit. If the central relevance of this question is accepted, then the whole debate turns on determining which side is correct in this empirical dispute. But is this the right battleground in the first place? I would argue that it is not.

Even if the poor were to get just a little richer, this would not necessarily imply that the poor were getting a fair share of the potentially vast benefits of global economic interrelations. It is not adequate to ask whether international inequality is getting marginally larger or smaller. In order to rebel against the appalling poverty and the staggering inequalities that characterize the contemporary world–or to protest against the unfair sharing of benefits of global cooperation–it is not necessary to show that the massive inequality or distributional unfairness is also getting marginally larger. This is a separate issue altogether.

When there are gains from cooperation, there can be many possible arrangements. As the game theorist and mathematician John Nash discussed more than half a century ago (in “The Bargaining Problem,” published in Econometrica in 1950, which was cited, among other writings, by the Royal Swedish Academy of Sciences when Nash was awarded the Nobel Prize in economics), the central issue in general is not whether a particular arrangement is better for everyone than no cooperation at all would be, but whether that is a fair division of the benefits. One cannot rebut the criticism that a distributional arrangement is unfair simply by noting that all the parties are better off than they would be in the absence of cooperation; the real exercise is the choice between these alternatives.

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piglet 08.23.12 at 9:54 pm

Bruce 130: “I have a bad habit of being long-winded and obscure.” Agreed.

The OP is a perfect example of how the Left fumbles around impotently, barely able to mumble incoherently, about basic policy propositions, because an aggressive neo-liberal / libertarian dialectic has hijacked the framework of economics and its conventional agenda, within which we would have to discuss and analyze ideas, such as the advisability of open borders.
Agreed.

CB 128 “that there would be net benefits in a purely consequentialist calculus (which is not all that matters) seems very likely to me and there doesn’t seem to be anyone out there who is gainsaying that.”

Part of the difficulty with that statement is that worldwide open borders is not a realistic option that might actually be taken. That is by no means an argument against making the case for it. But it should caution against the style of argument employed here (e. g. Clemens). There are a number of somewhat different, somewhat more or less open, more or less brutal, immigration regimes that might realistically be adopted and Open borders is not one of them. In the policy debate about these options, humanitarian considerations have little traction and global justice concerns are completely irrelevant. We need to avoid falling into the trap where leftist humanitarian/global justice language serves to sanctify neoliberal deregulation schemes designed to weaken labor without giving a damn about the global poor.

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bob mcmanus 08.23.12 at 10:01 pm

136:The key, IMO, is to ignore economics altogether, because it’s a subject that has nothing to offer the Left whatsoever.

Oh dear.

8:Or as Paul Krugman has put it, average incomes are determined by average productivity in an economy. As he’s gone on to point out, as soon as average productivity in China is the same as that in the US then so will wages be: Chinese wages will rise to American ones.

10:explaining that poor countries are poor because of the low productivity of their rich people (compared to top managers at Ericsson, Saab etc.)

I skipped this thread as nearly hopeless because what claims to be the left here, including Krugman and Chang, continues to follow the neo-classical paradigm and supply-side economics. Productivity my ass.

As soon as people move to a Keynesian/Kaleckian model in which national income is determined by the distribution of income and effective demand we can take a better look at open borders. People come to a place, buy stuff*, create investment and jobs. Wasn’t cheap labor built America circa 1900, was millions of new consumers.

Sven the busdriver is not paid more because he is more productive, or because he is surrounded by wondrous productivity, but because he is surrounded by bunches of folks with money to spend.

*Print/borrow money, give it to immigrants, tax it back. Whatever.

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SR819 08.23.12 at 10:05 pm

In the policy debate about these options, humanitarian considerations have little traction and global justice concerns are completely irrelevant. We need to avoid falling into the trap where leftist humanitarian/global justice language serves to sanctify neoliberal deregulation schemes designed to weaken labor without giving a damn about the global poor.

Exactly, and economics has absolutely nothing to say about humanitarian/global justice concerns, and what effect different policies would have in trying to achieve such goals. The only concepts economics understands are those that can be quantified (no matter how crudely).

The Left should not utilitarian, and one of the mistakes the “Third Way” made was accepting the language and framework of economics which severely limited the policies it could promote. This means that any progressive policy (like greater unionisation drives) can only be justified if it improves labour productivity, or has a positive effect on economic growth. The same with the opposition to fiscal austerity. The soft left are criticising current contractionary fiscal policies because they think it’s negatively affecting economic growth, another neoliberal concept.

It’s time to break free from economics’ dismal framework, and argue based on concepts of humanity, justice and working class rights. We want union rights not because we care what effect it has on the “economy”, but because our allegiance is the working class and we wish to improve their condition and redress the balance of power between capital and labour. We are opposed to fiscal contraction because it inevitably means the poor are going to be hurt by cuts in spending to health, education and unemployment benefits, and our political philosophy demands that our first concern is to the welfare of the worst off in society. This is the sort of language we should be using to justify our policies, not by using neoliberal technocratic “cost benefit” calculus.

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piglet 08.23.12 at 10:14 pm

Tim 143 “I note too that the point about creaming off productive people from underdeveloped areas hasn’t really been addressed – is this not going to reduce the likelihood of the place actually becoming developed?”

Another good point, and one reason why I said (without elaborating) that mass migration has destabilizing effects and should not be mistaken for a solution to global injustice. Of course, the very fact that successful migrants tend to be individuals of above-average skill and initiative has been used as an economic argument in favor of immigration – especially selective immigration – for a long time. But it can hardly be said to work in favor of the global poor.

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Jake 08.23.12 at 10:14 pm

There certainly are places – Geneva is not far off, for example, and Dubai is definitely there – where there is practically no native-born working class and all the menial jobs are done by immigrants at much lower wages than a native would accept.

So Dubai shows that as long as native-born unskilled labor can count on getting lots of oil money they have nothing to fear from lots of unskilled immigrants. Doesn’t really seem in the spirit of the original post, does it?

Geneva is marginally more interesting, maybe it shows that as long as native-born unskilled labor is willing to move to a cheaper city in the same country where they can get social services funded by exporting tax evasion to the rest of the world they have little to fear from lots of unskilled immigrants.

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Chris Bertram 08.23.12 at 10:28 pm

Peter Schaeffer: people who quote Victor Davis Hanson on how immigrants are turning California into a cesspit get banned from my threads. Simple as. Bye.

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John Quiggin 08.23.12 at 10:38 pm

@SR819 You might want to check on the history of the dismal science

On the main point of the post, I’ve been meaning to look at some evidence before commenting, but haven’t had time. But I’d be very surprised if a large influx of unskilled workers through migration didn’t lower the wages for unskilled workers generally (that is, unless there is some sort of imposed separation of labor markets between citizens and non-citizens, as in Singapore, Dubai etc.)

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bob mcmanus 08.23.12 at 11:01 pm

150:large influx of unskilled workers through migration didn’t lower the wages for unskilled workers generally

Certainly there may be a surplus created as the “economy” expands. The real point is, who gets the surplus?

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rf 08.23.12 at 11:05 pm

As per Josh at 13, George Borjas has done a lot on this:

http://www.borjas.com/

But I’m not an economist so don’t know what to make of it.

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MPAVictoria 08.23.12 at 11:17 pm

“It’s time to break free from economics’ dismal framework, and argue based on concepts of humanity, justice and working class rights. We want union rights not because we care what effect it has on the “economy”, but because our allegiance is the working class and we wish to improve their condition and redress the balance of power between capital and labour. We are opposed to fiscal contraction because it inevitably means the poor are going to be hurt by cuts in spending to health, education and unemployment benefits, and our political philosophy demands that our first concern is to the welfare of the worst off in society. This is the sort of language we should be using to justify our policies, not by using neoliberal technocratic “cost benefit” calculus.”

Just figured that this deserved a repost.

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temp 08.24.12 at 12:07 am

The Left should not utilitarian, and one of the mistakes the “Third Way” made was accepting the language and framework of economics which severely limited the policies it could promote. This means that any progressive policy (like greater unionisation drives) can only be justified if it improves labour productivity, or has a positive effect on economic growth.

This isn’t true. Declining marginal value of money (a basic econ 101 concept) justifies egalitarianism and therefore wealth redistribution and unionization, even if there is some harm to productivity or economic growth.

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novakant 08.24.12 at 12:16 am

Of course, the very fact that successful migrants tend to be individuals of above-average skill and initiative has been used as an economic argument in favor of immigration – especially selective immigration – for a long time. But it can hardly be said to work in favor of the global poor.

So what would the counter-argument be? Would you really want to deny someone a visa on these grounds? Freedom of movement should be a universal right that can only be restricted in such cases where it can be proven to cause major harm or is completely unfeasible – nothing said in this thread has convinced me it does.

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chris 08.24.12 at 1:14 am

Sven the busdriver is not paid more because he is more productive, or because he is surrounded by wondrous productivity, but because he is surrounded by bunches of folks with money to spend.

This would work for Sven the hairdresser, maybe. Sven the busdriver, on the other hand, works for the government, which pays him more than it absolutely has to because it *chooses* to pay busdrivers a decent wage and not the lowest wage it possibly can.

Lars the janitor makes a decent wage because it’s illegal for him not to. Another policy choice by the government — businesses certainly wouldn’t pay him well if they could get away with paying him badly! (If any did, they’d be driving themselves out of business. A law that applies to everyone is the only way to create space for a business to behave decently without being outcompeted by other businesses that don’t.)

The minimum wage, of course, makes the cost of doing business slightly higher, but since low-skill labor isn’t the only or even most important contributor to the costs of many goods and services, Lars and Sven still come out ahead. Actually, so do most of the businesses — Lars and Sven and lots of others like them are their customers.

High income people are effectively a little less high income because of the taxes that pay Sven’s salary and the higher price of goods in a country where labor isn’t cheap. So businesses that cater to high income people have a smaller market than they would in a kleptocracy or plutocracy. Whether this is a worthwhile tradeoff is left as an exercise for the reader.

@136-137 etc.: I think it’s important to distinguish between legitimate study of economies and economic pseudoscience concocted in order to support preconcieved political agendas. Rejection of the whole field of study is too much — it’s like saying “Creationism is BS, therefore we should ignore all of biology and medicine.” No, but you should be much more careful about who you listen to.

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prasad 08.24.12 at 1:46 am

“I would challenge anyone to name a single example where economics has been used to improve the lives of the common man and woman.”

What have the Romans ever done for us?

I also wanted to point out that the diaspora effects of migrant workers upon their home community is enormous. A Filipino nurse in Dubai repatriates much of her income. Carry on…

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John Quiggin 08.24.12 at 1:51 am

“I would challenge anyone to name a single example where economics has been used to improve the lives of the common man and woman.”

Keynesian policies for full employment , 1945-70

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SR819 08.24.12 at 8:51 am

A lot of the Keynesian policies were developed by Neo-Keynesian economists like Hansen, Solow, Samuelson who were still operating within the neoclassical/neoliberal framework of classical economics, and only saw recessions as temporary deviations from the perfect world of full employment.

And remember, these economists were by no means “left wing”. Moreover, all they did was advocate government consumption; so many of the great advancements made in the post war years, like nationalisation of the steel, coal, car making industries, the greater recognition of trade union rights, the welfare state*, extremely high marginal rates of taxation would NOT have been supported by these economists, because within the neo-Keynesian framework they occupied, these microeconomic issues would all introduce “distortions” to the market system, so would be undesirable.

All the economists can be credited for in the post war era is government spending more money buying goods and services during recessions (mostly military hardware) or cutting taxes. Many of the humanising policies that governments put in place to ensure a “New Jerusalem” was built (as Clement Atlee put it) were not the result of economists, but the result of brilliant politicians, many of whom had seen extreme poverty in the Cities and knew that they could never go back to those conditions again.

Even if we accept that economists deserve some credit for the full employment policies (although I think governments would have pursued them anyway), that’s 1 achievement in a discipline that’s over 200 years old. Now let’s list all the times economics has been used to damage the working class:

= The classical economists’ justification for the free market system, and opposition to child labour laws.
= Malthus’ predictions about how the working class would be to blame for overpopulation, and how providing poor relief would actually be undesirable.
= Ricardo’s insistence that Britain pursue free trade, that at least partly contributed to us losing our status as one of the most technologically advanced and industrially powerful nations in the world, losing out to protectionist USA and Germany.
= Milton Friedman’s policies that led to mass deindustrialisation in the US, the destruction of a lot of the welfare state and the widening of income inequality.
= The ideological backing given to Pinochet by the “Chicago boys”, Chilean economists trained at Chicago to help devise the neoliberal economic policies of Pinochet.
= Most of Margaret Thatcher’s policies were created based on Hayek and Friedman’s economic ideas, which destroyed the industrial base of the UK, increased poverty and the gap between rich and poor.
= Jeffrey Sachs, Andrei Shleifer and other US economists who helped developed the “shock therapy” treatment for post communist Russia, that led to massive inflation, an increase in poverty and extreme hardship for a lot of Russians. Moreover, the Lancet has shown a link between “Shock Therapy” and suicides rates, due to the utter helplessness induced by these free market policies.
= As the film “Inside Job” showed, the corruption of the economics profession was a leading contributor to the financial crisis, with economists, funded by financial institutions, deliberately sung the praises of further financial liberalisation, and didn’t spot the problems with the system which has led to massive job losses for people who had no part to play in the crisis.

Based on that record, I think it’s quite clear that economists have caused more problems for the world than they have solved. So I hope you can see why the discipline is absolutely despised by other academics and increasingly by the general public. As I said before, it’s pure snake oil.

* (I know you’ll say Beveridge created the welfare state and that he was an economist, but he was actually a lawyer)

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Tim Worstall 08.24.12 at 9:03 am

“Exactly, and economics has absolutely nothing to say about humanitarian/global justice concerns, and what effect different policies would have in trying to achieve such goals. The only concepts economics understands are those that can be quantified (no matter how crudely).”

Eh? So quantifying the effects of different policies in trying to achieve humanitarian/global justice concerns is not economics then?

For example, attempting to work out whether infant industry protection or free trade works better in attempting enrich the working man? Whether communal or private property farming produces more food for the working man to eat? Whether state regulation, private property or voluntary communal agreements work best to preserve commons? That last is not something that economics can enlighten us on even though a recent and richly deserved Nobel in Economics* was awarded for elucidating that very point?

“I would challenge anyone to name a single example where economics has been used to improve the lives of the common man and woman.”

Smith’s point about not letting the businessmen conspire together seems to be a pretty good one.

* Yes, yes, Bank of Sweden etc.

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SR819 08.24.12 at 9:22 am

For example, attempting to work out whether infant industry protection or free trade works better in attempting enrich the working man?

You prove my point, because I don’t think economics can be used to see whether infant industry protection or free trade works better to “enrich” the working class. Enrichment as a concept includes many philosophical ideas like positive liberty, living life without insecurity, etc. Economists when looking at different trade policies would only analyse whether industry is more efficient under free trade or protection, and whether economic growth is hindered by using infant industry policies. However, like I said, the Left are concerned with the good society, and ensuring that the working class are able to enjoy the full fruits of their labour. These are not things that can be reduced to an economistic “cost benefit analysis” or variables that can be plugged into an ONS regression.

Whether communal or private property farming produces more food for the working man to eat? Whether state regulation, private property or voluntary communal agreements work best to preserve commons?

I don’t see why an economist is needed to help us answer that question (surely an Agronomist would do that?)

Smith’s point about not letting the businessmen conspire together seems to be a pretty good one.

When he meant businessmen he was probably talking about the Guilds, who “conspired” to restrict labour supply, reduce working hours and keep wages high. As Guilds were a precursor to modern unions (indeed they can be thought of as craft unions employing skilled labour) Smith’s opposition to them should not be seen as a progressive statement. In fact Smith wanted to destroy the spirit of these craft organisations, that used to produce high quality work because of the value of such work in itself, but due to industrialisation was forced to respond to market forces and incentives, that destroyed the focus on quality.

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Chris Bertram 08.24.12 at 10:23 am

OK, SR819, I think we’ve got the message that you think economics has nothing of value to say about policy and that the left should simply ignore what economists say. It follows from that that you think we should ignore anything economists say about the costs and benefits of different migration policies.

I don’t think you can add to the discussion by repeating your view.

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SR819 08.24.12 at 10:51 am

OK that’s my last word on this subject. Apologies if I repeated myself.

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Thomas Jørgensen 08.24.12 at 2:56 pm

The discipline of Economics has a problem. The problem is this: It claims to be the science of economics – an attempt at understanding how the mighty engine that is industy, commerce and labor works.

This claim has not been true for at least 40 years, because people noticed a fact – Economic arguments can be immensely politically powerful.

Marx reshaped the course of history by being wrong in an immensly persuasive manner.
Keynes was far more accurate – and also drastically reshaped the politics of the world.

The problem is that at this point, it became obvious that the dominant economic theory of a nation shapes the politics of a nation in ways more profound than mere elections and coups can usually manage, and so economics got bought.

What economics actually is, today, is the applied study of retoric and demagougery for political ends. Because that is what gets chairs endowed, think tank jobs awarded and grants given. Any actual insight into the workings of the economy is incidential, and in any case, completly drowned out by the noise.

Its like the way climate denialists thinks climate change studies works, except with a very real money trail, and a motivation that makes sense.

I would have to consider myself a completely bonkers conspiracy theorist, except…
The organizations I see poisoning the well of knowlege have webpages, mission statements and completely public records. I dont belive the illuminati run the world, I think the hermitage foundation is succeeding in some of its goals.

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Thomas Jørgensen 08.24.12 at 2:57 pm

… heritage foundation. <,<

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Scott P. 08.24.12 at 4:06 pm

I’m not sure how we can judge the merits of various policies if we are not allowed to perform cost-benefit analysis.

SR819: We should raise the minimum wage. It would improve worker’s lives and give them a higher standard of living.

Me: That sounds suspiciously like cost-benefit analysis. We can’t measure the really important things. Maybe raising the minimum wage would crush them spiritually.

SR819: Do you have any evidence that would happen?

Me: I can’t say, because that would require me to perform a cost-benefit analysis.

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Kasper 08.24.12 at 4:31 pm

Clemens and Kennan are right and Chang is stupid.

The biggest problem with free immigration isnt that wages would fall (the marginal productivity of the lowest paid part of the native population wouldnt be reduced much, if any) . The biggest problem is that it isnt compatible income redistribution / the welfare state. You cant have a party with an open bar and an open door.

Lant Pritchett is basically right about everything: http://reason.com/archives/2008/01/24/ending-global-apartheid/singlepage

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rf 08.24.12 at 4:53 pm

“The biggest problem is that it isn’t compatible income redistribution / the welfare state.”

Is this actually true? How has immigration destroyed the welfare state so far? Taking the US and UK as examples, surely any damage was done by deindustrialisation, international competition, specific government actions etc. This is something that gets trotted out by the left a lot, so I’m curious is there any evidence for it?

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rf 08.24.12 at 4:58 pm

Doesn’t the creation of the welfare state in Britain coincide with large scale post world war 2 immigration? What role did ‘immigrant’ communities play in the Unionisation of the US working class? This seems to be one of those assertions, like the working class vote Republican or the Southern strategy destroyed liberalism, that are completly wrong.

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Kasper 08.24.12 at 5:33 pm

rf,

“Is this actually true? “

Of course its true. If you try to combine free immigration and a meaningful level of cash transfers to poor people, you would have an unsustainable amount of people who’s wages/productivity are/is lower than the welfare benefits coming to your country to claim them.

Its why one of the two (the other is crime) biggest arguments against low skilled immigration to the western world is the it costs the native population money. Its probably also why US immigration laws became stricter when welfare spending became more generous.

It also makes intuitively sense. You cant operate a night club where you both have an open bar and the entrance is free/non-restricted.

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UnlearningEcon 08.24.12 at 5:36 pm

“Clemens and Kennan are right and Chang is stupid.”

The claim that Chang is stupid rests on the assumption that you are right, which I’d like to question.

“The biggest problem with free immigration isnt that wages would fall (the marginal productivity of the lowest paid part of the native population wouldnt be reduced much, if any) .”

This requires that workers are simply paid their marginal productivity. Even marginal productivity theory doe snot claim that. It only claims the demand schedule is derived from marginal productivities. Here is Alfred Marshall:

“The doctrine that the earnings of a worker tend to be equal to the net product of his work, has by itself no real meaning… “

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Bruce Wilder 08.24.12 at 5:43 pm

Evidence about controlled immigration is not directly relevant to evaluating the likely effects of a policy of “open borders”, which, presumably, is akin to a policy of uncontrolled immigration.

It seems to me that apparent incomprehension on this seemingly obvious point reflects profound differences in worldview and ideas about the sources and nature of the wealth of nations and the generally high (or low) incomes of the people living in them.

In a comment, Chris Bertram has expressed this as a conflict of political ideals:

“it can’t be legitimate (imho) for governments to pursue those interests in ways that impose massive harms on outsiders as, arguably, hard borders policies do. More generally, I think the neoliberals (and libertarians etc) have us, the left (and US “liberals”), in a hard place over migration, because there’s a massive tension (even a contradiction) between our democratic and (some of our) solidaristic and communitarian commitments and our parallel commitments to internationalism and universal rights.”

One can complain as several commenters have, including me, about the corruption of neoliberal economics, but the interesting point would seem to be Bertram’s: look where the idealistic left is. Rejecting corrupt economic analysis doesn’t free the left from its own ill-considered committments of sentiment.

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UnlearningEcon 08.24.12 at 5:58 pm

My view is that uncontrolled immigration would benefit some very poor people in the short term, hurt some ‘first world poor people,’ but overwhelm infrastructure and widen both the relative and absolute poverty gap over time.

Basically, like free capital, it just makes me envision a swarm flinging itself around the globe and destroying everything in its path.

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rf 08.24.12 at 6:02 pm

“If you try to combine free immigration”

If we’re still talking about ‘uncontrolled’ immigration then sure, in that completely unrealistic scenario then the position of the ‘native’ population, primarily the working class, would be undermined. If we’re talking about reality, then immigration doesn’t appear to have played a significant role in undermining the welfare state or unions, from what I can see.

On a larger point, I don’t see how the two claims, caring about economic development in the South but hostile towards immigration from developing countries, (and lets be serious, that’s what we’re talking about here), as being compatible. Nothing wrong with prioritising your own community’s wellbeing, but let’s at least be honest about it and not ignore the evidence that emigration is a necessity for small and developing countries.

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Chris Bertram 08.24.12 at 6:14 pm

Whoah!

Kasper says lots more immigrants would bankrupt the welfare state and cause lots of crime. The evidence on crime and immigration is pretty mixed, but some studies suggest that immigrants are less likely to commit crime than citizens. And the welfare claim relies on all kinds of assumptions about migrants being net beneficiaries rather than contributors, neglects possible residence and contribution requirements for insurance-style schemes etc. Quite possible that welfare systems _need_ immigration to stay solvent, in fact.

UnlearningEcon: ” a swarm flinging itself around the globe” – perhaps not the best way of thinking about migrants?

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Matt 08.24.12 at 6:59 pm

Its probably also why US immigration laws became stricter when welfare spending became more generous.

I’m not sure when this could be referring to. US immigration laws became much stricter in the early 1920s, but that wasn’t a time when welfare spending went up or had gone up, and the move had been brewing for some time. The start of a welfare state got going in the ’30s, but that was a time of low immigration for reasons unrelated to restriction. The increase of the welfare state, under Johnson in the 60’s, was a time when there was very significant liberalization of immigration laws in the US. The increase in enforcement provisions in US immigration laws, mostly in the 90’s under Clinton, and somewhat under Bush after the Sept. 11th attacks, did not have any increase in welfare provisions associated with them- the opposite for the most part- and federal welfare provisions for immigrants were greatly cut then, too. (But not expanded for others.) I think that there are interesting and important questions about the compatibility of various forms of welfare states with different immigration schemes, but the historical/causal claim made in 170 above seems to me to be pretty much completely wrong.

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UnlearningEcon 08.24.12 at 7:07 pm

Haha, yes I did not mean it in that sense. I just mean when you have that much of pretty much anything moving between countries ‘as it pleases,’ you’re going to create instability of one kind or another.

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Kasper 08.24.12 at 7:08 pm

Bertram,

“Kasper says lots more immigrants would bankrupt the welfare state and cause lots of crime. The evidence on crime and immigration is pretty mixed, but some studies suggest that immigrants are less likely to commit crime than citizens. And the welfare claim relies on all kinds of assumptions about migrants being net beneficiaries rather than contributors, neglects possible residence and contribution requirements for insurance-style schemes etc. Quite possible that welfare systems need immigration to stay solvent, in fact.”

What Im saying is slightly more sensible than that.

With regards to crime its undeniably true that its one of the major arguments against low skilled immigration. You only need to turn on your tv to see that. Even if immigrants commit less crime than citizens what Im saying is still true.

Fwiw here in Denmark, immigrants, especially poor 3rd world ones, are overrepresented in crime statistics and I think it’s likely the same in the rest of Western Europe. The US and elsewhere could well be different. (I think most of the problems could be solved by legalizing drugs, but thats another issue altogether).

With regards to welfare. I was talking about completely free immigration.

In the situation we’re in now, with pretty strict restrictions on immigration, I think its only safe to say that immigration of people productive enough to make more money working than they can claim in benefits makes the welfare state more sustainable. And subsequently immigration of people who can earn more on benefits than they can working makes the welfare state less sustainable.

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Bruce Wilder 08.24.12 at 8:00 pm

UnlearningEcon: “Basically, like free capital, it just makes me envision a swarm flinging itself around the globe and destroying everything in its path.”

Chris Bertram: “. . . perhaps not the best way of thinking about migrants?”

Idealization of “freedom” from control, structure, committment and constraint might not be the best way of thinking about economics and economic development.

Yet, that’s what “neoclassical economics”, in its neoliberal and libertarian variations, does: it posits a self-organizing, self-optimizing ideal market system, which needs government intervention only in the exceptional case of market failure, and even then, only when the market failure would otherwise be greater in magnitude than the burden imposed by the imperfect remedy of state intervention or regulation. In this framework of ideas, “it seems obvious that in order to maximise both fairness and economic efficiency, capital and labour must face similar (low) levels of restrictions on their freedom” (to quote another commenter).

This neoliberal idea about economics — a positive thesis about the functional economy, with normative implications — seems to fit a political leftist’s normative ideals of freedom as egalitarian respect and empowerment for the individual. The two seem to fit together like a virus attaching to a cell, in the course of infecting, reproducing itself, and killing its host.

It is actually kind of horrifying to watch, as various commenters have tried to sketch out various, fairly obvious-seeming reasons that immigration has to be controlled (as, also, financial capital has to be heavily controlled, contra neoliberalism — as UnlearningEcon suggests), and replies come back, to the effect that such controls are inimical to left committments to freedom and universal solidarity.

I marvel.

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chrismealy 08.24.12 at 9:10 pm

Bruce, self-optimizing, -organizing, -regulating, -correcting market economics is easy to understand. It’s even kind of fun in a three-year-old with a hammer kind of way (Matt Yglesias has made a career of it). I can’t blame people for believing it. I was a neoliberal for a long time, and unless your education was a lot different than mine I bet you were too. Anyway, you’ve convinced me. I can see how the neoliberal framework isn’t helping us leftists. Why don’t you show us your institutionalist framework in action as applied to immigration? I’ve wrapped up my heterodox economics phase (critiques get boring after a while) and I’m looking for something to do before I commit to complete economic nihilism.

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chrismealy 08.24.12 at 9:13 pm

Inadvertent strikethrough. Don’t start words with dashes.

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UnlearningEcon 08.24.12 at 9:53 pm

Sorry for posting so much, but for Chris and Kasper:

http://www.ucl.ac.uk/news/news-articles/0907/09072302

“In the latest fiscal year, 2008/09, A8 immigrants paid 37% more in direct or indirect taxes than was spent on public goods and services which they received. “

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ckc (not kc) 08.24.12 at 9:57 pm

You only need to turn on your tv to see that.

…I’ll have to try that sometime … maybe I’ll start with Fox

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chris 08.25.12 at 12:50 am

It also makes intuitively sense.

Like the flatness of the Earth! Or the fact that we didn’t come from no monkeys!

The fact that it makes intuitive sense makes it more suspect, not less, because it gives people a reason to believe it whether it is true or not, therefore you can’t deduce that people who believe it are believing it for a good reason; not when there is a convincing bad reason that they might be following instead.

Of course, when it comes to believing bad things about people that don’t look or talk like you, plenty of people don’t even need a bad reason.

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Peter T 08.25.12 at 1:34 am

The key issue for the left (and for any society that hopes to have a long-term future) is controlling the elites. Specifically, how ordinary people in each society control their particular elites. Each society needs to come up with its own ways here, and globalising labour is unlikely to make this easier (note that, over history, mass importation of poor foreigners has been a classic weapon of elites against the lower classes). A few more Ram the bus drivers is a good idea, a lot is a disaster. Since principles don’t reckon in numbers, this makes for an awkward discussion.

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MPAVictoria 08.25.12 at 1:38 am

“Sorry for posting so much, but for Chris and Kasper:

http://www.ucl.ac.uk/news/news-articles/0907/09072302

“In the latest fiscal year, 2008/09, A8 immigrants paid 37% more in direct or indirect taxes than was spent on public goods and services which they received. ””

Seems like a great data point in favour of controlled borders.

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prasad 08.25.12 at 1:51 am

With regards to crime its undeniably true that its one of the major arguments against low skilled immigration. You only need to turn on your tv to see that. Even if immigrants commit less crime than citizens what Im saying is still true.

Isn’t the view that immigrants increase crime the same as the view that immigrants commit crimes at higher rates? What could it mean to say an incoming group could “commit less crime” but still have crime be a major argument against immigration? I’m supposed to turn on my TV and see…what exactly?

Also, second chrismealy’s question. Chris Bertram’s point, that the left’s commitment to social institutions and communitarianism is coming into conflict with its commitment to universalistic internationalism, this seems like an intrinsic conceptual tension. It’s not a conflict seen only from the vantage point of a neoliberal. It seems like many commentators here want to be nativists while also singing the internationale, and you’re not going to resolve that tension there simply by bashing your favorite neoliberal.

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William Timberman 08.25.12 at 2:45 am

It seems like many commentators here want to be nativists while also singing the internationale, and you’re not going to resolve that tension there simply by bashing your favorite neoliberal.

The debate over whether or not you could have socialism in one country didn’t turn out too well, but at this point it seems to me unlikely that the debate about whether or not you can have capitalism in one country will fare any better. Bruce Wilder, if I’ve understood him correctly, is right, I think, that our present social contracts depend on the nation state, and on the fragile institutions which the citizens of nation states have cobbled together to manage those contracts. Open borders, especially in so-called first-world states, would seem to invite pressures on their internal political and economic arrangements which few, if any, are equipped to manage. Attempts at extending those arrangements beyond national borders haven’t fared too well in the past, and those we’ve been betting on most recently, such as the IMF or the European Community, don’t seem to have as bright a future as many assumed not so many years ago that they would have.

There are all sorts of reasons for this, and all sorts of analyses of those reasons, but I don’t see a necessary conflict between singing the Internationale on the one hand, and being very nervous about the consequences of open borders on the other. The latter isn’t so much nativism — although it manifests as nativism often enough — as it is the natural consequence of observations that Marx himself, among others, made quite a long time ago. When capitalism helps make a wasteland overseas and calls it development, there’ll be consequences, just as there were consequences when it did the same thing at home several centuries ago. Allowing open borders in first-world nations just brings these consequences to our attention a a little sooner, and with a great deal more urgency than we’ve been led to expect.

It would help, of course, if we were honestly attempting to find cooperative solutions to the economic and political imbalances that global capitalism has brought in its wake, but in my view those who have the power to actually do anything about such imbalances don’t think that they themselves are in any jeopardy from them, and consequently have little interest in doing anything much to address them, except perhaps to build more gunboats.

So if we seem to contradict ourselves, it isn’t because we’re ignoring the inconsistencies in our own thinking, but because we genuinely don’t see how such inconsistencies can be resolved — at least not without a little help from people we know aren’t really our friends.

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Tim Wilkinson 08.25.12 at 3:20 am

If we’re still talking about ‘uncontrolled’ immigration

I thought that was the whole point of this post: complete ‘freedom’ of movement of all human beings over the face of the earth.

Sidestepping – two-stepping – a selection of the actually interesting questions involved, then sitting back and waiting for the ‘foreigners are all criminals’ and ‘get orff my land’ crowd to turn up for a ritual kicking is a great way of eliciting soundbites in support of the position that it is teh Left that are the real racists – so well done for that one – but when the global working class’s toehold on left-wing policies is currently mediated by parochial citizenship rights – and global economic institutions are dedicated to consolidating the grip of international capital over the entire globe – there are obvious issues which, having raised the question, one really ought to make some attempt to address in a constructive manner.

You could say, for example: ‘obviously this would require a world socialist government’, and then that could be discussed; or ‘obviously this would require other forms of exclusive land ownership to be pulled down, otherwise we are just looking at the break-up of existing communities only for their erstwhile members to be chivvied on their Tebbitian bikes from ghetto to ghetto by the not-so-impersonal forces of the market'; or anyway make some attempt to fill in the details.

Failing that we just have the Ladd/Nozick style of argument from highy selective first principles, of the ‘how can Liberty possibly be bad’ style, unobtrusively buttressed by an unofficial doctrine of market Panglossianism.

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Tim Wilkinson 08.25.12 at 3:22 am

(Refresh fail – didn’t see previous from William)

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Tim Wilkinson 08.25.12 at 3:30 am

Also that was (obviously) not aimed at rf, just hung on the peg of his remark.

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Tim Wilkinson 08.25.12 at 3:30 am

or hers, sorry

193

LFC 08.25.12 at 3:35 am

SR819
Milton Friedman’s policies that led to mass deindustrialisation in the US

Deindustrialization would have occurred if Friedman had never existed. Certain government policies might have slowed deindustrialization, but it’s hard to see how it could have been entirely prevented.

So I hope you can see why the discipline [economics] is absolutely despised by other academics and increasingly by the general public.
Evidence needed.

I realize s/he’s no longer on the thread, but these statements have not been specifically questioned and should be. (for the record, IANAE)

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john c. halasz 08.25.12 at 4:56 am

@193:

“Deindustrialization would have occurred if Friedman had never existed.”

IIRC Friedman was a key adviser in urging Nixon to scuttle Bretton Woods, which later led Paul Volcker to describe U.S. policy as ” the controlled disintegration of the global economy” under the floating FX system that Friedman advocated. So, no, there wasn’t any fatal inevitability to the matter, rather than a set of deliberate policy decisions.

But then this is the problem with this whole thread: it argues about international labor migration without mentioning the demise of the FX/trade regime, which effectively doomed capital controls and thus national economic policy autonomy, making development strategies outside the control of international finance capital moot.

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JW Mason 08.25.12 at 5:42 am

I’ve wrapped up my heterodox economics phase (critiques get boring after a while)

OT but this is a big problem. We in heterodoxy need to spend a lot less time on critique, and a lot more on building up a positive alternative economics. A lot of us on the left tend to assume we already have one, if people would only listen to us. But we don’t.

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JW Mason 08.25.12 at 6:41 am

Bruce W., quoting Chris B.:

I think the neoliberals (and libertarians etc) have us, the left (and US “liberals”), in a hard place over migration, because there’s a massive tension (even a contradiction) between our democratic and (some of our) solidaristic and communitarian commitments and our parallel commitments to internationalism and universal rights.

Right, this is the real issue.

It so happens I’ve just been reading Eric Hobsbawm’s book on nationalism. Key point he makes is that, historically but also logically, the nation is a political category before it’s an ethnic category. The distinction between a nation and any other geographic grouping of people really hinges on sharing a government. So the notion of people forming distinct nations doesn’t really have any purchase before the French revolution. The starting point is that the nation is constituted by the exercise of sovereignty — we are one people because we are collectively governing ourselves. Obviously to participate in collective self-government you need to have or acquire a competence in the national language but there’s no presumption of any preexisting linguistic or cultural or ethnic unity. “The ‘nation’ … was the body of citizens whose collective sovereignty constituted them as a state which was their political expression. Whatever else a nation was, the element of citizenship and mass participation or choice was ever absent from it. … We observe without surprise that Mill discusses the idea of nationality not in a separate publication as such, but … in the context of his little treatise on Representative Government, or democracy.”

In terms of popular consciousness of nationality, he argues it came in two ways. Negatively, through the destruction or decay of “all those intermediate instances” which formerly stood between the state and ordinary people but which “the Age of Revolution had dismantled or demoted”: religion, hereditary social hierarchies, etc. And positively, through the increasing need of the state for the active consent of ordinary people, through formal democratic processes and/or because of the new space for active noncooperation created by industrial labor, conscript armies, etc. Popular nationalism is inseparable from popular participation in politics: “The very act of democratizing politics, i.e. turning subjects into citizens, tends to produce a populist consciousness which … is hard to distinguish from a national, even a chauvinist, patriotism — for if ‘the country’ is in some ways ‘mine,’ then it is more readily seen as preferable to those of foreigners.”

On the other hand, the classical liberals, from Smith on, gave very little attention to the question of national identity and self-determination, precisely because they thought they were developing principles of correct governance that could be derived from first principles, so it didn’t matter who was sovereign or what the political units were. “Thus J. E. Cairns, at the peak of the liberal era, even spent ten pages seriously considering the proposition that a theory of international trade was unnecessary, as distinct from any other trade between individuals.”

Neoliberalism looks like its original in this respect. It’s supposed to offer universal prescriptions, so questions of sovereignty and political authority don’t arise. Whoever is making decisions should arrive at the same choices, since they’re objectively best for everyone. The question of who decides has no more relevance in policy than in physical science — just solve for the first-order conditions.

That’s why this open borders stuff makes me (and I think Bruce, and lots of others) uncomfortable. National states remain the most important vehicle for collective decision-making as opposed to the power of capital. And if you believe that the modern state is in some way an adaptation to popular resistance, and that it is at least potentially a vehicle for collective self-government , then you have to worry about weakening the link between people and particular states, at least until we have real institutions of global self government.

There seems to be a trend right now to shift sovereignty from (imperfectly but genuinely) democratically accountable national governments to “independent” technocratic bodies, most clearly in the EU but really globally. And of course this can always get the progressive gloss that national self-government is atavistic, etc. But it seems to me that if you destroy all the particular solidarities you don’t get universal solidarity; you get no solidarity, no counterweight to concentrated power.

If we take the Hobsbawm perspective seriously, then the question, Why should we care about national borders, turns into, Why should we care about popular sovereignty? I worry that in practice the people who are against the first, are really against the second.

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Mao Cheng Ji 08.25.12 at 7:31 am

The tension is, as usual, between ‘left’ and ‘liberal’. The Internationale calls for destroying the foundation, making a clean slate, and then building from there. That’s the goal, everything else is the means, and all the good things are supposed to come from that.

The liberals want to preserve the foundation (they like it), and to keep improving it. These are two radically different doctrines.

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Chris Bertram 08.25.12 at 8:02 am

JWM, of course those are fair points, though I’d note that some people (notably Rogers Brubaker) distinguish 2 concepts of nation. In the first, the political institutions come first and then … we get everyone to speak French; in the second, we find everyone who speaks German and decide that they ought to have political institutions to correspond to their supposedly shared identity. In the latter conception, the arrival of democracy, especially after WWI and Wilson’s 14 points entails the expulsion from the demos of the people who don’t belong to the ethnos (see Michael Mann’s _Dark Side of Democracy_ ).

Yes there is a tension between free movement and popular sovereignty, but it doesn’t strike me as an insurmountable one. The first liberal democracies had open borders, for one thing. And within large federal states (such as the US, Canada, even Russia) no-one would think that it is impossible to combine a high degree of devolved power of democratically governed sub-units with unrestricted internal movement throughout the federation.

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Tim Worstall 08.25.12 at 9:29 am

@193

“Deindustrialization would have occurred if Friedman had never existed.”

Umm.

“these statements have not been specifically questioned and should be. “

Well, yes. Given that US industrial production is (leaving aside the current little depressionette) at an all time high it’s difficult to see what deindustrialisation there has been.

There’s been a decline in industrial/manufacturing employment, sure. But not in production. What has happened to industry is that it has been automated, not that it has disappeared.

The same is true for the UK BTW. Peak industrial output was sometime around 2005. For all the claims that Maggie, The Tories, neoliberalism and the rest eviscerated manufacturing output was higher in 91 than 79, higher in 98 than 91. It was employment in the sector that fell, not output.

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Oliver 08.25.12 at 9:46 am

“It would be nice, however, if economists could come to a consensus about the economic effects on the poor citizens of wealthy states.”

I don’t begin to see how this is possible. Mass immigration would have multiple effects (economic, institutional, cultural, political) and each one of those effects would have an impact on all of the others. I don’t see how you could with any degree of confidence forecast the behaviour of a system with so much feedback in it.

Might it actually be immoral to allow mass immigration? What responsible government would enact a policy whose consequences were in principle unforeseeable?

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Chris Bertram 08.25.12 at 10:05 am

Oliver:

“Mass immigration would have multiple effects (economic, institutional, cultural, political) and each one of those effects would have an impact on all of the others. I don’t see how you could with any degree of confidence forecast the behaviour of a system with so much feedback in it.”

Fair point, and almost certainly correct. In which case it would be nice to have a consensus among economists that such knowledge is impossible to have, rather than categorical statements from the likes of Clemens and Kennan about the probable effects of open borders.

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Agog 08.25.12 at 10:19 am

“Mass immigration would have multiple effects (economic, institutional, cultural, political) and each one of those effects would have an impact on all of the others. I don’t see how you could with any degree of confidence forecast the behaviour of a system with so much feedback in it.”

Yes – beware of immigration, Rhode Islanders!

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SR819 08.25.12 at 11:59 am

I’m sorry, but I have to take issue with the “nativist” label that some have attached to my arguments, as if my views are akin to Pat Buchanan’s. I actually think the last Labour government’s point based system of immigration was completely sensible, and I certainly don’t believe that the UK should close their borders to people from developing countries. I believe in managed (controlled) migration, which is due to my belief that free markets in anything lead to instability and increased pressures on those least able to handle them.

The Left need to understand these issues. Some on the neoliberal right are using ideas about free migration and free trade to undermine the working class. However, they’re smart enough to try and bring in Left wing supporters as well, by framing the issue as if it’s to do with “solidarity with the poorest people in the world”. I remember Steven Landsburg (the economist) call John Kerry’s running mate John Edwards a “xenophobe” because he opposed free trade. By deliberately using language like this, the aim is to push progressives away from supporting protectionism because they don’t want to be seen as being xenophobic, even though xenophobia has NOTHING to do with it.

This sort of framing is hugely damaging to the Left’s cause, and it’s imperative we don’t debate within this framework. Opposition to free trade and migration is nothing to do with nativism or xenophobia, and we need to be clear about that. If the Left don’t shed their neoliberal clothing, you’ll end up with damaging coalitions forming, like how the future Socialist Party USA presidential candidate supported Pat Buchanan’s election run in 2000. Protectionism should be a bread and butter issue for those on the left, but if we abandon that territory, you end up with much more malign forces like the populist right claiming ownership of it, and their protectionism will be extreme and not purely based on economic concerns. Do we really want that?

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Watson Ladd 08.25.12 at 12:31 pm

SR819, how can you say anti-immigration has nothing to do with xenophobia when there is a long history of explicit xenophobia driving the US immigration policy? The US has one of the most restrictive policies of immigration in the world right now. Asylum has become a hell to get, and in Europe requires not working for four years IIRC. If we had a norm of welcoming strangers to our shores, maybe some national monument devoted to this in the biggest harbor in the world, perhaps people fleeing prosecution would settle and prosper in their new land. Their children might even become Supreme Court justices someday!

Oliver, the US did have mass immigration in the 19th century. Whatever you say about its effects, mass immigration has been tried.

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SR819 08.25.12 at 12:41 pm

Watson, I said protectionism, not anti-immigration, had nothing to do with xenophobia. By protectionism I primarily mean trade protectionism, so that domestic industries are supported by imposing tariffs and quotas on foreign produced goods, so that the working class are not exposed to international competition which would weaken their bargaining power in negotiations with employers. By protectionism I also mean managed immigration, which is completely different to anti-immigration. On the whole I am pro-immigration, as long as it is controlled and policies to combat the potential social, cultural and environmental problems associated with immigration are put in place.

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Watson Ladd 08.25.12 at 12:46 pm

Can you distinguish between your views and those of Henry Cabot Lodge on immigration?

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SR819 08.25.12 at 12:59 pm

There is plenty of difference between my views and Henry Lodge’s views. For example, this gives a taste of his views:

The immigration of the people who have settled and built up the nation during the last 250 years, and who have been, with trifling exceptions, kindred either in race or language or both is declining while the immigration of people who are not kindred either in race or language and who represent the most ignorant classes and the lowest labor of Europe, is increasing with frightful rapidity.

I find these sorts of views absolutely abhorrent and there is a world of difference between what this man believes and what I believe. I do not recognise the concept of Race, and don’t think the country of origin should have any influence on immigration policy. Moreover, Lodge displays a significant amount of class prejudice with his comments about the “ignorant” classes and the immigrants being the “lowest labor or Europe”. I believe in international working class solidarity and find these sorts of disparaging comments about the working class as reprehensible.

Like I’ve said before, my concern about free migration is that it leads to a redistribution of power from the working class to capitalists. This violates the principles of Socialism, to which I adhere to, which is why I cannot support the policy.

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rf 08.25.12 at 1:46 pm

“don’t think the country of origin should have any influence on immigration policy”

Perhaps, but a lot of the rhetoric here is implicitly concerned with country of origin. Undermining the welfare state, difficulty in unionising immigrants who will undercut native wages, leading to a breakdown in working class solidarity are generally concerns directed at specific immigrant groups.

“I certainly don’t believe that the UK should close their borders to people from developing countries. I believe in managed (controlled) migration”

Do you agree with open borders within Europe, or between Ireland and the UK?

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Mao Cheng Ji 08.25.12 at 1:57 pm

Watson Ladd, 204 says: “…the US did have mass immigration in the 19th century. Whatever you say about its effects, mass immigration has been tried.”

Indeed, it has. And it’s easy to attest to how it’d affected the host (Native American, in this case) population.

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prasad 08.25.12 at 2:27 pm

Some on the neoliberal right are using ideas about free migration and free trade to undermine the working class. However, they’re smart enough to try and bring in Left wing supporters as well, by framing the issue as if it’s to do with “solidarity with the poorest people in the world”.

The mere fact that someone frames trade as solidarity with the world’s poor doesn’t make the point false, any more than OWS “framing” trade as an attempt to fatten the 99th percentile at everyone else’s expense negates that point. In truth, there’s money transfer [normalize to get rid of any of the positive sum stuff] from the global 85th percentile to the 99th percentile, but also to the global 50th percentile (~white collar jobs), and similarly from the 65th percentile to the 30th percentile (~manufacturing). Numbers schematic of course. Whatever this thing is, it’s not very useful to characterize just as making-plutocrats-richer or as solidarity-with-the-poor. It’s an odd moment from a Marxian standpoint. It might sound convenient to a neoliberal (leftist) to talk of trade/immigration only as uplifting poor Asian economics (destroying first world working and middle classes) but there’s not much value, or so I’d argue, in pretending the other part of the story is imaginary.

I’m sorry, but I have to take issue with the “nativist” label that some have attached to my arguments, as if my views are akin to Pat Buchanan’s [...] I believe in managed (controlled) migration, which is due to my belief that free markets in anything lead to instability and increased pressures on those least able to handle them.

Well…I would be one of those ‘some.’ Except that your nativism is like the diffuse faith of a non-denominational Christian – any first worlder seems to qualify over everyone else. You have, as a UK resident, said you feel greater class solidarity with American tech and manufacturing workers than with their Indian or Chinese counterparts. If you squint really hard, this is compatible with concern for “pressures on those least able to handle them” maybe if you suppose that Indians and Chinese are unusually resilient. I suppose it’s also technically non-racial in character, though it probably wouldn’t pass a disparate impact type analysis. Although, I wonder. I’ve heard plenty of first worlders exhibit this kind of solidarity, but not, and it’s a curious exception, about Japanese jobs going to Korea or SE Asia.

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LFC 08.25.12 at 2:58 pm

Tim Worstall @199:
Manufacturing output has not fallen, but in the US manufacturing employment has declined and manufacturing has declined as a percent of GDP, I believe.
William Tabb, in New Politics (summer 2012), notes that in 1960 the largest employers in the US were GM, the Bell system, Ford, GE, and US Steel. Today the largest employers are Wal-Mart, Kelly Services (temp placement), IBM, UPS, McDonald’s, and Yum! (which runs Taco Bell, KFC, and Pizza Hut).

john c. halasz @194:
I’m inclined to think firms would have moved manufacturing to lower-cost areas of the world even if exchange rates had remain fixed. Weren’t changes in ease of transport (containerized shipping etc.) one of the driving forces? You have to assume capital controls so strict, istm, that no money at all could have been invested in overseas production facilities, and controls of that kind weren’t going to be implemented even under Bretton Woods.

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GiT 08.25.12 at 3:50 pm

But manufacturing as a percent of GDP, and manufacturing jobs as a percentage of all employment, have declined globally. And that’s the case in China, for example, just as well as it is for developed countries.

But I think that’s all orthogonal. Parts of the US have definitely deindustrialized, regardless of whether or not the global experience mirrors the US experience.

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Rakesh 08.25.12 at 4:10 pm

So what do you do when crossing a border means that a parent will have now access in the new country to medical facilities or resources to send back to the home country to reduce sharply the likelihood of a child dying before the age of 5?
*
Yet it seems that net migration to the US from Mexico has become near zero since the financial crash as the costs of illegal movement increase while the demand for labor remains weak. And then we find that immigrants probably pay taxes in excess of the monetary costs of the government services that they provide and often stimulate economic activity by the industries that they revive (meapacking in Iowa) and the demand that they create (David Card’s study), how are we to explain anti-immigrant politics except as symbolic politics?
*
We need to transcend the focus on the North as so much migration is from very poor or collapsing societies to only poor ones–from Haiti to the DR, Guatemala to the South of Mexico, Congo to Rwanda, Bangladesh to India.
*
Yes Simon Schama made an interesting point. What made America an integrated nation-state? The railroads. Who built them? Chinese-Americans. Their reward–the Chinese Exclusion Acts.

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Rakesh 08.25.12 at 4:14 pm

pay taxes in excess of the government services that they receive–a point that I see has been made above. There was a study done by UCLA researchers on this a few years back. A nice overview of the issues and research is Aviva Chomsky’s They Take Our Jobs and Other Myths about Immigration (may not be exact title); it is melodramatic but I do recommend Sin Nombre.
I look forward to reading Lant Pritchett’s piece. Thanks for the cite.

215

Stephen 08.25.12 at 7:27 pm

Chris Bertram @104
“there’s what justice requires, which isn’t a matter of opinion for voters or anyone else.”

Strewth. So in any case the just solution is not a matter of opinion, but entirely obvious?

Why do I suspect that the requirements of justice, being entirely obvious, will always and astonishingly coincide with the opinion of Chris Bertram?

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Chris Bertram 08.25.12 at 8:03 pm

Stephen: the fact that something is not a matter of opinion doesn’t entail that it is entirely obvious. (I’ve yet to read a comment from you that rises above the level of the Daily Mail. Please go away and don’t come back.)

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Watson Ladd 08.25.12 at 8:04 pm

Mao Cheng Ji: You need to provide a mechanism by which mass immigration to the Eastern Seaboard leads to the settlement of the West and the genocide. Given that supporters of one were often enemies of the other, I don’t think that’s the case. Furthermore, there were competing ideologies governing expansion: agrarian slavery in the South and free labor in the North. Sadly the US census for the years in question are woeful.

Note that the center of population of the US is only in Indiana by 1920. source. So the settlement in lands held by the Native Americans after 1830 was much less extensive then during the early 20th century, when immigration was effectively suspended.

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chris 08.25.12 at 8:09 pm

But manufacturing as a percent of GDP, and manufacturing jobs as a percentage of all employment, have declined globally.

Yeah, but isn’t this just Baumol’s cost disease running backwards? Manufacturing is easy now, so it doesn’t take as many people and resources to do it. (Output is still continuing to rise, as others have pointed out.) Education, health care, etc. are still hard, so it takes lots of people to provide them to an entire population.

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Mao Cheng Ji 08.25.12 at 9:08 pm

Watson Ladd,
the mechanism, not just in this particular case but in general, seems fairly obvious. When newcomers arrive en masse, they have no chance to assimilate, in the way some Leatherstocking character would. Soon they begin feeling resentment towards the natives: why do they own everything? why are they overrepresented at the top of the social pyramid? how come they get to control everything? And that has got to be a much stronger sort of resentment than the nativist sentiment. And if there is a lot of them, as many as the natives, and if they manage to unite under some common identity, the natives are in trouble. After all, it really is true that they inherited most of the stuff they own, and how is that fair, if it wasn’t fair for them to control the border simply based on the accident of birth? I mean, I don’t really have an opinion one way or the other, but it helps to understand where the logic leads…

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Watson Ladd 08.25.12 at 9:30 pm

Right, because immigrants have so famously failed to integrate in the US, or become successful. In fact none of the three branches of government have the children or grandchildren of immigrants in them. Our biggest investment bank is Cabot and Lodge, not some immigrant upstart firm by people with obviously German names. And we never see any immigrants in the best universities in the country.

We were just talking about this on CT a few days ago, with regards to the Supreme Court. Show me a historical case of resentment of newcoming immigrants leading to dispossession of the original inhabitants more recent then Attila the Hun, and I’ll admit you have something of a point, albeit a small, incredibly unlikely one. Otherwise I’ll conclude you haven’t thought a bit about this one. Mechanisms need to happen!

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rf 08.25.12 at 9:42 pm

“Show me a historical case of resentment of newcoming immigrants leading to dispossession of the original inhabitants more recent then Attila the Hun”

Texas? Palestine?

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Watson Ladd 08.25.12 at 10:29 pm

So why does California still have more generous Medicaid then other states?

223

Tim Wilkinson 08.25.12 at 10:53 pm

CB @198: Yes there is a tension between free movement and popular sovereignty, but it doesn’t strike me as an insurmountable one. The first liberal democracies had open borders, for one thing. And within large federal states (such as the US, Canada, even Russia) no-one would think that it is impossible to combine a high degree of devolved power of democratically governed sub-units with unrestricted internal movement throughout the federation.

1. It’s not just a question of formal ‘popular sovereignty’, it’s (also) a question of whether the relatively recent improvements in the conditions of the working poor and the unemployed in some countries are going to be salvaged and survive long enough to stand any chance of spreading farther afield, or whether instead globalised ‘laisser faire’ neoliberalism is going to carry all before it. Once that happens, the sideshow of electoral politics will not reconstruct the labour movement – and, among other things, the kind of direct action that was involved in building it is not going to work too well this time around. The view of unionised labour as ‘at the expense of’ the ‘excluded’ finds an application to migrant labour in pressure to reduce job security for citizens, so as not to ‘exclude’ non-citizen workers.

2. Regardless of whether the model of those ‘first liberal democracies’ is in fact something one would wish to emulate, it seems unlikely that they have much to tell us about current conditions and those in the near future.

And 3. if the analogy is with a federal system, what takes the place of the federal government – which is responsible for things like labour laws, most redistribution, etc.? Institutions like the IMF, the World Bank and, dare I mention it, the Bilderberg Group?

While you might be right not to suppose the problem insurmountable, we still, as Sen says in the same article quoted above, need to make sure that surmountable obstacles are actually surmounted. There is after all an extremely powerful constituency which is pretty well bent on keeping them unsurmounted, and if at all possible making them irreversibly insurmountable.

So what is the surmountation strategy? A strong international union movement doesn’t seem to be in prospect, and more pertinently in the first instance, certainly hasn’t been discussed here.

(Suggesting that the open borders policy will not actually have any significant effect on migration is not really an option here, since the policy is surely premised on the supposition that it will; that the status quo does indeed mean that people will be driven to leave their homes and communities in search of jobs. As piglet – and Sen – point out, migration is in many cases a fairly extreme response to what are therefore presumably fairly extreme circumstances; and as JW Mason points out, we need to ask why the necessary investment is not being made in migrants’ home countries. Will open borders encourage such development? Will it remove the incentive from capitalists to make it? Improve the likelihood that states will bootstrap their own industry without inward capitalist investment?)

—–

Rakesh – What made America an integrated nation-state? The railroads. Who built them? Chinese-Americans. Their reward—the Chinese Exclusion Acts. But if sovereign states are indeed under threat (with ‘open borders’ – moving the Mohamed of labour to the mountain of global capital – being one avenue of attack) and the prospect of full global ‘laisser-faire’ (corrupt) capitalism looms, exclusion from land and employment will devolve to private owners: the hundredth percentile (or the 0.1%, 0.01%…) will still be able to exclude people from its land, and from employment in its unregulated operations, at will, without limitation. And that does, on the current trajectory, appear to be the kind of future that is just around the corner.

One aspect of a full open borders policy, planned for by capitalists and workers alike, may be that economic migration becomes normalised; as the distinction between citizen and non-citizen, losing its basis in residency, comes to appear increasingly arbitrary, the possibility that the inequality will be resolved by levelling up rather than down seems a remote one. Instead we are likely to see the power of the global prole reduced further, with a One World Army of the unemployed on call at a moment’s notice to undermine any move by labour to claim part of the industrial surplus product.

—-

what do you do when crossing a border means that a parent will have now access in the new country to medical facilities or resources to send back to the home country to reduce sharply the likelihood of a child dying before the age of 5?

This is getting dangerously close to making some progress – treating migrant and transient employment as a real, fine-textured phenomenon rather than a single abstract concept. (The latter kind of approach underlies things like the right-wing propaganda/received wisdom that paints unionisation as an exclusionary measure that victimises the little guy. Unionisation is obviously different in this respect from immigration restrictions, which are exclusionarty – at least in the absence of adverse discrimination in hiring – and thus raise the hard questions under discussion.)

So this means we consider the difference between relocation and transient work; the related question of unemployment and other state benefits; the impact on communities from which migrants depart, and so forth.

—–

Sen on migration and the market: http://www.hindu.com/2006/12/21/stories/2006122107641300.htm

A sample of writing about migration which goes some way to addressing its realities: http://www2.warwick.ac.uk/fac/soc/wbs/research/irru/publications/recentconf/gm_-_ilera2012_3.pdf

(I’m not even suggesting these provide arguments against open border policies: at this point at least I’m more interested in realistic discussion than winning an argument. In fact if it should turn out that open borders were a good plan both politically and technically, even implemented on plutocrats’ terms, then so much the better. It’s not much fun being called a racist, after all.)

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john c. halasz 08.25.12 at 11:04 pm

LFC @ 211:

The point of the Bretton Woods arrangement was a) to encourage international trade in goods, while discouraging free flows of financial capital (and the BOP imbalances and crises that result), and b) correspondingly, to allow each country control over its economic choices, in terms of fiscal, monetary and regulatory policies, to suit its own conditions.

Ideally, international trade can be mutually beneficial, while allowing each country to choose its own developmental path within the overall international division of labor at its given point of development. And that needn’t entail de-industrialization, at least for trade-related reasons, (though shifts in sectoral concentrations due to productivity differentials would occur).

The post-Bretton Woods system of floating exchange rates resulted in the stagflation crisis of the 1970’s and the rise of the neo-liberal “regime of accumulation” as its resolution, with MNC sponsored globalization and financialization, specifically aimed at restructuring corporate oligopoly rents through arbitraging FX differentials (rather than based on productivity improving real investment). There was no perfect foresight and perfect coordination in the process, which is only clear in retrospect and occurred in successive waves, but there is also no simple inevitability, independent of policy choices by dominant “players”, as you seem to imply, which amounts to a kind of reverse teleology.

Shipping containerization was a sharp productivity improvement and thus cost reduction in transport, but it first occurred around 1960 and reduced transport costs don’t by any means explain the subsequent globalization as “inevitable”, (since it could just as well have supported increased trade in goods without disinvestment in production). More relevant in the technology-change department was the successive waves of development in IT and telecom technologies, which supported the outsourcing strategies of MNCs and Wall St., (since it’s less the reduction in costs than the maintenance of control that’s the issue, and thus the reduction in the costs of control and not transport).

If anything, the counter-factual of the maintenance of a balanced system of FX and trade would have increased the substitution of capital for labor,
“automation”, domestically rather than de-industrializing through off-shoring and so there might have been comparable industrial job losses from other sources. But the value-added would have been retained domestically and thus be subject to domestic policy regimes to correct domestic imbalances, rather than stove-piping gains in wealth and income to the top, as has persistently occurred under neo-liberalism.

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Mao Cheng Ji 08.25.12 at 11:51 pm

Watson Ladd asks: “So why does California still have more generous Medicaid then other states?”

I don’t know why, or what this question may have to do with the topic being discussed, but here’s a relevant except from the wikipedia article on California:

“In 1848 the non-native population of California was estimated to be no more than 15,000. After gold was discovered, the population burgeoned with U.S. citizens, Europeans and other immigrants during the great California Gold Rush. By 1854 over 300,000 settlers had come. [...] Like in other states, the native inhabitants were forcefully removed from their lands by incoming miners, ranchers, and farmers. [...] As a result, the rise of California brought great hardship for the native inhabitants. Several scholars and Native American activists, including Benjamin Madley and Ed Castillo, have described the actions of the California government as a genocide.”

Clearly the “incoming miners, ranchers, and farmers” who forcefully removed “the native inhabitants from their lands” were, for the most part, those you (and others. Hey, including me, I suppose) tend to sympathize with: your tired, your poor, your huddled masses yearning to breathe free. And yet, under these conditions, a combination of open borders and strong incentives to migrate, they, apparently, went on to perpetrate a genocide, or something close to it.

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Watson Ladd 08.26.12 at 12:28 am

Mao, there is a jump here. Chinese immigrants to SF were coming to do manual labor, not buy expensive haciendas in the hinterland. If we define the borders as the US, then the case isn’t made. If we define the borders as the Native American regions, then we have the issue that this isn’t immigration but rather invasion: the settlers came in expecting to bring their laws and customs with them. By definition economic migrants do not expect to bring the bad economic policies with them also!

Far more likely is that immigrants are resented, discriminated against, and subjects of violence precisely because of their success. It’s what happens to Asians today, and Jews before them. It’s why Malaysia is separate from Singapore.

john c. halasz: The Eurodollar market came into being before Bretton Woods ended. Restricting capital flows simply wasn’t working long before the collapse. The crisis of the 1970’s wasn’t caused by Bretton Woods falling apart: the chronology is wrong, and the direction of the shock is in the wrong direction. If anything Bretton Woods, by constraining central banks, caused the shock. Lastly, international trade was restricted several times, beginning with Eisenhower, to keep Bretton Woods in place.

Adopting Bretton Woods means handcuffing the central bank, which is not a good idea.

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rf 08.26.12 at 12:39 am

Liberalisation of Texan immigration laws led to an influx of North Americans and to the eventual secession of Texas from Mexico. Something similar with Jewish immigration to Palestine. There are two examples, no?

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john c. halasz 08.26.12 at 12:52 am

@226:

I.C.U./Bancor. Triffen dilemma. The rest is just word salad, not worth engaging with…

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Watson Ladd 08.26.12 at 12:59 am

Given how well the Euro is doing I’m rather pessimistic about currency union. Restricting capital movements is great in theory, but inevitably comes apart as shown by the Eurodollar market. And the advantages are unclear: domestic capitalist and international capitalists are both capitalists.

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John Redican 08.26.12 at 3:13 am

This debate is all very quaint and intellectually stimulating. I assure you there would be blood all over the streets.” Resentment” doesn’t even begin to address the reaction if millions of heavily armed Americans were confronted with the prospect of their pay being slashed to accomodate capitalist utopians.
Far better to do this gradually, through NAFTA and similar trade agreements.
The frog will never notice the slowly increasing temperature in the pot, until it’s too late, of course.

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Watson Ladd 08.26.12 at 3:27 am

John Redican: In the nineteenth century mobs went around killing Catholic immigrants who were seen as taking jobs. Is that the sort of reaction you want to endorse? And it’s not even clear immigration decreases wages: immigrants spend more on US goods then if they stay home.

As for the decline in wages since 1973 trade is only a small factor. The decline in unionization, together with a policy environment against income redistribution plays a significant role as well.

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John Redican 08.26.12 at 3:48 am

Watson Ladd
Who said anything about endorsing?
Open borders, to me, ends nationhood. Some might think this would be a good outcome.
I simply think our country should not be expected to solve all the world’s problems, especially when ours are so acute.

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Andrew Cady 08.26.12 at 5:45 am

Free immigration sounds great for debtor nations. The citizens can all leave. Then nobody has to pay.

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Daniel 08.26.12 at 7:17 am

Can the defense of wilderness, big massive, stretching, “useless” wilderness, not “the environment”, elbow it’s way into this conversation?

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SR819 08.26.12 at 9:16 am

I simply think our country should not be expected to solve all the world’s problems, especially when ours are so acute.

I think this is true for the UK as well. There’s no question that British imperialism has had a lot to do with certain developing countries being poor, but the empire ended over half a century ago, and to keep asking developed countries to single handedly bring developing countries out of poverty is not realistic. Indeed, if the demand was that we should tax the rich until the pips squeak, and then use that revenue to aid developing countries, I’d be all for it. However, it seems some on the left want to lift up the global poor on the backs of the “first world poor”, which is exactly what the capitalists want and is not a progressive idea.

And you cannot argue that some developing countries’ leaders also have to take responsibility for the fact that there is massive poverty and inequality in their nations. Ramachandra Guha, the Indian historian, has admitted that a lot of the problems India face is due to it’s own corrupt officials. This is not to undermine the role of empire as an explanation for the poverty in developing countries, but to use our imperial history to justify policies that will hurt the first world poor cannot be right. It’s not as if the working class in the UK had anything to do with the British Empire, they were simply pawns being used by their capitalist exploiters (the East India Company for example) in the same way the Indians were.

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rf 08.26.12 at 10:00 am

“I simply think our country should not be expected to solve all the world’s problems, especially when ours are so acute.”

Assuming your American, I don’t think anyone expects you to. (Or wants you to try) I think you’re misunderstanding what generally drives immigration policy, which are business interests rather than attempts to save the world.

“And it’s not even clear immigration decreases wages”

There’s plenty of evidence Watson, see George Borjas in link 152. Its sector specific, but some wages will generally decrease.
There’s also plenty of evidence to suggest that Texas and Palestine fit your request for examples “of newcoming immigrants leading to dispossession of the original inhabitants,” would you agree?

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Chris Bertram 08.26.12 at 10:56 am

_ I think you’re misunderstanding what generally drives immigration policy, which are business interests_

If business interest were in charge, then both the US and the UK would have much more liberal immigration policies than they actually have. In the UK, for example, business has been massively annoyed at the way in which the new rules introduced by the coalition prevent them from hiring whom they want.

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LFC 08.26.12 at 12:27 pm

john halasz @224:
thanks for the reply. I did not mean to imply inevitability and that policy choices did not matter. (There are some things I’d need to read on the whole ‘end of the golden age’ question before commenting further.)

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MPAVictoria 08.26.12 at 2:24 pm

” In the UK, for example, business has been massively annoyed at the way in which the new rules introduced by the coalition prevent them from hiring whom they want.”
I simply don’t believe that in a country of 60 million people there is not one person who is qualified for the position being staffed. They just want to be able to import people who they can pay less. Yay for wage suppression!

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bianca steele 08.26.12 at 2:41 pm

@237
I have some sympathy when Microsoft wants to hire someone their employees already know who doesn’t have a US work permit, or when they don’t want to lower their standards, or when they don’t have time to do training just now, or when they want to hire someone fast and need a larger applicant pool. I don’t find it at all as easy to be sympathetic when Tata wants to increase the size their US workforce without enlarging their own applicant pool or business model, though.

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SR819 08.26.12 at 2:52 pm

@MPAVictoria
The CBI (Confederation of British Industry) are extremely transparent yes. They frequently bemoan the so called lack of quality of the UK workforce (and they’ve been joined by some right wing Tories recently) even though our universities are some of the best in the world, and we have a large pool of unemployed graduates with higher level degrees. For example, the unemployment rate of Computer Science graduates is higher than average for graduates, and yet companies bemoan that not enough UK graduates are taking STEM subjects. Of course, that’s a convenient lie, as the real reason for the CBI’s complaint about immigration restrictions is that it cuts of the supply of cheap labour from developing countries who can be employed on lower terms to increase their profit margins.

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Chris Bertram 08.26.12 at 2:54 pm

With the company or the individual Bianca?

People find it easy to sympathize with the highly educated university graduate who can’t get a work permit to join the faculty/high tech team/whatever …. but don’t find it easy to sympathize with the poor unskilled person who can’t come to pick fruit and vegetables? After all, the commenters at Crooked Timber might be friends with the first sort of person, but not with the second.

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purple 08.26.12 at 2:54 pm

Open borders are impossible in capitalism, in terms of the way it has historically developed. The nation state is absolutely vital to the bourgeoisie for the reasons Ha-Joon Chang alluded (though not for the benefit of bus drivers.)

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bianca steele 08.26.12 at 3:32 pm

Chris,
The part of Tata’s business in the US that I know about is consulting, and usually involves bringing Indian computer programmers to the US, either contracting them to US-based companies or doing Andersen or IBM style consulting, and sometimes hiring them again in India after they’re trained. If they bring farmworkers to the US, I didn’t know about it and that wasn’t what I was referring to. They and the other similar big consulting firms tend to snatch up the skilled-worker permits on the first day they’re issued. The people they hire? They deserve to have jobs, but I don’t think it makes them or anyone else better off to create a quasi-feudalistic system where people are taken far from home and totally dependent on a third party.

I have some sympathy, also, for say, Greek workers who’d like to make beds on Cape Cod for the summer but can’t get work permits. I have a little less for Irish and French college students who’d like the same jobs, however. Is it really the case that US college students can’t do the same job adequately, though? Or are they saying that migrants have lower expectations and put up with worse treatment?

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Watson Ladd 08.26.12 at 3:36 pm

US college students would like to do the same job in Europe. This is why temporary travel/work visas exist. The assumption being made here is that migration is bad and people would prefer to do the same job where they live. I doubt that that is universally true: historically migration has been the result of political issues as well (see Pogrom and Irish Potato Famine for details)

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MPAVictoria 08.26.12 at 3:37 pm

” Or are they saying that migrants have lower expectations and put up with worse treatment?”

Ding ding ding! We have a winner.

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bianca steele 08.26.12 at 3:38 pm

I’ve known plenty of South Asian and East Asian and European and Haitian engineers with “regular” jobs, so it certainly isn’t impossible to get a work permit. At one point, there were equal numbers of permits for “stars,” top manager, middle managers, skilled workers, and unskilled workers–so obviously it’s easier to work in the US if you are closer to the beginning of that list. But that requires having a job or an offer ahead of time and there are some difficult and expensive requirements.

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Bruce Wilder 08.26.12 at 5:56 pm

“Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen!”

I’m not sure our hopes for what might be possible in the millenium after the Second Coming, or the fullest development after the Revolution, or whatever, provide much practical guidance for migration control policies, or economic development, or economic relations, generally.

When our principles, ideals and values are so precious, and so brittle, that we cannot admit a realistic appraisal of conflict and cost, even in speculation, when we are ready to defend only a null hypothesis of “freedom” as an absence of rules rather than a choice of rules, we are not ready for politics.

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LFC 08.26.12 at 6:11 pm

B. Steele:
I have a little less for Irish and French college students who’d like the same jobs, however. Is it really the case that US college students can’t do the same job adequately, though?

Heard a relevant piece on this the other day — P. Solman on PBS NewsHour, I think (though i was listening to it on radio, so i didn’t get the visuals). The issue was: do foreign college students and other young people taking summer jobs deprive some US kids of work? And the conclusion: possibly/probably “but” — with the “but” being someone from the State Dept defending the program on grounds that it improves the image of the US abroad, etc etc. It’s apparently a PR and cultural education thing, basically, and maybe there are reciprocal arrangements w some other countries. Not sure on that.
And also there were US employers w different views of the visa program. I’m sure one can find the piece on the NewsHour site.

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Stephen 08.26.12 at 7:25 pm

Chris Bertram @216

I appreciate your politeness in asking me to go away, rather than shouting YOU ARE BANNED. May I take advantage of your courtesy to make one more post, explaining why I have a serious problem with your earlier words?

You are in favour of a considerable, but not complete, relaxation of immigration controls. Fair enough, that’s your opinion, and you are free to argue in its support. But other people are equally free to hold other opinions and argue for them. Some may hold that immigration controls should be completely abolished, or relaxed even more than you would wish, or less than that, or left much as they are, or made more rigorous.

My own not very important feeling is that any of these points of view may be more or less justified, depending on time, place, and circumstances. In Hawaii in the 1880s and 1890s, for instance, justice could have demanded extremely rigorous immigration controls.

But what astonished me is that you wrote, about the relaxation of immigration controls, ” there’s what justice requires, which isn’t a matter of opinion for voters or anyone else”.
I find this alarming. Justice is very often a matter of opinion: you will have noticed that judgments by courts with more than one judge are often accompanied by something from the minority which is called a dissenting, er, opinion.

You appear to say that your preference is what justice requires, and nobody else has any right to think otherwise. If that is so, it seems to me you are implying that anyone who disagrees with you is either ignorant, stupid or actively malicious.

I don’t often look at the Daily Mail, and I suspect my low opinion of its quality is much the same as yours. But I do think, from the little I have seen of its articles, that the attitude you seem to be taking – nobody else has the right to disagree with me – is very far closer to the Daily Mail than anything I have contributed.

If I have misunderstood you, or if you wish to rephrase what you have written, I hope you will be able to make a response more constructive than “Please go away”.

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rf 08.26.12 at 8:58 pm

@chris

Fair enough, although I didn’t mean to imply that business interests are ‘in charge’, just that they drive current immigration policy to a greater extent than post imperial guilt or multi-cultural Utopianism

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rf 08.26.12 at 9:21 pm

@Bianca 244

Why would you have more sympathy for Greek students looking for a job in cape Cod than Irish or French?

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bianca steele 08.27.12 at 12:09 am

rf:
I didn’t mention Greek students. I think hotel maids’ jobs should go to unemployed hotel maids, not to students, in general. I don’t think there’s such a surplus of jobs that hotelkeepers have to routinely advertise abroad. There may be, as the OP suggests, a right to look for work in other countries if there’s extra jobs there and no work at home, especially for people without other resources. I don’t think there’s a similar right for middle-class people to take gap years working menial jobs in vacation spots in areas with high local unemployment (or for visas to be made available to them for the purpose).

(In the past these jobs were often taken by local college students until–in part–the available students were no longer seemed enough like people who would vacation there.)

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piglet 08.27.12 at 8:21 pm

“In the UK, for example, business has been massively annoyed at the way in which the new rules introduced by the coalition prevent them from hiring whom they want.”

I don’t know anything about the specifics of this debate but if experience is any guide, capital will always complain that government regulation prevents them from doing what they would like to do. You can’t take that as a guide to reality, ever.

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Random Lurker 08.28.12 at 3:02 pm

There is a point that I think is important, and that I think has been overlooked in the thread, so I’ll try to put it forward in a better argued way than I did at 99.
Many people believe that immigrants “steal” jobs from natives, but this idea implies that there is a fixed number of jobs in a country, so that if, say, an Albanian gets a job in Italy, some Italian loses that job.
But the idea that there is a fixed amount of available jobs is a nonsense in itself. For this reason, the comparison of European immigrant in America who displaced natives in order to get land (which is a limited resource) with, say, Albanians who come to Italy in order to get jobs (which are neither finite nor a resource) makes no sense.
This confusion comes, IMHO, from the weird semantic habit of speaking of employers who “offer” a job, as if they were the supply side, and unemployed who “search” a job, as if they were the demand side. In fact it is the opposite: the unemployed offer labor power and are the supply side, while businesses pay for the labor and are thus the demand side, although in a situation of oligopsony.
In fact underpaid immigrants, almost by definition, produce more than they consume, and the difference enters in the pocket of someone who lives in the host country. In this sense the idea “the immigrants will destroy our welfare system” seems stupid, the real story is “the employers who pocket the fruit of the wage arbitrage don’t pay enough taxes on their profit to make up for the lost taxes from wages”.
Thus the whole problem comes from the fact that the immigrant, generally, will settle for worse wages than natives.
But often strict immigration laws force immigrant to even worse positions, for example suppose that the Albanian of my example comes legally to Italy, maybe marryes with an Albanian girl who also works in Italy, then loses his job (and with it his visa). He will not like to go back to Abania, but also will have problems to find jobs here because he became an illegal, thus will be forced to work “in black”, for lower net wages, whithout paying taxes etc..
In this example the strict immigration rules are a disadvantage to the native Italian worker, who anyway will think that the Albanian simply shouldn’t be here and will vote Lega Nord (hence, stricter immigration rules and so on).

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Norwegian Guy 08.28.12 at 5:01 pm

“If business interest were in charge, then both the US and the UK would have much more liberal immigration policies than they actually have.”

Businesses wants to be able to employ whoever they want to whatever wage they want to offer, but they also want to pay lower taxes. So they have no reason to want to accept more immigrants that they, rightly or wrongly, think will be significantly more likely to be outside of the workforce (on welfare, unemployment or disability insurance etc.) than the rest of the population. For instance, I doubt business interests in the US and the UK are pushing for more liberal asylum policies, but rather want to be able to pick and choose the immigrants that they want to bring into the country based on their own needs, not the needs of the immigrants themselves.

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rf 08.28.12 at 5:53 pm

Bianca

Okay, I see your point. Just read your initial post a little quickly I think

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Maggie 08.28.12 at 5:53 pm

People find it easy to sympathize with the highly educated university graduate who can’t get a work permit to join the faculty/high tech team/whatever …. but don’t find it easy to sympathize with the poor unskilled person who can’t come to pick fruit and vegetables? After all, the commenters at Crooked Timber might be friends with the first sort of person, but not with the second.

Wrong, at least in this corner (although in our case it has been sewing rather than vegetable-picking). I don’t have much to say to the subject at hand, but I’m always personally irritated by the assumption that at or above a certain level of discourse, discussion can proceed as though the poor are entirely elsewhere. As though ability to follow an argument varies with social status, or the job market invariably highly rewards literacy and intelligence. If only!

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johne 08.28.12 at 6:49 pm

I’m late to the discussion, and haven’t read all the above, but I’m surprised that my browser’s search feature finds no mention of Ecuador, whose borders are open almost to the degree that we associate with the nineteenth century. The current president, Rafael Correa, seems to be idiologically committed to the concept.

According to Ecuadorian friends and in-laws, results have been mixed: in addition to the skilled and affluent, who have always had an easy time gaining residency in the country, there has been an influx of the poor, seeking opportunities that are lacking at home. Quito now has neighborhoods largely populated by Cubans (Havana apparently takes a benign view of emigration to a nominally “socialist” nation), Koreans and even West Africans.

Rightly or wrongly, a rise in the crime rate has been blamed on the influx, and demonstrations like the rally a while back by Cuban immigrants, blaming Correa for “bringing us here and not giving us a job” indicates that there is some desperation among a segment of the arrivals.

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