January 7, 2013 at 11:18 am #17491samghebParticipant
Been reading some of the articles by immigration critics on sites like Vdare and they tend to claim that immigration is a burden rather than benefit. Now in that assesment they also add the cultural/social cost but here I want to know about the economic cost in a welfare state such as America.
One of the famous labor economists, George Borjas, claims that there is no benefit and certainly not in the short term. Friedman said that you couldn’t have free immigration in a welfare state.
Here is an interview with Borjas by Peter Brimelow:
http://www.vdare.com/articles/george-borjas-on-the-medias-immigration-economics-people-now-are-getting-that-its-complete-January 8, 2013 at 12:07 pm #17492jmherbenerParticipant
The argument that immigration is an economic loss to society because it lowers the wages of workers who compete with immigrants is incorrect. If it were true, then population growth from any source, foreign or domestic, would lower social well being. Social well-being would also decline if people in one country integrated their economic activity with people in another country. In other words, free trade would lower standards of living..
Extending the division of labor results in greater physical production. Reallocating resources from lower to higher valued uses results in higher-valued production. Accumulating capital results in higher-value goods being produced in lower-cost ways. These economic principles transcend political boarders.
While the dynamic of the market improves the economizing of resources for society at large it doesn’t and can’t guarantee that each person has a higher standard of living after each adjustment than he did before. Entrepreneurs who lack the foresight to anticipate declines in consumer demand for their products will see their incomes decline as entrepreneurs with superior foresight attract consumer demand. Workers for inferior entrepreneurs will see their incomes decline if they choose to remain in their employ. The only way to prevent such changes in income patterns is to destroy the market altogether.
But this doesn’t seem to be the complaint of the anti-immigration economists, In other words, they don’t seem to be merely apologists for some special interest group, e.g., they want protectionist measures designed to prevent immigrants or foreigners in their own country from competing against domestic garment workers to help out the domestic garment workers even though society at large would be worse off.
They seem to be claiming that by lowering wages in certain labor markets an influx of immigrants lowers the average standard of living in the country. But that cannot be the case in terms of physical production of goods, i.e., standard of living, as long as immigrants produce at least as much as much as they consume. With an influx of immigrant garment workers, for example, wages will decline for all garment workers, but the physical production of domestic garment workers who remain in their jobs will not decline. So if the immigrant workers produce at least as much as they consume, then the average standard of living will not decline.
And if what the anti-immigration economists’ seem to be claiming was correct, then it would be an argument against free trade and not just immigration. If foreign wages for garment workers are lower than domestic wages, then capitalists will invest in foreign countries which will lower the demand for domestic garment workers and hence, their wages. The result, they claim, are lower average wages domestically. But, again, this argument conflates monetary with real wages. Average standards of living will rise for workers in society at large even though domestic garment workers’ average share of goods produced in society might be lower.January 8, 2013 at 6:04 pm #17493maester_millerParticipant
What if the assumption of immigrants producing more than they consume is not true? For example, a poor immigrant working under the table making less than minimum wage might quite possibly be receiving (and likely consuming) welfare and other government entitlements well in excess of what they earn in their under the table job.
Whether or not this is the case for most immigrants, I believe this is what most anti-immigration critics have in mind. The very poor worker who utilizes the generous welfare programs of developed nations and ends up consuming more than they produce.January 8, 2013 at 8:41 pm #17494jmherbenerParticipant
If immigrants come to America and go on welfare, then they draw down average standards of living. This is straight forward and I don’t think even immigration proponents deny it. But the anti-immigration labor economists seem to be claiming that immigrants lower average standards of living in America just by lowering the market wage in labor markets they enter.January 8, 2013 at 10:45 pm #17495gborrego1991Member
Russ Roberts had an Econtalk espisode where he discussed these issues with Bryan Caplan – http://www.econtalk.org/archives/2010/10/caplan_on_immig.html
Regarding welfare, Caplan claims that increased immigration could actually reduce our current welfare state. I suggest you listen to the talk because he can explain the details more eloquently than I can.
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