source: tradingeconomics.com
I’m not a Trump supporter and I support free trade but there’s something about Donald Boudreaux’s most recent post at TribLive that got my Irish up. In the post he asks a number of questions. Here’s the first:
If you’re like most Americans, you are descended from immigrants who arrived on these shores before Uncle Sam imposed annual quotas on the number of immigrants who could come here legally. Do you believe that America would be a better place today had your ancestors been kept from immigrating here by numerical quotas on immigration? If not, why do you believe that America in 50 or 150 years from now will be a better place if we today impose even tighter restrictions on immigration?
I can answer that. My most recent immigrant ancestors arrived here just about 150 years ago, disembarking at the Port Of New Orleans in 1865. The marginal product of labor in the United States was rising and would continue to rise along with incomes for more than a century.
That is no longer the case. Median incomes have actually decreased over the last ten years and marginal productivity has stalled. Conditions are different than they were 150 years ago and however they change in the future the way things look today it appears unlikely that the marginal productivity of labor will rise sharply. In short we don’t need more workers and bringing more in is more likely to depress the wages of the workers already here than it is to result in an improvement in the lives of those already here.
Additionally, I think I would claim that there is a cost to be associated with assimilating a new immigrant into a society. It’s cheaper to assimilate another English, Protestant immigrant into a society of mostly English Protestants than it is to assimilate an English-speaking Irish Catholic and it’s cheaper to assimilate that Irish Catholic than it is to assimilate a non-English speaking Italian Catholic or a non-English speaking Eastern European Jew. It’s cheaper to assimilate an Italian Catholic or Eastern European Jew than a non-English speaking illiterate Muslim Somali. And so on. There is a point at which the cost exceeds the benefit and I think that the empirical evidence supports the idea that we passed that point long ago.
I’d like to ask Dr. Boudreaux a few questions.
- Assume completely free trade and free-floating exchange rates. How do you explain the graph at the top of this post? If you can’t, then you can’t defend our present trade on the basis of free trade. How can such an imbalance persist indefinitely?
- Aren’t the net effects of such a persistent trade deficit that we export jobs and import deflation? Is that good?
- Three merchants are shipwrecked on a desert island. All they have to trade is their hats. In the absence of borrowing and lending or the discovery of some other resource, how can one merchant run a persistent deficit with another?
- Imagine an economy in which there are just two jobs. Entry into one job is limited by law and the number of people holding it is capped and the wage is subsidized by the government while there is free entry into the other job, no cap, and no subsidy. All other things being equal wouldn’t you expect wages in the first job to rise and wages in the other job to fall?
Dr. Boudreaux assumes that before there were numerical quotas on immigration that there were no restrictions on immigration, and this itself is a complex subject because individual states and colonies differed on their approach. For example, the Know-Nothing Party advocated with some success three common restrictions on immigration during the antebellum period: (1) lengthening the residency requirement for citizenship, or at least the right to vote (by up to 21 years IIRC); (2) mandating public education by cities, including learning the King James Bible; and (3) alcohol prohibition. The relationship btw/ these things was assimilation. Citizenship gave people access to the courts, and rights to property, liberty of person and conscience.
Earlier the Federalists had required 14 years to be eligible for citizenship as one of the provisions in the Alien and Sedition Acts, which further authorized the President to deport aliens at his discretion without any procedural safeguards. Most of the law was repealed by the Republicans, but primarily under the view that States were the best arbiters of which foreigners are unable to care for themselves or are agents of a foreign power to be imprisoned or removed. As a practical matter states and colonies with labor shortages had more liberal naturalization laws, thus encouraging population flows to where opportunity existed. (Probably why Dave’s ancestors arrived at the further port of Orleans, which had better access to the booming cities of the river valley.)
It costs far more to rear the progeny of the Amerikan breeders than to assimilate a shovel-ready Somali or Latino. Canada, New Zealand and Australia favor the shovel-ready.
Well, whats wrong with putting up a wall, physical, virtual, legal, and then using it as a way not to prevent immigration, but to screen immigrants in the toughest possible sense. You run our gauntlet, welcome home hombre. You have to be young, smart, fast, tough.
As to the questions, I assume from Steve Verdon’s previous comments on this thread (if not OTB) are that “jobs” is not a relevant consideration in trade, which is about the exchange of goods and services. Perhaps, but I don’t think its politically realistic, and if you want to live in a country in which “the people’s” preferences are the concerns of the leaders, it matters. And the ultimate effect of imbalance of trade would appear to be an eventual equilibrium where the American consumer is rendered a pauper and trade-flows reverse, benefiting neither Americans nor their dependents. Perhaps the paupers will vote for a race-to-the bottom in terms of reducing the minimum wage or reversing occupational safety standards. Or perhaps the paupers will vote for a dictatorship of the proletariat.
Frankly, though the current trade discussion IMHO is way too over-dramatized, as if all trade is dependent on the TPP. This is an obvious rhetorical posture.
Prior to 1965, almost all the immigrants were white Europeans who shared many cultural characteristics. Immigration today is largely from nonEuro countries with radically different cultures. Their IQs are much lower, too. Moreover, they are coming to a high tech economy without any relevant skills.
“Do you believe that America would be a better place today had your ancestors been kept from immigrating here by numerical quotas on immigration? ”
Strange question considering my direct paternal ancestor “came” to the US as a prisoner of war in the 1650’s after he was captured during the Battle of Worchester.
You and PD bring another good point to mind, Andy. Here’s my modest proposal. Open federal lands up for homesteading. Allow any number of immigrants to come here as long as they settle on the newly-opened federal lands. If they leave their homesteads, deport them. No publicly-funded education, pensions, healthcare or other benefits. Ever.
I’m sure such a program will prove popular but those were the conditions faced by the immigrants here 150 years ago. The one benefit of such a program is that it should shut up people who make specious historical arguments for unlimited immigration.
When you spend the money that should be used for capital investments on imported goods because you do not produce any real goods, you might have a problem, but what do I know.
A less Swiftian modest proposal is that the U.S. should not actively fund programs that make immigration easier, such as the diversity visa program and the loans for immigrants to pay for their transportation and start businesses. Stop using U.S. embassies as immigration offices. I don’t know if this would change much, but the government did not have an active role in encouraging immigration over 150 years ago that it does today, and generally it was difficult and costly to migrate.
… disembarking at the Port Of New Orleans in 1865. …
The Irish, Italians, and Germans make up (or made up) a good part of the city. I am not sure if it was the Irish or German side, but either way, the French Creoles would not have considered them much more than animals. They would not have been welcome in the French Quarter, and by “not welcome”, I mean “beat within an inch of their life”. The French Creoles hated Americans, and while not Americans, they were not creoles (native born) and not French.
(In New Orleans, a median is called a “neutral ground” because there was a large median between the French Quarter and the American part of town, and this is where they could meet to do business – on the neutral ground. Otherwise, being caught in the other’s area would result in a beating or death.)
Socially, your ancestors would have ranked with or slightly higher than the Free People of Color. The Black Creoles would have been at the top of the social order. Prior to the Louisiana Purchase, the Free People of Color had substantial legal rights, and many of them were property owners which included owning slaves.
The Americans were kind enough to rectify this flaw. You all are to blame for David Duke and his ilk. New Orleans was more progressive than today’s Progressive de facto segregationists. In New Orleans, David Duke would have been using the servant’s entrance with the Native Americans, Irish Catholics, freed slaves, Haitian runaways, and Black Creoles, but he would have had to stand aside for the Black Creoles. Hell, he would have had to use the servant’s entrance to the Black Creole’s house, and he had better not forget to remove his hat.
Instead, we get your trash, and by the way, no New Orleans or Louisiana politician has ever done or even been accused of anything near the Clinton scale of corruption.
My family did not remain in New Orleans. They immediately got on a steamboat, traveled up the Mississippi and Ohio, and settled in the vicinity of Louisville.
I figured as much, but I got tired of writing about money. Actually, I got tired of pressing the Submit button.
I used this as a jumping off point for something different, and if anybody is interested in the money angle, there is my other comment.
Meh. We still manufacture a lot of stuff, we just don’t use many people to do it.
http://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28
Steve