Sunday, March 26, 2006

Should They Stay or Should They Go?

I think this may be the best protest poster I've ever seen. It captures very well the problem of dynamic inconsistency that plagues any attempt to rationalize or improve the nation's immigration laws. The full article reports on the 500,000 people who protested in Los Angeles against legislation passed by the House that:


[W]ould make it a felony to be in the U.S. illegally, impose new penalties on employers who hire illegal immigrants, require churches to check the legal status of people they help, and erect fences along one-third of the U.S.-Mexican border.
It further quotes the President in a way that illustrates the problem quite succinctly:

"America is a nation of immigrants, and we're also a nation of laws," Bush said in his weekly radio address, discussing an issue that had driven a wedge into his own party.
I start from the basic premise that a nation needs to define its borders and establish the rules for who is a citizen and who is not. Once those borders and rules are set, some people can be identified as being in the country illegally. In order to discourage illegal immigration, the nation's laws must promise severe punishment for those who are so identified. But here's the rub. Once an illegal immigrant has become an otherwise law-abiding resident, the nation should provide as much support to that person as possible. And once the illegal immigrant has a child in this country, all bets are off. Say what you want about the woman in the photo, the kid poking her in the eye is innocent in all of this and we do such children no favors by deporting or jailing their parents.

I am convinced from having worked on this briefly toward the end of my time at the CEA and from the President's remarks that the administration has its heart in the right place on this and is trying to make some progress on a very challenging issue. There are two parts of the President's rhetoric that I continue to dislike. The first is embodied in this statement from the radio address:
Finally, comprehensive immigration reform requires a temporary worker program that will relieve pressure on our borders. This program would create a legal way to match willing foreign workers with willing American employers to fill jobs that Americans will not do. [Emphasis added.]
That last phrase is a decidedly non-economic statement. Americans will not do these jobs at the prevailing wages. The appropriate response is to let the wages rise, so that the market clears without resorting to workers from abroad. That means that more Americans will do them at the higher wage and that fewer employers will demand the services. That's the way we deal with other markets--I see no reason why we should systematically undermine the wages of low-skilled workers in urban and border areas by refusing to enforce immigration laws. So I disagree with the assertion that reform should involve a guest worker program specifically to allow such jobs to be filled in some exceptional way.

The second issue is whether any reform is perceived is an amnesty. Here's the excerpt from the radio address:
One thing the temporary worker program would not do is provide amnesty to those who are in our country illegally. I believe that granting amnesty would be unfair, because it would allow those who break the law to jump ahead of people who play by the rules and wait in the citizenship line. Amnesty would also be unwise, because it would encourage waves of illegal immigration, increase pressure on the border, and make it more difficult for law enforcement to focus on those who mean us harm. For the sake of justice and for the sake of border security, I firmly oppose amnesty.
Okay, I oppose amnesty as well, for all of these reasons. But if we oppose amnesty, then we haven't addressed the twelve million people who have a version of the story that the woman in the picture is trying to tell.

So, as the House has done, we have to lead with the punishments. I would leave the churches out of it, at least at the start. I would start with extreme fines for employers caught violating the law--fines that are several orders of magnitude greater than any economic benefit that could be gained by hiring illegals at a lower wage than citizens. This applies to large employers and household employment of domestic workers alike. My next targets would be the smugglers who bring illegals to this country and anyone found forging documents that establish citizenship. Jail time, severe and mandatory. I think that laws to deny illegal immigrants access to driver's licenses and other non-essential benefits of citizenship are generally a good idea.

That's about as much prevention as we can do without looking to deport moms with kids. I don't think there is much we can do on that margin, except to deport those who are apprehended if doing so does not jeopardize their children. But most illegals will not likely be apprehended, because they don't break any other laws (and there's nothing beyond lip service about devoting more resources to doing so in the radio address). Those who are here are probably here permanently, unless they leave voluntarily. So there are two more steps we can take.

The first is to work on the border. I have no problem with fences. I am willing to pay taxes to support the increases in border security required to keep as many illegals out as possible. Let the problem get no worse than it currently is. The second is to increase the limits on legal immigration. Who needs the complications of a guest worker program? We are unlikely to enforce the exit requirements, and I see no reason to have two classes of resident formalized in this way. And perhaps a greater pipeline of people coming in legally and enjoying the benefits of citizenship would be the inducement necessary to get those living as illegals to change their status.

16 comments:

Anonymous said...

"to fill jobs that Americans will not do."

This is a prevalent way of thinking among many. According to this thought process, some people do not want to work. Larry Kudlow may have similar thinking on people (kids) in France.

I tend to think that some people stuck in a rut want to work more than some such as Bush or Kudlow would acknowledge. There are other factors that get in the way of working - discouragement and lost confidence, stigmas and stereotypes, lack of dignity or respect, hope for future development in a job, etc.

It is risky to tell people they do not want to work. It antagonizes people who are already isolated.

Arun Khanna said...

Very rarely are there simple answers to complicated problems. I think illegal immigration is an exception to that rule.
Answer to the problem is as simple as enforcing the law. Deport all illegal immigrants (whether 10 million or above) with exceptions for unusual hardship cases. The amount needed for deporting nearly all illegal immigrants is not that much. The bottom line is unless we enforce our laws, we might end up eroding the rule of law.

Jon Shea said...

I'm sorry, I didn't follow. Would you please spell out the "dynamic inconsistency" you're talking about?.

What I gather (and please check me if I'm wrong), mostly from NPR interviews, is that workers don't seem to appreciate that if they don't take the buyout and GM enters bankruptcy protection, then their union contract might be terminated and they they could get canned outright and/or lose their retirement benefits. That's the gamble these guys have to weigh, right? Approximately:

$140,000 >?=?< (({salary} - {opportunity cost of working, probably very small for union employees}*{years to retirement}) + {value of retirement benefits}) * {probability of contract being nullified, probably pretty high and it doesn't seem like works understand that)

Even the $140,000 high end is a pretty bum deal compared to $70,000 a year in salary plus an awesome retirement package... if you neglect the possibility of getting a Whammy!, which I think a lot of those guys are doing.

I'm not sure whether or not current retirees pensions are at risk when a company goes into bankruptcy. If I were going to retire, say, tomorrow then is there any reason I should consider the buyout?

Anonymous said...

Deport all illegal immigrants (whether 10 million or above) with exceptions for unusual hardship cases.

This is much like saying "the solution to dirty bathrooms is simply to clean every one of them in the entire world." Yeah, I guess we'll get started on that bathroom cleaning right away, you know? The problem is of such scale that we might not even have the resources (both social and physical) to solve it in a direct fashion. We also may not want the outcome of the most direct solution, either.

As far as the cost goes, "not that much" might be true, if you believe that any amount is not that much to solve the issue. Sadly, I do not think this is a priority shared by either the administration or America at large. If it were, we would have done it already!

Also, again, does it help anyone to deport parents of citizen children? The basic issue of how we determine citizenship would have to be tackled before we handle that, and I don't see anyone thinking of that. I either see evasions of the issue or just plain ignorance in that quarter.

All of the solutions to this problem fall into the category of "stuff we're doing already but either don't want to pay for it or don't like the ramifications of actually doing it 100%." That's the issue to understand first.

Karthik said...

The appropriate response is to let the wages rise, so that the market clears without resorting to workers from abroad. That means that more Americans will do them at the higher wage and that fewer employers will demand the services.

I'm no economist, but my simple understanding of basic economics would suggest this would result in a severe uptick in inflation. Anyone who has ever been to a farm knows that the notion that American agriculture could survive without cheap labor is ludicrous! Isn't it true that historically, low employment levels such as the present have been associated with serious wage pressures that (at least according to Greenspan's biography) have caused Fed bankers to fret about inflation?

What would we achieve then by kicking out free labor? Increase wages in the short-term, only to cause an economic collapse because of inflation and concomitant interest rate hikes, and also cause a flight of foreign capital, which has been willing to finance US deficits only because of the Fed's ability to fight inflation. All-in-all, the average American ends up worse rather than better!

Andrew Samwick said...

John,

The inconsistency is on the part of GM. Early retirement buyouts are an opportunistic way to reduce the workforce immediately. But if they are used too often, workers begin to expect them. The quote from the article suggests that GM has used them so many times that workers will not retire without them, exacerbating its current problem.

I think you are right about the calculatin that needs to be done and the way it may be being done wrong.

ac said...

You're right that saying immigrants take "jobs Americans don't want" is both uneconomic and politically offensive. A better way to think about this is closer to an example that David Card used in a talk I attended last year; With illegal immigrants in the picutre, the carwash consists of 10 guys with towels and brushes; without them the carwash owner either scrapes together the capital to invest in mechanized washing equipment or never opens in the first place. In other words, immigrants don't do jobs that Americans don't want; they substitute for capital, or do work that otherwise wouldn't be done at all.
Now, anti-immigrant reformers will shrug that we can certainly get along without more hand carwashes in this country. But apply the same reasoning to your aging parents. With open immigration, you can hire 4 dedicated caregivers to watch them at home, round the clock. With a border crackdown, the cost of that is prohibitive, so you can either move back in with them yourself or put ma in a nursing home.

That baby in the picture isn't the only innocent at risk here ...

Shazam McShotgunstein said...

Excellent analysis and prescriptions, but I would add a third: raise immigration quotas for highly skilled workers. Not only would that help drive the economy and help protect U.S. dominance in high-tech industry, it would also diversify the pool of immigrants in ways that might prevent low-skilled immigrants from remaining insulated within their own homogeneous communities within the U.S., and help them integrate more quickly into mainstream U.S. society.

Whitehall said...

A guest worker program for "highly skilled workers" - isn't that the H1B program? The one that is getting abused right and left? The one that makes indentured servants of tens of thousands? The one that drives down salary and wages for Americans who have invested in their technical education? The one that discourages American students from investing in technical education?

Anonymous said...

Americans will not do these jobs at the prevailing wages. The appropriate response is to let the wages rise, so that the market clears without resorting to workers from abroad.

The wages will only rise if entry to the labor market is restricted or prohibited by the government. This means the government will use force to prevent capitalist acts between consenting adults, one foreign and the other an American citizen. What could justify that use of force? You might think it would be a preference for American workers (who would receive the higher wages) over foreign workers (who will bear the costs of not having work they otherwise would have obtained). But that would be wrong. Preventing those capitalist acts would harm both the foreigner and the Americans who wished to hire them or to consume goods or services produced by them. In truth, the argument seems to be that the government should use force to favor “low-skilled workers in urban and border areas” at a cost to the Americans mentioned earlier and to the foreign worker. That preference, of course, is “a decidedly non-economic statement” which leads to a policy that runs counter to the economic value of efficiency.

Anonymous said...

andrew samwick said:
"In your view, is there any relevance of citizenship at all?"

The answer is "no". Nationality is a useless superstition. Government is just an armed gang. Taxation is extortion.

Open borders equals individual freedom. The philosophical discussions mean nothing, because, amnesty or not, millions more are coming.

Anonymous said...

Andrew,

I'm confused as to your prescription for the 10 million illegals here currently. I assume you're not an advocate of deportation. If you want increased penalties for document forgeries and employers, and you don't like the guest worker or amnesty proposals, what are they supposed to do?

It seems like all sides would be happy if security was tightened, quotas increased and some sort of assimilation/eventual citizenship program was put in place for current residents. Well, the deportation people wouldn't be happy, but oh well.

Anonymous said...

How about because of the increased cost to society. These people get benefits and services from government, far more than they pay for. If this private party wants to conduct this economic transaction, fine, but let them pick up ALL of the costs associated with it.


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This means the government will use force to prevent capitalist acts between consenting adults, one foreign and the other an American citizen. What could justify that use of force?

Shazam McShotgunstein said...

Whitehall said...

A guest worker program for "highly skilled workers" - isn't that the H1B program? ... The one that drives down salary and wages for Americans who have invested in their technical education? The one that discourages American students from investing in technical education?


I didn't say "guest worker" program, I said immigration quotas; let them become Americans.

But your abuse of the idea is misplaced. Many of my clients have R&D facilities both in the U.S. and in overseas locations such as Beijing, Bangalore and Singapore. They often prefer to bring their foreign engineers and researchers here to the States, because it's more efficient to get a greater share of their R&D staff in one place. But they also simply cannot hire enough talent from native-born Americans alone. So it's not a choice between whether they'll hire Americans or foreigners; it's a choice between whether their foreign researchers will work and settle in America or stay and work overseas.

I'd much rather have these top talents from around the world come here and become Americans. It's better for our economy and better for the nation as a whole.

Anonymous said...

immigrants suck

steph said...

hey they should stay they have no reason to go all they want is to have a better life for them and their familys so let them stay