Crashing the Border

There is no way to get around the fact people who are hellbent on curbing immigration and loosely shift from undocumented and documented immigrants are more interested in one (or both) of three things: 1) maintaining the "white Christian male power structure" by capping immigration; 2) keeping wages up; 3) protectionism of the labor markets.

The sad thing is #1 is founded primarily in a combination of white privilege and a hidden desire for aristocracy and #2 is founded on plain old ignorance of economics. The former tends to be more inspirational and froth-forming; the second is more associated with the thinking that illegal immigrants will bring wages down because they’re more willing to accept lower wages, leading to wage deflation overall; the last tends to get confused with the idea that employment is stuck on some kind of zero-sum scale where the more immigrants come in, the fewer jobs there will be for the locals.

The fact of the matter is that is far from the case and it’s even more pathetic that it’d be Republicans/Tea Party sympathizers/members who advocate closing the bothers as much as possible instead of getting rid of this protectionism of the labor markets.

Felix Salmon:

Statistical analysis of state-level data shows that immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization. This produces efficiency gains and boosts income per worker. At the same time, evidence is scant that immigrants diminish the employment opportunities of U.S.-born workers.

As a matter of fact, immigration overall has a positive effect on both wages and employment:

Over the long run, a net inflow of immigrants equal to 1% of employment increases income per worker by 0.6% to 0.9%. This implies that total immigration to the United States from 1990 to 2007 was associated with a 6.6% to 9.9% increase in real income per worker. That equals an increase of about $5,100 in the yearly income of the average U.S. worker in constant 2005 dollars. Such a gain equals 20% to 25% of the total real increase in average yearly income per worker registered in the United States between 1990 and 2007.

Just as removing capital tariffs and protectionism leads to increases in overall efficiency and incomes, removing stringent limitations on immigration, a form of labor market protectionism, leads to the same positive effects — leading to wage and employment increases. You don’t hear much about that because, well, there are plenty of forces in this country who find sufficient reasons to set up the blockade. Part of the reason is reason #1 tends to outweigh the economic truths behind economically-tied immigration policy; the growth of the Birch Society in the last several years exposes this phenomenon. Another part of the reason is ignorance on the part of most people who don’t bother to learn a pinch of economics.

Right now, immigration policy in the US is completely assbackwards.

Ezra Klein:

Because of a 1965 law, our immigration system is based around family unification. More than 65 percent of visas are for purposes of bringing family members to the United States. Only 15 percent are for economic reasons. As Darrell West of the Brookings Institution writes in his book "Brain Gain," this means that immigrant families, rather than current policymakers, decide who enters the country.

That’s nuts. Our immigration policy should be primarily oriented around our national goals. And one goal is to have the world’s most innovative and dynamic economy.

Writing more about the futility of strengthening border security and how it tends to backfire and actually lead to more illegal immigration, Peter Schrag mentions, "As noted by the nonpartisan Public Policy Institute of California among many others, the element missing from this picture is that immigration, both legal and illegal, is driven more by the economy than it is restrained by border enforcement."

Klein adds to the flame of the futility of border security by showing that the recession and loss of jobs is the primary mover in the diminished number of immigrants coming in:

That’s because immigration, both legal and illegal, is more economic than anything else and demand for labor will lead to supply. The immigration bottleneck acts like a loose form of prohibition and, as with all kinds of prohibition (eg. alcohol, recreational drugs, prostitution), it doesn’t work.

There is some truth to the fear that undocumented workers lead to lower wages but that’s a very limited negative. Klein:

We should remember, though, that the average worker isn’t every worker. A study by Harvard economists George Borjas and Lawrence Katzj found that although immigrants raised native wages overall, they slightly hurt the 8 percent of workers without a high school education. A subsequent study by Peri found that even unskilled workers saw a benefit from immigrants – but it was much smaller than that of highly skilled workers.

And unskilled workers face even tougher competition from undocumented immigrants who, because their status is so tenuous, will accept pay beneath the minimum wage. And they are unlikely to complain about safety regulations or work conditions. That takes unskilled immigrants from being a bit cheaper than unskilled natives and makes them a lot cheaper – which makes employers likelier to hire them for jobs that native workers could do better.

Fix the bottleneck, however, and that problem tends to be diminished. With the influx of new migrants, both prices increase and so does demand for all kinds of goods. The most prominent increase in demand is in housing which everyone knows could use a good boost. Adam Ozimek: "Right now, there are millions and millions of people who want to “employ” our “unemployed” housing stock: immigrants. Simply let more of them in and they will buy, rent, and live in these empty homes."

Housing tends to lead to economic growth; instead, due to politics, once the Fed decides to get off its ass and spur economic growth through more expansionary monetary policy, housing recovery will come after and as a result of economic growth.

Calculated Risk:

The key to the housing market is to absorb the excess inventory. That means more households and fewer new housing units. Luckily housing starts are very low right now, but unfortunately there is very little job growth (and therefore little new household formation).

There’s little new household formation right now due to the recession. Couples are, instead of making babies, getting married and moving in together, are staying at mom and dad’s and screwing with that condom permanently attached. It’s just too expensive to start a family when jobs are far and few in between.

So we could give a good nudge to the housing market which is seeing a horrible vacancy rate:

All it would take is a little bit of immigration reform. I’ve always believed immigration should be tied directly to economic need and the goals of the nation. It’s touchy-feely and nice to take the immigrant and his or her family needs into consideration but it should be a far second to the needs of our economy. Maintaining the status quo by being a xenophobic douchebag ensures the status quo stays.

Not only would the housing market recover faster but it could lead to a bit more economic stability in that market and a faster drive to housing starts instead of the slow drudge we’re going to be seeing after we begin reaching the pre-recession trend. Housing starts lead to jobs. It’s as simple as that.

Not only would that lead to employment but it would also lead to higher wages, canceling out the negative to the 8% of workers without a high school diploma: Albert Saiz: "…a very robust impact on rents and housing prices that is an order of magnitude bigger than the estimates from the wage literature. Immigration inflows equal to 1% of a city’s population were associated with increases in average or median housing rents and prices of about 1%."

So #2 and #3 are easily debunked and we’re left with #1. Unless you want to argue against pretty simple econ because you think it’s incorrect, you’re pretty much just a fucking bigot.

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