The Economics of Immigration

By Alex Tabarrok. Yes!

Go Barney, Go

Some encouraging words on free trade by that ardent capitalist [read in Al Gore-esque sarcastic tone], Rep. Barney Frank...

Mr. Chairman, I am here to confess my reading incomprehension. I have listened to many of my conservative friends talk about the wonders of the free market, of the importance of letting the consumers make their best choices, of keeping government out of economic activity, of the virtues of free trade, but then I look at various agricultural programs like this one. Now, it violates every principle of free market economics known to man and two or three not yet discovered.

So I have been forced to conclude that in all of those great free market texts by Ludwig von Mises, Friedrich Hayek and all the others that there is a footnote that says, by the way, none of this applies to agriculture. Now, it may be written in high German, and that may be why I have not been able to discern it, but there is no greater contrast in America today than between the free enterprise rhetoric of so many conservatives and the statist, subsidized, inflationary, protectionist, anti-consumer agricultural policies, and this is one of them.

In particular, I have listened to people, and some of us have said let us protect workers and the environment in trade; let us not have unrestricted free trade; but let us have trade that respects worker rights and environmental rights. And we have been excoriated for our lack of concern for poor countries.

There is no greater obstacle, as it is now clear in the Doha round, to the completion of a comprehensive trade policy than the American agricultural policy, with one exception, European agricultural policy, which is much worse and just as phony.

Sugar is an example. This program is an interference with the legitimate efforts at economic self-help in many foreign nations. So I appreciate the leadership of the gentleman from Arizona [Jeff Flake] and the gentleman from Oregon [Roy Blumenauer]. Here is a chance for some of my free-enterprise-professing friends to get honest with themselves, and now maybe we will see some born-again free enterprisers in the agricultural field.

It is quite ironic to see the so-called conservative Republicans lectured by a liberal Democrat on the topic of free-trade. But, since the concept is apparently quite foreign to the Congressional Republicans, I'll take allies wherever I can get them. So, thanks, Barney.

Red State Idol

This is pretty funny. For once, I have to accept that I share the Kos' elitist attitudes towards something. For the life of me, I cannot understand the attraction to American Idol. In my less than humble opinion, the show is watered-down, saccharinized, fluff that does little more for me than invoke a great, big, YAWN. I do find it interesting, however, that so may Idol-finalists have been from the state of Alabama (Ruben, Diana DeGarmo, Bo and now Taylor) and other red-states (Kelly C. - TX, Clay - NC, Carrie - OK, and Fantasia - NC) (Side note: I looked all of these people up and no, I did not know their names off the top of my head). That is wicked weird. Surely people residing in the red-states are not more talented than their blue-state brothers and sisters?? Well, what then? Here is my take: since the Idol winners are selected by the voting audience, I am guessing that it has something to do with viewership in the red-states. Could it be that the remoteness and general rural nature of the red-states has an effect? Perhaps the less than attenuated connection to the music industry leaves this class of voters at the mercy of the Clear Channel-esque, media manipulators of the world? Obviously the obscurities of progressive culture don't make it far outside of the hipster-rich, blue metropolises of America?? Call it a culture gap. I think I would like to see a breakdown in Idol viewership by state or region. Man, maybe I should write for the New Yorker...

Rappaport on Mill and Utilitarians

I have loads of respect for Mike Rappaport; however, I am highly skeptical of utilitarianism as a basis for policy. Let's take an issue such as the market economy. The market economy is not superior to the planned systems (socialism, fascism, corporatism) simply because the invisible hand of "price," as determined by supply and demand, tends to deliver goods and services in the most efficient manner. Rather, notwithstanding its efficiencies, the market economy is superior because it is consistent with our human nature as free individuals. The end. No need to break down the effects of wide open markets on the Google boys, Malawian maize farmers, or Walmart shoppers. Such stats are, indeed, encouraging and make us feel like altruist do-gooders; but, alas, such is not the basis for support. Rather, a free market enables its participants to pursue their individual self-interests free from external coercive pressures and, for that reason alone, it is superior to all other competing systems. There is no need to walk the utilitarian rope. In fact, by injecting some relativistic, ends-justifies-the-means, analysis of fact only works to diminish the moral superiority of the system (or any other philosophy). Perhaps I'm demented, but I say that there is nothing wrong with freedom for the sake of freedom. To be sure, it seems that utilitarian arguments can be, and often are, used to combat the goals of freedom rather than assist in its proliferation (see my discussion of American prisons and the Drug War below).

Just Say Stupid

Via Radley Balko, take a look at the following stats relating to American prisons:

As of 2005, drug offenders accounted for 55 percent of the federal prison population. About 45 percent of them were in prison for possession, not trafficking.

The number of people incarcerated in federal prisons for drug crimes rose from 14,976 in 1986 to 68,360 in 1999.

It costs U.S. taxpayers $3 billion per year to keep drug offenders behind bars in federal prisons.

Drug offenders have accounted for nearly half the meteoric growth in prison populations since 1995.

About half the population of U.S. jails and prisons are nonviolent offenders, more than the combined populations of Wyoming and Alaska.

Forty percent of the more than 1,000 state prisons in the U.S. opened in just the last 25 years.

The state of Texas alone has opened an average of 5.7 new prisons each year for the last 21 years. Despite this, about half of federal and state prisons operate over capacity.

Total U.S. inmates numbered 488,000 in 1985, 1.3 million in 2001, and number 2.2 million today.

According to federal sentencing guidelines, a man would need to possess 50 times more powder cocaine (prefered by white users) than crack cocaine (prefered by black users) to earn the same prison sentence.

Blacks represent about 12 percent of the U.S. population, but 48 percent of the prison population. They represent just 13 percent of drug users, but 38 percent of those arrested for drug crimes, and 59 percent of those convicted.

When convicted of the same drug felony, blacks are about 50 percent more likely to be sentenced to prison than whites.

A black woman's chances of spending some time in prison over the course of her life (5.6 percent) is about equal that of a white man (5.9 percent). For black men, the odds are nearly one in three (32.2%).

Before Congress passed mandatory minimums for offenses related to crack (but which didn't apply to powder cocaine) in 1986, the average drug-related sentence for blacks was 11 percent higher than for whites. After that law, the disparity jumped to 49 percent.

The average prisoner in the U.S. costs taxpayers approximately $36,000 per year. What a waste.

Must Be That Whole Division of Labor Thing?

SCOTUS Property Rights Fight Round 2

Jonathan Adler describes the next fight in NRO. This fight centers around the reach of the Federal Clean Water Act and, specifically, its application to wetlands. While not a "takings" case in the eminent domain sense, regulatory takings are in many ways worse for a property owner because such takings do not necessarily invoke the 5th Amendment and thus do not require just compensation. This ought to be interesting.

I Can See Clearly Now

The spring edition of the quarterly CATO’s Letter includes an excerpt from a recent speech by Tucker Carlson entitled, “The Decline and Fall of the Republican Party.” The ex-crossfire host asks, “What went wrong with the Republican Party?” Seriously? Oh, where to begin?? I suppose I do not have the time, nor the space. Nonetheless, I am overjoyed to see people like Tucker Carlson coming around to see the dark side for what it is. And this list seems to be growing by the minute. Anyway, Tucker’s piece can be largely summed up with the following: “The first and most obvious explanation of the problems in the Republican Party is that the President, despite, everything you hear, is not actually all that conservative.” Amen. And you can add, the President does not appear to have any philosophical beliefs of his own, or, in the alternative, enough integrity to assert them (I tend to lean towards the former although I doubt the depth of his integrity as well). We can only blame the Congress for direction of the Party for so long. They are, and always have been, poplulist-geared demagogues with little regard for ideology. Why do you think the American people refuse to elect President’s from their ranks? I mean, John Kerry, while arguably the worst major-party candidate for President since Al Landon, should have mopped the floor with sinking Dubya but couldn't. What is that about? I guess that is a whole other topic. Anyway, I have said it here before, and I will say again, I believe that GWB has single-handedly doomed the GOP for a generation. Who needs enemies?

Is that Reardon Steel?

It is all too disgusting how correct Ayn Rand was almost 50 years ago. In this piece, David Boaz tracts Google’s newfound realization of what it takes to do business in America:

But in our modern politicized economy - which National Journal columnist Jonathan Rauch called the "parasite economy" - no good deed goes unpunished for long. Some people want to declare Google a public utility that must be regulated in the public interest, perhaps by a federal Office of Search Engines. The Bush administration wants Google to turn over a million random Web addresses and records of all Google searches from a one-week period. Congress is investigating how the company deals with the Chinese government's demands for censorship of search results by Chinese users.

So, like Microsoft and other companies before it, Google has decided it will have to start playing the Washington game. It has opened a Washington office and hired well-connected lobbyists. One of the country's top executive search firms is looking for a political director for the company.

What should concern us here is how the government lured Google into the political sector of the economy. For most of a decade the company went about its business, developing software, creating a search engine better than any of us could have dreamed, and innocently making money. Then, as its size and wealth drew the attention of competitors, anti-business activists, and politicians, it was forced to start spending some of its money and brainpower fending off political attacks. It's the same process Microsoft went through a few years earlier, when it faced the same sorts of attacks. Now Microsoft is part of the Washington establishment, with more than $9 million in lobbying expenditures last year.

Of course Hank Reardon eventually hired himself a “man in Washington” too; and as it turned out, slimy old Mr. Wesley Mouch epitomized the bottom-feeder nature of the political looters. Unfortunately, far too many entrepreneurs and business people cave in and pursue the same course of action, only to be corrupted by the system in the end. It’s a sad state of affairs. Lobbying expenses, regulatory compliance, the federal tax code, Sarb-Ox…. -- the cost of doing business is this land of the free sickens me. By design, the system necessarily encourages rent-seeking (e.g., corporate welfare) and anti-competitive protection in exchange for Abramoff-style quid pro quo. Will somebody please slip the Google boys a copy of Galt’s speech ASAP?

It's Called the American Dream

Good stuff on the immigration debate from Tyler Cowen and Dan Rothschild with the premise: "Unskilled immigrants are good for the U.S., and the U.S. is good for them."

Until the late 1990s, when a boom in native-born self-employment occurred, immigrants were more likely than natives to work for themselves. Immigrant small businesses, from the Korean corner market to the Mexican landscaping service, are, well, as American as apple pie. The labor market is not a zero-sum game with a finite number of jobs; immigrants create their own work...

...New arrivals, by producing more goods and services, also keep prices down across the economy. Even [George] Borjas — the favorite economist of immigration restrictionists — admits that the net gain to the U.S. from immigration is about $7 billion annually...

And over the coming decades, the need for immigrant labor will increase, according to demographers. The baby boom generation will need more healthcare and more nursing homes. The forthcoming Medicare fiscal crunch will require more and younger laborers to finance the program.

Some argue that we should employ a more restrictive policy that allows in only immigrants with "needed" skills. But this assumes that the government can read the economic tea leaves. Most bureaucrats in 1980 did not foresee the building or biomedical booms of the 1990s, or the decline of auto manufacturing.

We should not trust government to know what kind of laborers we will need 20 years from now. The ready presence of immigrant workers — including the unskilled — makes all businesses easier to start, and thus spurs American creativity.

Tip to Nick Gillespie for the link. And one more thing for the nativist-restrictionists to ponder:

[P]ost-1965 immigrants, as recorded in U.S. census data, have a good record of assimilation. Second-generation children have, on average, higher education and wages than the children of natives. Of the 39 largest country-of-origin groups, the sons of 33 and the daughters of 32 of those groups have surpassed the educational levels of the children of natives (emphasis mine).

Ooooo. Competition is scary.

West Winger's Blow One

I cannot refrain from blowing my horn when the smug, know-it-all writers of the West Wing (I am looking at you Larry "meltdown" O'Donnell) completely blow it. In tonight's season finale, they simply missed an easy one. While waxing nostalgic together on the last day of the second Bartlett term, the first lady threw up softball, thereby allowing big daddy Sheen to show us his vast knowledge of history one last time. To paraphrase his answer as to why inauguration day falls in January:

President Bartlett: "We can thank Jefferson, Adams and Franklin..."

Uhh, WRONG. Try the twentieth amendment circa 1937, Capt. Willard. And Larry, go to the back of the class and, please, try not bust a vessel.

Where Have All the Conservatives Gone?

Mr. George Will's recent rant in Newsweek is anything but rhetorical. Like me, I think Will is perplexed to the point of exhaustion. And at this point, my exhaustion has given way to anger, which I think will eventually sow the seeds of anguish and ultimately, total and complete apathy. C'mon apathy. Anyway, it looks like Will is taking a break from his recent rash of Republican-bashing and takes aim at the proliferating culture of mush that seems to dominate Washington and the frontal lobes of most Americans. I like the way in which George ever-so articulately vents in his little glass case of emotion:

About those polls critical of the president's "handling" of gas prices, who over the age of 7 really thinks presidents can "handle" world petroleum prices? And: A major reason for high oil prices is the rapid modernization of India and China; which is desirable and promoted by U.S. policy. And: For some reason, it pleased the Intelligent Designer of the universe to put much of the Earth's oil in turbulent places: the Middle East, Venezuela, Nigeria, Russia. And: The Congress that is in histrionic anguish over high gas prices has mandated adding ethanol to gasoline: ethanol which is in short supply, partly because Congress has legislated a tariff of 54 cents per gallon on imported ethanol.

A modest proposal: Among the federal entitlement programs is the Low-Income Home Energy Assistance Program, which gives states block grants to help pay energy bills, and for weatherization and other energy-related home repairs. Congress should amend that law to say: No such funds shall be spent in any congressional district or state that elects a representative or senator who votes against drilling in the Arctic National Wildlife Refuge, or in currently closed portions of the Outer Continental Shelf.

Americans, endowed by their solicitous government with an ever-expanding array of entitlements, now have the whiny mentality that an entitlement culture breeds. They feel entitled to purchase gasoline at the price they paid for it 25 years ago. Guess what? Last week they could do even better than that. The average price of a gallon of regular was $2.91. In April 1981, the real, inflation-adjusted price was $3.10.

You go.

Following the Lunatic Fringe

Perhaps I am blinded by bias, but every now and again, I think the loonies get it exactly right - in a way that even the most conservative (e.g., mainstream) among us must admit. In this case, I am referring to Lew Rockwell’s latest column in which the czar of Rothbardian anarcho-capitalism makes the case for a market in political rule. Granted, there are a whole bunch of people out there who consider Rockwell’s beliefs to be the extreme fringe of political thought (hence my devotion…); but, when the dude’s right, the dude’s right. In this piece, Rockwell cites the current abysmal polling numbers of Dubya and suggests a remedy for those who oppose the President:

So let's say that we put our politics on the market model. Everyone who is still nuts for Bush would be entitled to be so. They should not be belittled or dismissed or called crazy. They should be permitted to be ruled by him completely and without question.

But there must be a few conditions: his rule must not be allowed to impinge on the person or property of anyone who does not want to be ruled by him. Also, the Bushians must demonstrate a willingness to do more than talk the talk; they must also be willing to pay the bills.

As for the rest of us mainstreamers (no longer on the fringe!) who are against Bush, we should be free to completely ignore his desire to rule over his fans. Neither should we be on the hook to pay for his rule of others. We should be able to choose our preferred systems of governance, and they should be able to choose theirs.

It's this crazy system that forces us all to merge our preferences that causes such conflict. The market, on the other hand, permits us all to live peacefully together while holding radically different perspectives on just about everything under the sun.

Aha. Choice - what a novel concept. As Rockwell aptly points out:

If you don't like a particular kind of food, music, or fabric, the answer doesn't have to be banishment. You just don't need to consume it, and that's all.

The policy answer, of course, in the absence of anarchism (in the Spooner-sense as advocated by the Rothbard/Rockwell anarcho-capitalists), is secession. Indeed, only through a system of functionable self-determination are we actually free. Without the ability to opt out, we are, by definition, enslaved by the system and the whims of any majority that tends to support that system and the participants therein. Some tend to think that the state’s monopoly power on governance is a necessity and but-for its existence, Hobbesian-chaos would be the rule. I am not so sure.

Quote of the Day

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

– C. S. Lewis

Do as I say...

From Jerry Taylor at CATO:

China’s plan to build 48 new airports over the next five years is freaking out environmentalists, who worry about the impact of Chinese air travel on ozone depletion. Apparently, the poor, unwashed masses of China should stick to their bikes while the rest of us jet around to U.N. conferences where we can worry about global warming and the oncoming environmental Armageddon in peace.

Heh.

Duh...

Ha.

Read thebokononist and avoid the trouble. I love I told you so's...

CATO Podcasts

For those of you with an unquenchable thirst for intellectual debate (read in: geek talks), the CATO Institute is now making some of their debates available via podcast. I am thoroughly obsessed. You can sign up for a subscription with iTunes and your computer will download each new debate when it's posted -- and it's all FREE. This past week I listened to Richard Epstein's presentation of his new book, How Progressives Re-wrote the Constitution, and a debate between CATO heavy-hitters, Bob Levy and Roger Pilon re. NSA wiretapping. Good stuff, all.

Booya

Don't Call it a Mutiny

I love it.

Bush’s disapproval rating among conservatives is 45%. That is not as high as the overall 66% disapproval score, but it is quite remarkable considering Bush is supposed to be—according to the media—the most conservative president since Ronald Reagan. Even more stunning is the whopping 65% negative score among polled conservatives for the Republican Congress. Close to a third of conservatives surveyed would be happier if the GOP lost control of Congress.

Ha! A big GOP loss in 2006 is a must. This spend happy Congress deserves a spanking and I cannot think of a better way to toss Dubya out the Presidential-door than saddling him, for the next 2 years, with a hostile, impeachment-hungry, Congress. He deserves no better. Retributionist tendencies aside, I fear that 2 more years of Republican-control will certainly guaranty a Shillary Presidency in '08 - the mere thought of which ties my lower GI tract into a knot of the Gordian variety.

Right to Take Drugs

Very interesting. The D.C. Circuit has established a new fundamental right for us. Thanks, guys. A split panel, led by Judge Douglas Ginsburg (our favorite "Constitution in Exile," libertarian-jurist), asserted that we have a Constitutionally protectected right as follows:

the right of a mentally competent, terminally ill adult patient to access potentially life-saving post-Phase I investigational new drugs, upon a doctor’s advice, even where that medication carries risks for the patient.

Ok? So the FDA can no longer deny a patient's ability to receive certain drugs, under a doctor's supervision, that are still deemed experimental and thus not suitable for market. Well, it's about time. I view FDA as monopolist-enablers, literally in the pocket of BIG-Pharma (drug companies pay the operation costs of FDA through application fees). To be sure, I like the outcome of this case - but, still, no matter you slice it, constitutional rights rooted in "substantive due process" always tend to create a sick feeling in my stomach. Think "right" to unemployment benefits... Due process means "process," people. While I realize that this opinion was probably tailored to withstand review by the SCOTUS, part of me wishes that Ginsburg et. al. would simply cite the Privileges and Immunities Clause just once, for good measure, and allow the rest of us academic-obssessive-geeks to see how the old robes feel about Slaughterhouse nowadays. And, yes, I do turn my head towards traffic accidents.

Amen

Some common sense on gas prices:

Both conspiratorial and cost-based supply explanations are unsatisfactory because they ignore demand. Gasoline prices are high because consumers have decided that it's still a “good deal” given the alternative. Until that changes – or until new supplies are offered – prices will remain high indefinitely.

A good analogy to what's going on in the gasoline market can be found in the housing market. Home prices are not dictated by construction costs or by back-room meetings of real estate executives. They are established by auction. Prospective buyers rarely think about how much houses cost to build.

Instead, they think only about whether a house is worth more to the buyer than the price asked by the seller.

In gasoline markets, prices are likewise established by auction. Those auctions occur in a multitude of regional spot markets. Oil companies generally sell gasoline to their franchised service stations at the spot price plus transportation and various business-related costs. Service station owners then post whatever price they like, but given competition, they can rarely charge much beyond their acquisition costs.

...And generally, people do not view pricing via auction (in essence, pricing based on willingness to pay) as unfair. Sure, we all need gasoline, but we all need food, housing and lots of other stuff, too. Why do we rail against “price-gouging” oil executives – who are simply charging auction prices – but not against price-gouging home owners or greedy eBay merchandisers?

I assume that question was rhetorical.

Libertarian Deconstruction of the Immigration Fandango

Some highlights:

We instinctively fear and hate "the outsider"… even though Americans now come from every place on Earth, and few people suggest that any ethnic group be forcibly returned (except for those lazy, drunken Irish). Also, in modern times our fear of those outside the tribe is a little misplaced. No roving nomad can actually come and take your tribe’s favorite berry patch without paying for it… with the exception of any large developer who pays your city council to use eminent domain and turn your berry patch into a commercial development. But those large developers are rarely illegal immigrants....

From the very beginning of the Republic, American politicians have made emotional political capital out of the fear of foreign devils. First, in the 1700s, it was those irresponsible Germans who would threaten our "essentially English" culture (presumably from their excessive punctuality and thrift). After the Germans had become our second-largest ethnicity, worry turned to the aforementioned lazy, drunken Irish. The Irish in turn having become so popular that more people claim to be Irish than really are, other groups replaced them as the menace o’ the day. The stupid Swedes, the mindless Poles, the un-Christian Jews, the too-Catholic Italians, even the obscure Croatians (who sent us such shiftless drifters as Tesla); all this teeming refuse and more deluged our shores. In 1910, 14.7 percent of US residents were foreign born, much higher than today’s 10 percent or so...

...There are two legitimate worries about immigration. One is that the Mexican culture will produce millions who will vote for more government. This is a little funny, because it wasn’t illegal immigrants who voted us into socialism; it was our own English-speaking great-grandfathers who voted for FDR. Mexicans don’t even control their OWN country’s policies; Mexican (or any Third World nation’s) politics is always dominated by the faction that gets the most US foreign aid. (Remember when Clinton "found" $35 billion for the Mexican government bailout? Or is that one down the memory hole already?)...

...The other "problem" is that immigrants will expose the unworkability of America’s various socialist programs, including our Federally controlled schools and medical system, a few years before they would otherwise collapse. (The immigrants are actually funding the Social Security system, but fortunately it will collapse anyway). This is indeed a problem… for socialists. The existence of a welfare state makes open immigration into a problem… for them. Every immigration conflict is an insoluble conundrum for the statist, but an opportunity for privatization for the libertarian...

Excellent. Read the whole thing here.

Cutting Flowers

It takes a lot of talent, ya know? Not just anyone can do it. Or, so says the State of Louisiana.

I suppose the argument here is to protect consumers, eh? Us lay people may just get too confused and overwhelmed when picking out our lilies. Beware - there are alot of hucksters and wannabees out there. And with so many choices - what is one to do?? But never fear, the state will narrow the field and insure that a properly licensed-eye will protect us from our inevitable poor decisions. Remember, it's all about quality. Thanks, state - you're swell.