Comments on Why the US Needs Immigrants

Hmm… the immigration piece below seems to have triggered a bug that we’ve seen before in Manila, the software that Harvard runs for its blogs.  Comments go into the database somewhere but they aren’t linked.  So I’ve cut and pasted a couple of my favorites here and anyone who wishes to comment on the piece below can do so here…

Matthew T: A more significant difference that will prevent the US from going into Argentine-style collapse in the near term is that US debt is designated in the US currency. As the dollar falls, US foreign debt doesn’t grow, the trap that Argentina fell into. In the longer term, foreign trade will be conducted in a strong currency from a large economy: if the domestic plan is to inflate away the deficit, the Euro will usurp the dollar’s central role.

John: According to Philip’s logic, the great depression should have never happened. Was the US substantially different in 1929? It had tons of smart immigrants from all over the world, and yet the economy suffered a total collapse.

14 thoughts on “Comments on Why the US Needs Immigrants

  1. I live on a street where three out of four houses have non native, spanish speaking members of the household. Most of them are legal, but some aren’t. A white van pulls up at 5:30 am and 7:00 am, takes away some people, and returns them late into the evening. I somehow doubt I or my housemates would be willing to do the work that my neighbors do for 14 hours a day.

  2. John, Your logic about the Great Depression omits at least one crucial factor: monetary policy. Philip talks about government fiscal policies (such as spending programs, budget deficits, and trade deficits) that he implies are inappropriate today. Some of these were part of the 1929 debacle are were clearly inappropriate then. While the root cause of the Great Depression is still hotly debated today, many scholars, led by Milton Friedman, think that faulty monetary policy and bad moves by the Federal Reserve are what got the ball rolling in 1929. And the Smoot-Hawley tariffs that came later greatly lengthened the depression.

    Some things are different today. Now that we have one of “the world’s smartest people”, Alan Greenspan (whose last name resembles that of our intellectual hero, Philip), at the helm of the Federal Reserve, we worry about things like deflation. Recall that in the three years after 1929, prices fell about 30 percent, so it was a better idea to stuff money in your mattress than to spend it. That’s exactly what people did — leading to a 40% decline in US national output (GDP) and the collapse of the banking system. I daresay that with Dr. Greenspan (and MIT alumni like Dr. Ben Bernanke) in the charge, this isn’t likely to happen.

    My view is that immigration is one thing that makes America a dynamic and great place to live. It provides cultural and intellectual diversity that few nations can offer. Very few Americans belong to families that were native here or came over on the Mayflower and most of us had to scratch our way up the food chain. At least the United States gives us a fair opportunity to grow economically, and that’s why some of us are here (Personally, I could live practically anywhere I want but I choose to live in the States). If US immigration policies attract the best, brightest, and hardest-working folks, so much the better.

  3. J Random:

    If the market did not have an inexhaustible supply of additional labor (read: was cheating), the companies hiring those people in the white vans would be forced to raise their wages / improve their conditions to the point at which Americans would, in fact, be willing to do that work.

    The market is loved by conservatives until it results in higher prices for “the help”. At which point, it becomes fashionable to extol the work ethic of the undocumented…

  4. Manufacturing jobs are being lost everywhere, even in China, due to technology and process improvements that keep on improving productivity.

    Trade deficits can be harmful, but they are often counter-balanced by investment. We buy more stuff from Japan than they will ever buy from us, because we buy more stuff than anyone else, period. But the Japanese take the US dollars that we paid them for the stuff, and they invest much of it in the US. I’m sure the same relationship exists between say, New York City, and the state of Michigan. It doesn’t mean there’s a crisis.

    The current US dollar devaluation is somewhat high, but not beyond a normal historical range, and I haven’t heard anything to lead me to believe that it’s beyond the control of the Fed.

    Immigration is a good thing, but it’s not immigration alone that saves us from catastrophe. The fact is that we have the strongest economy in the world, and there are many reasons for that.

    I really wonder, though, if the Bush proposal will decrease the cost of labor, because of a larger supply of unskilled workers, or increase it, by creating an environment in which the current illegal immigrants will suddenly demand minimum wage, because of their new rights. Will the minimum wage become a tool to create a limit on the number of immigrants that can participate in the program, because of the requirement that they be sponsored by employers?

    What will this do to the educated immigrants. Right now, the more educated immigrants are held back, because they are more likely to play by the rules. While everyone thinks of this new proposal affecting unskilled workers from Mexico, it might also unleash a torrent of highly-educated applicants from all over the world, who were unable to immigrate legally due to the quotas and/or lack of family connections and weren’t willing to immigrate illegally. It will be interesting to see how the debate shapes up in Congress and what the long-run effects are.

  5. Philip,
    You are right that U.S. needs immigrants, so that the country has better presidential candidates than George Bush.
    But U.S. might now have to live with the likes of George Bush, since the brighter immigrants are now going to Canada, and not to U.S.

  6. from what I remember from economics courses the Great Depression was partially to blame on faulty reasoning in Classical Economics, which supposes that 100% employment is the natural state, and that unemployment is really just the occurrence of job shifting among the labor supply. The faults of classical economics were rectified in the Keynesian system which argued that 100% employment existed in rural economies but not in urban ones, that the natural boom/bust cycle predicted by classical economics was correct, but that a government should invest in projects that would stimulate the economy during the bust and stop such projects during the boom. The Keynesian model was somewhat accidentally achieved via the New Deal, and later social programs (although IIRC Keynesian social policy is not really the same thing as a welfare state) if the U.S strips its pseudo-Keynesian system of most of its support for the unemployed(which it has been doing for the past few decades) it seems reasonable to assume that the boom/bust cycle will become more pronounced as it was in the pre-Keynesian times, which, abetted by especially bad historical conditions at one point, produced an especially bad bust.

  7. Inertia isn’t going to save us by itself. 70 years ago, you went to Europe if you wanted to study under the top people in most fields. That ended because the US made huge investments in education, while Europeans made huge investments in killing each other. Likewise, today the US is making huge investements in cutting taxes for the rich, while countries like India are investing in education. Just about everywhere in the US, funding for education is being cut from kindergarten through graduate school, and there is no political will to reverse that trend.

    We’re still on top, but don’t be too surprised if the smart kids start going somewhere else to study before you retire.

  8. Beware of the details that Bush conveniently omitted from his latest campaign speech. If it’s anything like his other Compassionate Conservative (a/k/a “No Donor Left Behind”) proposals, this one will give a few crumbs to the peasants (in this case Latino ones) as a distraction from the large handouts to the corporate donors who are his only constituents.

    If and when the details emerge, the proposal will probably amount to providing corporations with a limitless supply of expendable, exploitable low-wage workers. Corporations that use these workers will enjoy exemptions from onerous wage and hour laws, and possibly even a tax break or outright taxpayer subsidy to defray the costs of “training workers” or “administering the program.” The temporary workers will be little more than indentured servants subject to the whim and caprice of their employers who stand ready to terminate their work permit at the slightest hint of trouble. If the pattern is similar to the way the bogus Medicare bill was debated, Democrats will reveal all these details just before the bill is rushed to a vote, and Republicans will ignore the details and attack the Democrats for preventing all those illegal aliens from becoming productive legal workers.

    For American workers, this program may well have the effect of driving down wages, and (to articulate the private dreams of CEOs) perhaps even entirely eliminate wage and hour laws that make American workers “uncompetitive” with the temporary workers (i.e., “starving the beast” in Compassionate Conservative terminology). This utopian result would be a great return on corporate investment in Bush’s campaign, giving CEO donors hope for cheap, third-world labor right here at home. That way they can increase their profits (and bonuses) by saving the cost of transportation from China or Vietnam, and avoiding costly hassles with corrupt foreign governments.

    I don’t know if the Compassionate Conservatives will actually get away with realizing these dreams of their donors. But they’ll certainly try– and package it as if it were intended as a gift to Latino voters. $200 million in fundraising and campaign spending can go a long way toward convincing millions of mice that voting for fat cats is in their best interest.

  9. RPS,

    I’d be interested in seeing your evidence that “just about everywhere in the US, funding for education is being cut from kindergarten through graduate school.” From my perspective, the cost of education is rising more than the general rate of inflation. Looking at the budget of my local school district, the cost of local K-12 private schools, and the tuition of top US private universities over the past 8 years, I can’t agree with your assessment that the long term spending trend is downward. Alternative theories are that the quality of education is lower, teaching is less rigorous, or we’re getting less for our money than we used to. And, yes, in places like California, the politics surrounding school budgets are incredibly screwed up. Your conclusion might be correct, nevertheless I challenge you to support your argument with facts.

  10. First of all, it’s not enough for education to rise at the rate of inflation, because enrollments are increasing. It costs more to educate more kids.

    Second, I don’t doubt that private schools are doing fine, but the majority of people are educated at public institutions.

    And here’s an article regarding education budget trends for public universities over the last two years:

    According to the article, higher education funding from taxes has declined 4% over the past 2 years.

    I can’t find (in a time frame that I can devote to arguing on a blog – my wife wants me offline) an similar article regarding K-12 education, but you can easily see that not all school districts are as blessed as yours.

  11. Certainly here in Cambridge, Massachusetts the taxpayer (that’s me!) isn’t stingy. We spent $14,084 per student in our public schools last year, enough to fly each kid to a country where the schools are really good (e.g., Korea) and enroll them in a top private school, with enough left over to pay for room, board, and a Christmas vacation back at home.


  12. We certainly need immigrants. The question is what type and how many.

    Massive illegal immigration reduces productivity, letting employers through serf labor at problems rather than having to invent new machines to do the job.

    Bush’s amnesty rewards illegal behavior. It will encourage even more illegal immigration, and that will lead to yet another amnesty down the line. That (second) amnesty will be called the “one final amnesty” just like all the preceding amnesties were, and it will be followed by a third, fourth, etc. etc.

    And, according to administration representative Margaret Spellings:

    “We do envision that this would be open to any type of employee and any type of employer, such as nurses, teachers, high-tech workers, low-skilled workers. This is a concept that can apply broadly”

    In other words, nearly all jobs – even those that currently pay a high wage – are at risk from Bush’s proposal. Those jobs will be offered to Americans first. But, with bidding on those jobs open to millions in India and China, at what wage rate?

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