Saturday, December 01, 2012

Deconstructiong Cantor's Plan; And Libertarian Immigration Dogma

  The Col. and I are tired of the lies.

Republican House leader Eric Cantor led in proposing what he and his cohorts insisted on calling a "jobs bill".   USA Today reports and says this about what Cantor and company repeatedly called a "jobs bill" ; "House Republicans still smarting from their poor showing among Hispanics in the presidential election are planning a vote next week on immigration legislation that would both expand visas for foreign science and technology students and make it easier for those with green cards to bring their immediate families to the U.S.".

Like Col. Kurtz, if there is one thing I despise it is lies.   The great mass of lies are acts of disrespect from whoever is telling the lie toward the person being lied to.   Lies that are insults to the intelligence aggravate the already offensive and disrespectful nature of the lie.    Cantor is not pushing a "jobs bill" as he so often claimed.   He is pushing an ethnic pandering bill.   He is pushing a corporate welfare bill.    But that's not what the Republicans are calling it.

USA Today spelled out half of the GOP's true motivation.   They want to appeal to voters who put their ethnicity first by softening on immigration, but in a way that they hope will let in their sort of Hispanics, not the Democrat-voting sort of Hispanics.    Meanwhile, millions of their base are increasingly identifying themselves as independents and millions of their former voters refused to pull the lever for their latest presidential nominee.  Instead of reaching out to their own disaffected former base, they are choosing to alienate them further by going even further left and resorting to racially obsessed hyphenated Americanism.

Unless these are rich foreign students who bring lots of cash from their family into the country, this plan will not be a net creator of jobs.  Neither will bringing in the non-working (since they will not be given green cards) family members of present green card holders.  Students and non-working family members are net consumers, not net producers.   You cannot on the net "create jobs" (that is real jobs that result in increased wealth) by adding consumers who do not produce.    Ergo, Cantor's plan will result in the exact opposite of it's claims.

Now there are always caveats to generalizations, and I want to point out a couple here.    If a green card holder is sending the preponderance of his earnings back to his or her home country, then bringing the family here and keeping the money here could add jobs.   But those with a green card who send a preponderance of their earnings back home are precisely those green card holders who are least likely to bring their families here.   That is the profile of a foreign worker who is working elsewhere temporarily in order to build a better life in what they consider their real home.    Now if their family could obtain sufficient public benefits then they might be induced to start over in their work-country, but then people who come here because our public benefits and welfare programs are so generous are not the sort to build prosperity on either.

A student who comes here on a visa might be induced to stay and work for an American company, but many of them will come to get their education (consume without producing) and then head home.   No specifics are given, but with as much money as our government is throwing at education, these foreigners could come here to obtain access to a heavily taxpayer subsidized college education and then go home.   That's not a way to build a prosperous economy either- but certain global corporations operating in America will benefit from such a policy at the expense of the typical taxpayer.

An engineering firm which had openings for 1,000 more engineers over the next 10 years might have some trouble filling those openings at their current compensation levels.     One solution would be to raise wages to the market price, but why do that?  By claiming you can't get enough "qualified" workers (at the price you wish to pay) compliant government officials will simply change the rules to allow an avalanche of foreign students into the nation to major in a given specialty, subsidized by the public treasury.  

It is my conclusion that neither policy is, in the vast majority of cases, a net job creator for the country.   Sure, some jobs will be gained, college professors who are training students who take their skills home, social workers to provide "benefits" for the non-working family members of green card holders, but these jobs don't add wealth, and the mis-allocation of resources will in the whole cost us more jobs than we gain.  

Unfortunately many activists have been so mis-educated that they don't care to analyze policy this deeply.  Libertarians at base do not accept the right and necessity of national borders, and even some conservatives have been trained reflexively to support whatever the corporate media calls "free market".

If such conservatives would think it through, they might notice the absurdity of ascribing the term "free market" to a government run plan to allocate an increased supply of workers to whichever specified fields contributors to the political system wish to pay less for.    A free market approach would involve private firms paying higher prices for labor in a given field, encouraging others in the labor market to select that field over others.  But paying more for labor is not in the interests of those who make money by hiring people to work capital.   It is in the interest of most Americans who make their living selling their labor, but these are the voices of the "little people" that don't seem to count much anymore.

There is a doctrine in some "free market" conservative and libertarian circles that adding more labor inputs is always good for an economy and creates wealth.    I choose the word "doctrine" because such beliefs are often held to with a religious fervor, even in the face of evidence that such truths don't apply to every situation.    There is a whole industry of economists (paid by the same government-corporate complex which benefits from such polices as Rep. Cantor is pushing) assuring us that adding "workforce" creates wealth.  The truth is that human economic interactions are so complex that the veracity of such a statement cannot be empirically tested to a scientifically satisfactory degree.   In a scientific test of a hypothesis, one should control for everything except the one variable being tested.   This of course is impossible on this question.  Thus, we must use inductive reasoning to come to a conclusion which makes sense to us.

If added labor inputs always help an economy, why don't they help specific companies in that economy?   That is, why do profitable companies ever quit hiring?  Why do they ever lay workers off?  Why do they even quit taking applications?    Forget theory. In reality once you have optimum labor inputs even the sorting costs to ID potential new employees is often not worth the effort.   In reality there is an optimum balance between the amount of labor needed to work a given amount of capital.   If 1,000 volunteers showed up to work for free at a factory will that factory be more efficient?  How about 10,000?  At some point it is clear that additional labor inputs do nothing to create more wealth working that available capital and in fact they will be getting in the way on the factory floor and interfering with production.

Third world nations experience this truth on a large scale daily.   There are too many people relative to the amount of capital available to be worked.   Vast numbers of them eke out a subsistence living, consuming what little they produce and adding nothing to modern economic output.    Would adding 20 million illegal immigrants from Mexico to the nation of Bangladesh help their economy?  Would adding 20 million mechanical engineers from various foreign nations?   Of course not.   There is not the capital available to benefit from such labor inputs.  Labor must have capital to work.   If Bangladesh foolishly spent the resources it had training 20 million mechanical engineers (half of whom went home after getting the training) then it would be even poorer than it is now.   The only beneficiaries would be the few firms in that nation who employed mechanical engineers.   They could hire such engineers for a song.

Obviously this would be a waste of resources, but even when there is a better match between economic need and foreign skill, there are hidden costs involved.   There are costs involved moving from one culture to another.   There are frictions involved when groups from different cultures have to live together.   And of course, if there is a welfare state in place, then one must be careful to consider those costs in determining net economic benefit.   Milton Friedman once famously declared that you cannot have both open borders and a welfare state.    We have a welfare state at the moment and so, right now, open borders would be most unwise.

My point is that importing a foreign labor force rather than paying your domestic work force more results in all sort of other costs which are not paid by the companies benefiting from the imported labor.   These costs cannot be accurately calculated, we must use our heads to approximate them, and make policy accordingly.   The simplistic and doctrinaire belief that more workforce always means more wealth works only in a theoretical world where costs are accurately assigned and workers from different cultures are interchangeable without any larger consequences for society.

None of that of course, reflects reality.  And we need to make public policy based on justice and reality, not theory.    How much wealth would be added to our nation if we imported a million Typhoid Marys to work in our food service industry?    How well can what free society we have left survive if we import into our culture millions more people who come from and are comfortable with dictatorships, corruption, and socialism?


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