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Sad End to the Immigration Issue

May 18, 2009

Tags Taxes and SpendingU.S. EconomyOther Schools of ThoughtProduction Theory

 

A standard test of a country's well-being is whether people want in or out. Whether you have an immigration issue or an emigration issue is telling. For example, people wanted out of East Germany and wanted into West Germany. People wanted out of Russia and into Estonia. People once wanted out of China, whereas now they want in.

These demographic flows tell more about a country and its economic prospects than all the political speeches combined. People vote with their feet.

Data from Mexico is extremely telling in this regard. There has been a massive plummeting in Mexican immigration to the United States within the last year. A quarter of a million people who would otherwise have come to the United States for work have decided to stay away.

This is not due to enforcement. Enforcement is mostly eyewash anyway and only gives an excuse for the federal government to spy on American business. What's made the difference is the recession. The jobs aren't available. The prospects for new immigrants are not what they used to be. The land of the free has become the land of a shrinking economy due to the despotic arm of the US state.

It seems that Mexicans are not so anxious to live in the great Obama utopia of debt, inflation, nationalization, bailouts, and regimentation.

Now, a person might say, well, there's a silver lining in every recession and this is one. But listen: economic opportunities are universal. If you feel them and sense them, so do others outside the border — and they want to be part of it. If they don't feel them and sense them, maybe it is time to wake up and realize that they don't exist as they used to.

Time was when shelters just across the border, where people lived until they saw an opportunity for safe passage, were filled and overflowing. Now they are empty. Time was when the border-patrol vans and buses hauled people here and there, whereas now they just drive around on day trips, looking for some sign of life.

To have an "immigration problem" is enormously flattering for a country. For that problem to go away is a dark cloud, a bad omen, a sign that something is going terribly wrong. The absence of an immigration problem can quickly turn into an emigration problem.

What jobs were once available that are no longer there? Jobs in housing for one. Mark Thornton points out that the housing bubble was a massive subsidy for immigration, since it was the immigrants who put up the drywall, painted the houses, and landscaped the yards. In this sector, what we might be seeing is a return to the status quo ante.

But housing is not an isolated sector. It is connected to other sectors such as retail and agriculture that are currently in a state of bust. Indeed, it is highly likely that the bust is going to be disproportionately large as compared to the boom, in which case the refusal to bother to immigrate is a sign of a more fundamental shift in American economic life.

We could be entering a period of prolonged economic stagnation, thanks not to some long wave or mysterious change of history, but as a direct result of Washington, DC's egregious management of public policy.

At the same time, the war on terror combined with nationalist hysteria has succeeded in dramatically limiting the ability of banks and technology firms to hire people from abroad to do the kind of work that is so desperately in demand these days. Higher-skilled employees are harder and harder to come by, given the rotten American educational system.

Leave it to the federal government to make it more difficult to find labor when it is needed most. A little-noticed provision of the February 2009 stimulus package actually punishes firms that use the provisions in immigration law that allow the hiring of foreign workers. All of this combines to erect ever more barriers to prosperity.

By way of review, the main sources of prosperity are two: capital investment and increases in the division of labor. When the prospects for investment fall, it becomes ever more important to widen the cooperative efforts among all peoples to exchange. A fall in the division of labor — which is implied by a fall in immigration — can have dramatically bad economic effects.

For example, it means that all of us have to do more of what we don't do well and less of what we are good at. Instead of hiring, we do the job ourselves, which means that we don't choose our highest-valued uses of time. If you reduce the division of labor enough, you land in a hunter-gatherer society where no civilization exists. Every step away from the extended division of labor makes us poorer and brings us closer to decivilization.

Prosperity is associated with the widest-possible division of labor. This is what leads to innovation too. It is not a surprise that 15% of the venture-backed companies that are high on the list of innovators were founded by foreign-born entrepreneurs. These are companies that benefit everyone.

Meanwhile, we will soon be dealing with an added issue of a growing brain drain. I personally know many brilliant people who have left the country or are seriously considering doing so, looking around the world for a home with economic opportunity — where the looters aren't running public policy.

$29 $25

 

Emigration out of the United States has been growing every year since 1991, from 252,000 in 1991 to 311,000 in 2005. I couldn't find data past that point, but can there be any doubt where we are heading with this? Low-skilled employees want nothing to do with us. High-skilled employees are not allowed in. Enterprise is being killed at every turn. It won't be long now before larger and larger numbers of people vote with their feet.

A final insult is how US tax law treats its emigrants from this country. It continues to tax them as if they were lifetime slaves. Wherever you go, the force is with you.

The heck of it is that all of this could be turned around today. A social consensus against tyranny can form and strengthen. It only takes political will to let freedom reign.

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