Browsed by
Tag: illegal immigration

Demagoguery vs. Data on Employment in America – Article by Tyler Watts

Demagoguery vs. Data on Employment in America – Article by Tyler Watts

Comments 0 Comment
The New Renaissance Hat
Tyler Watts
******************************

Demagogue politicians love to play on popular fears that low-wage foreigners are “stealing” good-paying American jobs by way of outsourcing and globalization. The claim is made by nativists and protectionists of all political stripes, whether leftists complaining of a “rigged economy” or rightists speaking of other countries “beating us” economically.

A sound economic analysis of the claim about job losses due to international trade should address two questions: First, is it true that the US has lost jobs due to trade (or other factors)? Second, is this phenomenon good or bad overall for the US and world economies?

On the first point, it can appear as though the US has lost jobs. For example, as Figure 1 shows, manufacturing employment in the US has declined by about 2 million from pre-Great Recession levels, and is down by over 7 million, or 37 percent, from the all-time high reached in 1979.

Figure 1: Total Manufacturing Employment, 1940–2016

watts1

The problem, though, is that by looking at manufacturing in terms of jobs, we’re missing the full picture of industrial production.

Nevertheless, the demagogues still argue that, even though high-paying service sector jobs have more than replaced lost factory jobs, “we don’t make things here anymore” and we should lament this. This oft-heard refrain is patently false. We don’t make certain things, such as garments, toys or electronics, because global free trade and technological advances tend to shift America’s output into those industries in which our comparative advantage is greatest. But Americans do indeed make things — quite valuable things.

This can be seen in Figure 2, which shows the US Industrial Production Index for the “de-industrialization” period. After the expected steep decline following the Great Recession of 2008–2009, US manufacturing has slowly bounced back and is now producing more products, in value-added terms, than ever before. Indeed, this index, which consists mainly of manufacturing, has grown by over 100 percent since the 1979 peak in manufacturing employment.

Figure 2: Industrial Production Index for the United States, 1979–2016

watts2

In other words, thanks to productivity gains, we need fewer workers to make more stuff.

From an economic perspective, nothing could be better news. US manufacturing creates 100 percent more value with 37 percent fewer workers. Creating more value with fewer workers means we’re more efficient than ever, or put another way, more productive than ever. These awesome productivity gains have many sources, especially in the form of technological advances in areas like software, robotics, and communications. Globalization and outsourcing have also played a role, as they allow American workers a greater degree of specialization in those sectors where our productivity edge is largest.

The good news gets better, though: not only have we gained jobs on net, but jobs have grown faster than the population over time. Since the 1979 peak in manufacturing employment, the US adult population grew by 53 percent, whereas employment grew by 59 percent, as shown in Figure 3.

Figure 3: Population Growth vs. Employment Growth Since 1979

watts3Source: Federal Reserve Economic Data

Despite these generally positive facts, some still contend that we’ve replaced “good” manufacturing jobs with lousy service sector jobs. Well, of course it must be true that, if we’ve lost manufacturing jobs, but gained jobs overall, then all of the job gains must have come from non-manufacturing sectors. And indeed the service sector, broadly defined, has seen employment growth of 90 percent since our 1979 benchmark. But beware of making hasty earnings assumptions about a sector that employs nearly 124 million people. To see whether the newly-created “service sector” jobs really don’t pay as well as the vaunted manufacturing jobs, we need to drill down into the employment and earnings data. What we’ll find is that a large majority of the new service sector jobs pay just as well or much better than manufacturing jobs.

Table 1 presents Bureau of Labor Statistics data on the 15 largest sectors and sub-sectors of the US economy, which together represent over 96 percent of the total net increase in payroll employment for the post-peak manufacturing jobs era (1979 to 2016). This might come as a surprise to the anti-globalization crowd: despite the loss of 7 million manufacturing jobs (and some mining, logging, and utilities sector jobs), we’ve seen a net increase of nearly 53 million total jobs. Of these net new jobs, fully 62 percent of them feature, as of January 2016, average hourly earnings equal to or greater than current average hourly manufacturing earnings. In other words, most of the 53 million new jobs pay the same or better wages than the demagogues’ benchmark “good” manufacturing jobs. So we lost 7 million good jobs, only to gain about 32 million equal or better-paying jobs, along with about 19 million lower-paying jobs (about 38 percent of net new jobs pay less than manufacturing).

Table 1: Employment Changes and Current Earnings by Sector

watts4Source: Bureau of Labor Statistics

We’ve established that, despite a major decrease in employment in the manufacturing sector, we’ve gained many more jobs than we’ve lost in the past 35 years or so, and that most of these new jobs pay better to boot. Economic changes, while painful in the short run, have brought gains in output and employment not only for the US, but for the rest of the world as well. Overall, this is good news for the US and world economies.

So, as the campaign season heats up, let’s not be misled by baseless arguments about America “losing jobs” or other countries “beating us” at trade. Trade is a positive sum game, and the benefits for both the US and world economies are, shall we say, “yuge.”

Tyler Watts earned his PhD in economics at George Mason University in 2010. He currently teaches economics at East Texas Baptist University and runs the Institute for Economic Education (see YouTube channel here), a public outreach focused on integrating economics with a Biblical worldview and providing unique teaching tools for high school and college economics students.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Illiberal Belief #25: Immigration Must Be Restricted – Article by Bradley Doucet

Illiberal Belief #25: Immigration Must Be Restricted – Article by Bradley Doucet

Comments 0 Comment
The New Renaissance Hat
Bradley Doucet
September 15, 2013
******************************
Those of us who believe in the rightness and the benefits of free markets spend a good deal of time defending free trade between countries. But aside from the free movement of goods and services across international borders, augmenting the free movement of people across those borders would, I believe, greatly increase the peace and prosperity of people the world over. Opening up our borders to increased immigration is in fact demanded both by considerations of economics and of justice.Unfortunately, immigration is not very popular. The Economist reported in 2008 on a November 2007 poll of Europeans showing that only 55% of Spaniards and 50% of Italians considered migrants a boon to their economies—and that’s the good news. The number for Brits and Germans was only 42%, and for the French it was a dismal 30%.

One reason we fail to appreciate the economic benefits of immigration is that we are predisposed to see the world in zero-sum terms. We assume, for instance, that there are a limited number of jobs available. Immigrants, we worry, will steal “our” jobs and depress the wages of those who manage to hang on to theirs. This worry is especially prevalent with regard to the poorest, least-skilled workers. In fact, there is little evidence to support this worry. Even the least-skilled migrants do not just suck up jobs; they also help create jobs, since as consumers they raise demand which itself gets translated into more jobs. They can also free up skilled workers to re-enter the workforce by providing childcare, for instance. According to The Economist, the numbers tell a similar story: “Studies comparing wages in American cities with and without lots of foreigners suggest that they make little difference to the income of the poorest.”

Fear of Foreigners

We humans also seem predisposed to fear those who are different from us, and events in recent years have not exactly been reassuring. From riots in France to devastating terrorist attacks in the U.S. and elsewhere causing massive damage and loss of life, we see people from different cultures causing various levels of mayhem, and our natural xenophobia is reinforced.

But the unrest in France is not so much evidence of a deep cultural divide between Western hosts and Eastern immigrants. There do exist important cultural differences, but it is also the case that France’s sclerotic employment regulations deserve much of the blame for recent unrest. By making it extremely difficult to fire employees, those regulations discourage the hiring of employees— especially the hiring of foreigners of whom one might already be suspicious. Sky-high rates of unemployment in an immigrant population, while not excusing violent demonstration, surely help to explain it.

As for terrorism, it is clearly just a fanatical fringe of Islamists who are so fervent in their beliefs that they would commit suicide and murder hundreds or thousands of innocents for their cause. There is no reason for a free society to fear the average Muslim immigrant. Nevertheless, the War on Terror will continue to be used to justify such projects as the building of fences along the Mexican border, despite the lack of Hispanic suicide bombers and fact that the September 11 terrorists did not sneak across the Rio Grande. And while fences will not keep many out, they might keep many in. As The Economist points out, “After all, the more costly and dangerous it is to cross, the less people will feel like leaving. Migrants quite often return home for a while—but only if they know it will be relatively easy to get back in. The tougher the border, the more incentive migrants have to stay and perhaps to get their families to join them instead.”

Be Our Guest

If there is little chance that developed countries will just throw their borders open anytime soon, guest-worker plans seem like a practical compromise. For one thing, our Ponzi-style welfare schemes, to which we are still very much attached, cannot support the whole world. Temporary migration, in which foreign workers come for a limited time just to work without drawing on government benefits, would still be appealing to those workers while alleviating concerns about breaking the welfare bank. So why are they not more popular?

Well, there is the concern that some guests might overstay their welcome. As The Economist Report reminds us, “The old joke that there is nothing so permanent as a temporary migrant has more than a grain of truth in it.” The historical record is mixed, with some countries running guest worker programs that function smoothly, and others failing to enforce the temporary nature of their arrangements.

The more serious problem is that even supporters of more open immigration, especially those to be found among well-intentioned elites, as often as not oppose guest worker programs. These critics lament the creation of a second-class of citizens. It is not right, they argue, to withhold welfare benefits from guest workers. They worry also about the possibility of those second-class citizens being taken advantage of and abused by unscrupulous employers. But is the answer to keep people out altogether, holding out for true open borders some day?

Harvard economist Lant Pritchett is the author of Let Their People Come. In an interview with Kerry Howley in the February 2008 issue of Reason magazine, he addresses concerns about second-class citizens: “The world now is divided into first-class citizens of the world and fifth-class citizens of the world.” He adds that, ironically, in places like the Middle East where people are not so concerned about denying migrant workers all the benefits of citizenship, immigration is high but far less controversial. “One of the awkward paradoxes of the world is that Bangladeshis and Pakistanis and Nepalis are enormously better off precisely because the Persian Gulf states don’t endow them with political rights.” [Emphasis in original.]

Internal Dissent

There are in fact some libertarians, most notably Hans-Hermann Hoppe, who argue against opening the borders to greater immigration. Hoppe has a case to make, but I don’t think it gets him nearly as far as he thinks it does. First, he points out that a truly free society would have no single, national immigration policy. Rather, the many private owners of land along the “border” would decide whom to allow onto their land, resulting in a patchwork system in which some areas would tend to restrict entry and others would throw their gates wide open. Under current conditions, though, Hoppe sees immigration as “forced integration” because, given existing anti-discrimination laws, people are forced to associate with others they might not wish to associate with. In a truly free society, people would be free to choose with whom they wanted to associate.

Until they are, however, governments should come up with second-best, least-bad national immigration policies. Hoppe argues that in order to minimize the harm to the rightful owners of the land in America (i.e., the current American population) the American government should follow a policy “of strict discrimination.” Immigrants should have “an existing employment contract with a resident citizen” and demonstrate “not only (English) language proficiency, but all-around superior (above-average) intellectual performance and character structure as well as a compatible system of values—with the predictable result of a systematic pro-European immigration bias.”

Of course, we all have an interest in keeping out hardened criminals and terrorists. The main problem I see with Hoppe’s logic, though, is that if America (or Canada) were a truly free society, many hard-working foreigners (and not necessarily Europeans or those of above-average intellect, either) would have bought into ownership of some of the land in North America. A system that tries to minimize harm to the rightful owners of the land should also minimize harm to these multitudes who would have been owners if the society were truly free. This suggests to me far more immigration than Hoppe envisions, and far more than is currently allowed into sparsely populated North America.

Slow But Sure

Lant Pritchett asserts that holding out for more sweeping change is the wrong way to go. “I think we’re going to move ahead on migration; people are going to become more and more exposed to the fact that people from other places in the world are, in very deep ways, human beings exactly like us; and eventually, in an unpredictable way, the attitude toward this will shift.” Small changes will beget more changes—with the added benefit of slower change being less disruptive for host countries.

Removing immigration restrictions, even if only a little at a time, is an excellent way to help the world’s poor. Immigrants themselves benefit, of course, but so do their families back home, through remittances. Says The Economist, “For most poor countries remittances are more valuable than aid. For many they provide more than aid and foreign direct investment combined.” And because money is remitted directly to families, it neatly sidesteps the problem of corrupt government officials siphoning off aid money to enrich themselves.

In the end, those who oppose more open borders must ask themselves by what right they would deny the freedom of movement of others? Put differently, by what right would they deny the freedom of association of those of us who want more open borders? Increased immigration would help the world’s hard-working poor, and without entailing the negative consequences we fear. But most of all, it’s just the right thing to do.

Bradley Doucet is Le Québécois Libre‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness. He also writes for The New Individualist, an Objectivist magazine published by The Atlas Society, and sings.
Review of Mark Krikorian’s “The New Case Against Immigration: Both Legal and Illegal” – Article by Daniel Griswold

Review of Mark Krikorian’s “The New Case Against Immigration: Both Legal and Illegal” – Article by Daniel Griswold

Comments 0 Comment
The New Renaissance Hat
Daniel Griswold
August 3, 2012
******************************
Published by: Sentinel • Year: 2008 • Price: $25.95 hardcover and e-book • Pages: 304
***

In his new book Mark Krikorian of the Center for Immigration Studies argues that immigration may have been good for America a century ago but not today—not because the immigrants have changed but because our nation has changed.

That’s an interesting thesis, but as the book unfolds, the arguments sound more and more familiar. Krikorian argues that immigrants at current numbers can’t be assimilated and that “mass immigration” jeopardizes national sovereignty and security, our quality of life, our jobs, wages, and wallets.

Despite his avowed goodwill toward immigrants, Krikorian’s book is a polemic written to paint immigration in the worst possible light. The word immigration hardly ever appears without the modifier “mass” before it, even though the immigration rate today is far lower than a century ago. He dismisses efforts in Congress to legalize low-skilled immigration as “amnesty” legislation, even though the proposals would have imposed fines, probation, and security checks. He also ignores important findings in the immigration literature for the sake of advancing his argument.

Krikorian’s worries about assimilation are nothing new and carry no more weight today than similar worries about the Italians, Poles, Irish, and Germans in past eras. Government promotion of multiculturalism and bilingual education don’t help assimilation, but they are not the insurmountable hurdles that Krikorian paints: Studies show second- and third-generation immigrants are almost all fluent in English.

The book is at its xenophobic worst in the chapters on sovereignty and security. Krikorian warns that “Mexico City is moving to being, in effect, a second federal government that American mayors and governors must answer to . . . becoming a permanent participant in the day-to-day business of governance, [exercising] joint dominion” over American territory. As evidence for “this assault on American sovereignty” he mostly just musters quotes from Mexican officials urging the U.S. government to reform its immigration system.

That’s only the beginning. While just about everybody recognizes that radical Islam is the most likely source of future terrorist activity against the United States, Krikorian is eager to bring every immigrant group under equal suspicion. In a section titled “Future Wars,” the author manages to slander millions of normal, peaceful, hardworking immigrants from China, Korea, and Colombia. “Though the nearly 700,000 Korean immigrants here came from South Korea, there can be little doubt that the Communist regime in the north has a network of agents already in place among them,” he writes, casting unwarranted suspicion on the corner grocer in Brooklyn and the worshippers at the Korean Central Presbyterian Church down the road from where I live in northern Virginia. In the same vein, Krikorian writes, “War with China is by no means a certainty, but it is clearly possible, and the nearly 1.9 million Chinese immigrants throughout the United States, including a major presence in high-tech industries, represent a deep sea for Beijing’s fish to swim in.” Is this really a valid argument for turning away immigrants such as Taiwan-born Jerry Wang, cofounder of Yahoo!, or Beijing-born Liang Qiao, the Iowa-based coach of the American Olympic gymnast Shawn Johnson?

Turning to jobs and wages, Krikorian sounds like a class-warfare “liberal.” “Mass immigration affects society as a whole by swelling the ranks of the poor, thinning out the middle class, and transferring wealth to the already wealthy,” he asserts. The facts say otherwise. Studies show that immigration benefits the large majority of Americans, not just the wealthy. The middle class has not been thinning out but moving up: The shares of households earning below $35,000 a year and between $35,000 and $100,000 have both declined in the past 20 years as the share earning above $100,000 has grown. Fewer Americans were living under the poverty line in 2006 than in 1994, and the poverty rate has actually been trending down in the past 15 years—a time of robust immigration.

It is true that low-skilled immigrants consume more in government services than they pay in taxes, as Krikorian argues at length. But he dismisses the practicality of limiting access to welfare while glossing over the fact that the average immigrant and his or her descendents generate a sizeable net fiscal surplus for the government.

In the final chapter Krikorian advocates deep cuts in legal immigration and a sweeping crackdown on illegal immigration. Among his preferred coercive tools would be a national database of all U.S. workers, native and immigrant alike; uniform national ID documents; enlisting local law enforcement officers in pursuit of illegal immigrants; and even barring private property owners from renting to people without the right documents.

There are plenty of thoughtful questions to be considered when it comes to the role of immigration in a free, modern, and globally connected society. Unfortunately, this book brings nothing new to the discussion.

Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.