Free Trade and Illegal Immigration

I was listening to the radio on the way home tonight and Al Rantal was on one of his favorite hobby high horses, illegal immigration. He was bemoaning the decline of the presence of the American worker in the meat packing industry. He mentioned the oft repeated claim that these are jobs that Americans wont do, and this time Mr. Rantel actually got the argument right, or more accurately put forward the complete argument: these are jobs American’s wont do at the wages currently being paid. Mr. Rantel then went on to scold those who are in favor of increasing immigration and changing immigration laws to make it easier for those who want to come here to work. Basically, this boiled down to: How can American workers compete with wages that, while above that in the third world, are below what Americans are willing to take to do these kinds of jobs?

And this got me thinking. If you are really adamantly against immigration you are a protectionist. Really, you can’t be anything else. After all, one of the standard argument against free trade and for protectionism is that American workers cannot compete with third world wages. So to protect American jobs we have to protect them from that cheap labor. Basically that is Al Rantel’s argument (or at least one of them) against illegal immigration. And not only are you a protectionist, but you are quite close to being a Mercantilist. After all, when I listen to Mr. Rantel and those like him they talk about how changing immigration policy to let in more immigrants will wreck the American economy, that we must resist it to keep the American economy strong, etc. Well, that kind of rhetoric and policy fits very well with mercantilism.

What is wrong with being a mercantilist? Well, if you have two countries engaging in mercantilist policies against each other, they end up hurting themselves. Basically, they are limiting trade and as a result they are actually weakening their respective economies. The whole idea of trade in general, be it between individuals or countries, is that of voluntary transactions that are, in expectation, to benefit both (all, in an n-party transaction) parties. Thus, by limiting trade, you limit opportunities for the actors, individuals, corporations, or nations, to make themselves better off. Or more simply put, trade is a positive sum game (in expectation).

Seriously, what is the difference between importing cheaper goods produced in another country or labor from another country? Both are commodities, both have functioning markets. The only way one can hold this position is to hold it for both commodities and to be a protectionist. I can understand getting control of the borders on national security grounds, but one thing those who hold this view might have to accept that to do that, it might mean making legal immigration easier not harder aside from security checks.

FILED UNDER: Borders and Immigration, Economics and Business, US Politics,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. AllenS says:

    Well, call me Mr. Mercantile.

  2. superdestroyer says:

    There is a huge difference between free trade in good and open borders. Free trade in goods keeps any negative externalities in the producing country. If Japan wants to pay its workers with $15 melons or China wants to keep production costs down by not having pollution controls,the those countries suffer the consequences.

    However, with open borders, the US suffers the negatives of its cheap labor through high crimes, failing schools, identify theft, urban sprawl, clogged roads, high welfare costs, overcrowded emergency rooms, collapse of zoning laws, higher insurance premiums, and the loss of common spaces.

    If you want to have open borders, then America has to give up the Welfare state. That means no more food stamps, Medicaid, disability insurance, public schools, free clinics, non-denial of medical care at Emergency Rooms, and even social security. If we are to benefit from the labor of immigrants, then we have to make sure that they cannot pass any costs of their immigration on to others.

  3. Rick DeMent says:

    Seriously, what is the difference between importing cheaper goods produced in another country or labor from another country?

    On a graph or balance sheet nothing at all. But goods don’t suffer from alcoholism, divorce, break up of families, and a long list of social pathologies that introduce costs that never make it to the balance sheet or are even easily quantifiable yet extract huge costs, seen and unseen, on an economy.

    The problem with ideologs is that if you can’t graph it or put it on a chart it doesn’t exist. Labor is different then other commodities because your screwing with peoples lives and the lives of their families. Frankly, public policy, including economic policy, needs to benefit the people in the country where it is being made first and formost. And while I acknowledge that the success of the economy is intertwined with the well being of actual citizens of that country, the keen jerk aversion to anything that even hints of protectionism, free markets, subsides, socialism, capitalism, and what have you, by the respective ideologs who insist on reducing the value of human beings to simple participants in an n-party transaction is a bug not a feature.

    Aside from that I do applaud you for pointing out the crucial second part of the “…jobs that Americans wont do” argument with the “…at the wages currently being paid” qualifier that makes it true. The dishonesty of the first part, lacking the second, is frankly appalling to me. It makes it sound like Americans are some how lazy simply because they want a small share in the fruits of the labor they perform and to me that is downright un-American.

  4. Anderson says:

    The Nazis were all about autarky, though “immigrant” slave labor was certainly okay during wartime.

    It’s not a trivial comparison, btw; the nativism and prejudice permeating much of the anti-immigration movement has some ugly 20th-century cousins.

  5. LaurenceB says:

    James is absolutely correct. If those who are anti-immigration want to oppose it on the grounds that “immigrants are bad” (as some do above) than that is their right. But if they want to oppose immigration on economic grounds, then they need to recognize that the economic philosophy they are espousing is protectionism, the antithesis of free market capitalism.

    See Reason Magazine or the Cato Institute for more background on why this is correct.

  6. thunderbird says:

    Lets just repeal NAFTA and end this illegal imagration entirly

  7. There is also the distinction between supporting immigration and supporting illegal immigration. It is somewhat similar to saying if you oppose smuggling, you must also be opposed to free trade. Smuggling occurs either to avoid the legal tax/inspection or because the thing itself is banned (Terrorists in the case of immigration). We can have a great debate on what our sugar tariffs should be, but which ever side you are on in that debate, you shouldn’t support the smuggling of sugar to get around the tariff.

    I think it is entirely appropriate for the US to revamp its legal immigration policies (e.g. emphasize immigration for skills vs reuniting families), but that doesn’t mean that the person I would support entering the country legally to work at the meat packing plant I can’t also disagree with their entering illegally to work at the same plant at the same job.

  8. just the messenger says:

    Where’s the evidence showing that immigrants cause all the social problems that are being attributed to them? My guess: it doesn’t exist.

    Courtesy of SSRN:
    Why are Immigrants’ Incarceration Rates so Low? Evidence on Selective Immigration, Deterrence, and Deportation
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=871071

  9. spencer says:

    The concept behind free trade is that the labor previously used to produce the newly imported good shift to the production of another good where the productivity or output of that labor is higher. So free trade in principle leads to both the domestic and foreigner worker producing more then they would in the absence of trade and consequently everyone is better off.

    So does that happen when you import cheap labor.

    First, it seems a safe conclusion that the immigrant is making more and better off then he was in their old job in their native country.

    But second, what do we know about the US worker that use to be employed in the meat packing or other low wage industry. Apparently that worker has also moved on to a better paying, more productive job because those workers are no longer willing to work in the low wage jobs.

    But is this a complete analysis? Is there a different alternative to importing cheap labor.
    What if the owners of the meat packing plant had invested more in improving the output of their workers so they could produce more and earn more.
    So meat packers — or other similar job —
    would now have more capital per employee and their productivity and earnings would be higher
    and US workers would have kept the jobs. In this case their would have been no need to import cheap labor.

    So the question comes down to one of whether we are better off because some industries can keep their product cheap by importing cheap labor rather then providing the worker more capital so they would be more productive and so earn higher wages. Under this case American workers would still hold the meat packing job but the jobs would pay better.

    Consequently it is not a clear cut case that illegal immigration makes everyone better off.

  10. Steve Verdon says:

    There is a huge difference between free trade in good and open borders.

    Is there any reason to continue beyond this strawman? Seriously, you anti-immigration folks would be taken more seriously if you wouldn’t resort to this tactic so blatantly and obviously.

    On a graph or balance sheet nothing at all. But goods don’t suffer from alcoholism, divorce, break up of families, and a long list of social pathologies that introduce costs that never make it to the balance sheet or are even easily quantifiable yet extract huge costs, seen and unseen, on an economy.

    Please, goods we import contribute to all of these things. Things like alcohol, computers, and so forth. If you are going to make this argument at least consider both sides–i.e. the costs and the benefits.

    Labor is different then other commodities because your screwing with peoples lives and the lives of their families.

    Funny, I imagine the same arguments were advanced in opposition to mechanization. Color me totally unpersuaded by this one.

    Frankly, public policy, including economic policy, needs to benefit the people in the country where it is being made first and formost.

    Yes and we can go back around 250 years to see arguments against Mercantilism.

    And while I acknowledge that the success of the economy is intertwined with the well being of actual citizens of that country, the keen jerk aversion to anything that even hints of protectionism, free markets, subsides, socialism, capitalism, and what have you, by the respective ideologs who insist on reducing the value of human beings to simple participants in an n-party transaction is a bug not a feature.

    Knee-jerk? Seriously point to a good use of protectionism from an economis perspective. Do that, and I’ll at the very least reconsider my views.

    There is also the distinction between supporting immigration and supporting illegal immigration.

    I disagree. Proposals to change the immigration laws of this country to make it easier for people looking for work to enter legally are almost always met with stiff opposition usually using the rhetoric of Al Rantel, et. al.

    It is somewhat similar to saying if you oppose smuggling, you must also be opposed to free trade. Smuggling occurs either to avoid the legal tax/inspection or because the thing itself is banned (Terrorists in the case of immigration).

    In part yes that is precisely what I am saying. Inspections are one thing, but avoiding taxes or in the case of international trade, tariffs is a form of protectionism. And I’ve already noted that getting control of the borders from a national security stand point is far more reasonable, but that doesn’t necessarily mean keeping out honest law abiding non-terrorists who simply want a better way of life.

    We can have a great debate on what our sugar tariffs should be, but which ever side you are on in that debate, you shouldn’t support the smuggling of sugar to get around the tariff.

    Actually I do. I don’t think bad laws should be enforced. Do you? You think laws that actually do more harm than good should be followed simply because they are the law?

    But is this a complete analysis? Is there a different alternative to importing cheap labor. What if the owners of the meat packing plant had invested more in improving the output of their workers so they could produce more and earn more. So meat packers — or other similar job — would now have more capital per employee and their productivity and earnings would be higher and US workers would have kept the jobs. In this case their would have been no need to import cheap labor.

    There is one problem with this “analysis”. Such improvements can take place even with cheap foreign labor (legal or illegal). Hence your conclusion is some what dubious.

  11. floyd says:

    labels be damned; common sense should still have a place alongside reason, somewhere other than the trash can!

  12. floyd says:

    why do so many of you confuse immigration with illegal immigration. read this next part slowly…home invasion is different from knocking and being allowed in.