Economics is branch of evolutionary biology and if the profession does not embrace this fact, it will only continue to produce more shallow blank-slatist "findings" with not much real world value; the critiques of these two guys just proves this.
And regarding your last sentence; i think its more accurate to talk about the genetic, not "cultural" distance between immigrants and the host population. "Culture" just obscures whats really going on under the hood
Nothing to add to your very thorough and plausible Is it?/Isn't it?/When is it?/When isn't it? economic analysis. But there is whole other dimension to all this discussion - albeit at a tangent. This other dimension is WHY Were They Allowed to Immigrate? Three parts to an answer:
1) they were perceived (rightly of wrongly) to be good for the economy.
2) liberal opinion in the host nation felt that we 'owed' our former colonials an economic break.
3) an indigenous intelligentsia had come to have such a disdain for their fellow white peers that they came to view any non-white-European as an inherently more likeable species of human being (but with the never-spoken caveat that they'd prefer if those immigrants weren't too present in the intelligentsia's own leafy back yard). If and when their white peers demurred from this welcoming attitude...well it only proved what a nasty breed they were.
It is this No. 3 - rather than any economic calculus - that marks modern Western Liberalism as a uniquely self-destructive moral system.
To me, it is kinda self evident that lower-skilled members of the public will be worse for the economy. Just take it to the extreme: imagine a million extra individuals with an intellectual disability, sub 70 IQ. Will that be better or worse for the economy? Obviously, it will be worse. They won't contribute much capital. Then take it to the other extreme: a million extra mentally-gifted individuals, super 130 IQ. They will be entrepreneurs, executives, managers, engineers, doctors, and so on, creating much and buying much. But, in between those two extremes, it all evens out? Mainstream economists have not come to grips with the effect of intelligence differences. Their field is in a quagmire until they do.
The economic theory of these two makes less sense than queer theory. According to their logic, a giant influx of low-skilled immigrants would be a boom for any country, perhaps on the condition that such immigrants are young, which raises the question of why the world seems like the opposite of that idea.
Countries full of low-skilled people are poor, even if they are young. For example, Nigeria is not only poor but has also had low economic growth. Mexico and Brazil are much richer than Nigeria, but are stuck in the middle income bracket, far below countries like the US, and while they have a low TFR now their populations are still relatively young compared to the US. Meanwhile old but higher IQ countries in Eastern Europe like Hungary, Poland, Slovakia, Lithuania, Latvia and Estonia, have gotten rich and are still getting richer. Human capital explains all this, the ridiculous theory of these two does not. Take South Africa, people who understood the importance of human capital predicted that the country would decline because the country's government had gone from being controlled by a high IQ group to being controlled by a low IQ group, but according to these two, SA should be in the ascendancy, after all they had year after year the influx of a young low-skilled labor force.
For any academic who believes immigration will help the economies of the West, they should be asked if they support immigration to Israel to help its economy. I think you'll get your answer about their true beliefs from that.
Have you read George Borjas "We Wanted Workers"? The key part I'm thinking of is his calculation of the "immigration dividend," that is, the economic surplus accruing to natives as a result of immigration, using standard economic assumptions. For the entire USA: $50 billion. Which is dwarfed by the $500 billion transfer from those competing with immigrants to those employing them, as well as the (not precisely calculated, but large) fiscal transfer from natives to immigrants. This is without taking into account IQ, other genetic effects, or political/institutional effects. Highly recommend the whole book; it's a good complement to Garret Jones' trilogy and Cognitive Capitalism.
Why do academics only seem to consider one aspect of every question? Even if it's amazing for the economy, migrants from other nations aren't us and they are replacing us.
If someone argued that panda numbers were down and that importing grizzly bears was needed to get the birth rates up because pandas don't want to breed, an academic would consider this a viable solution.
As for Nowrasteh, when I asked him whether he believes that low-skilled immigration into Europe from Muslim countries has been or will be good for the economy, he replied, “Yes”.
I don't think it's about high or low skill immigrants. I think it's about immigrants that will join your culture and become part of your civilization, and contribute to society.
If a hypothetical person moves from Ecuador to Texas and doesn't speak the language, won't learn the language, won't work, and steals from his neighbors. What is the reason why they should allow him to stay?
And yet, million of low skilled, non English speaking illegal immigrants cross the border between Texas and Mexico every day, if not week. Why should we allow illegal immigrants to stay?
"If a hypothetical person moves from Ecuador to Texas and doesn't speak the language, won't learn the language, won't work, and steals from his neighbors. What is the reason why they should allow him to stay?"
The first problem here is arguing economics is a fool's errand. The statement that economics is the dismal science is telling but an insult to actual science. This comment sums up economics: 'Economics is like reading tea leaves...just not as accurate.'
About immigration, using the United States as an example. Immigration should be rare, and the quality of immigrants, foremost. The United States is 'blessed' with a plethora of those suited to low-skilled labor; one example is government officials at all levels. The United States and other countries have a deficit of those of high cognitive ability. The one human trait that gives a tremendous advantage over all other animals is intelligence.
If there is a dearth of low or unskilled labor, raise the wage and/or cut welfare payments. And above all, practice meritocracy.
Noah, I would accept your reductio: "If low-skilled immigrants are good for the economy because they free up time for high-skilled workers, would the same be true of even lower-skilled immigrants (who could free up time for low-skilled workers) and so on until we are admitting the very lowest-skilled immigrants? Should we admit immigrants with absolutely no skill so they can free up time for workers with the bare minimum of skill?" Absent other factors (welfare, political influence, crime) very low-skill workers are beneficial for low skill and high skill workers.
I am wondering what your response would be to a reductio in the other direction: Imagine we had fewer and fewer low-skilled immigrants (and births) without high-skilled immigrants (and births) taking their place. Would the economy improve? At the extreme, there is only a handful of extremely productive people or one single productive person. Do they not benefit from the existence of low-skilled workers to perform certain tasks? I don't see a major economically relevant distinction between a low-skilled worker being born or coming as a migrant.
What should happen is more government transparency on how much money is being wasted on these illegal immigrants. Right now Western government are actively hiding this data.
The cost of immigration of different groups in the Netherlands. As you might guess, Sub-Saharan Africans are the worst of the lot.
I think one key fact is that we don't have accurate prices for what the "price" of low wage labor is.
Anyone working a low wage job or working intermittently is heavily subsidized by the state. Free education, free retirement, free healthcare, free infrastructure, free services, etc.
There is a subsidized apartment building near me where the residents appear to be all Hispanic immigrants. They get free food from some kind of charity delivered to them. They obviously send their kids to the local public school which I doubt they fully fund. They get Medicaid. If I see one of them working at McDonalds, what is the REAL PRICE of their labor. It's a lot more then whatever McDonalds is paying them.
Given all the implicit subsidies that go into low wage work, we don't really know what the "price" of a house cleaner is. We know its a lot higher then the price they charge, but we don't know the real price. We don't know how much lower taxes would be without immigration. Or what the price of housing would be. Or what the quality of services would be. Etc.
The most basic function of the market economy, to give people accurate prices so they can make efficient decisions with their resources, is a complete mess for low end labor.
Now, maybe that's just a fact of life in a welfare state. But adding more welfare clients through immigration (bulging out the left half of the bell curve) makes it a lot worse.
In truth I think that if we didn't have "cheap labor" we would either be more efficient with labor or more people would do labor themselves. But perhaps their tax and cost of living burden would be lower as well, so having a spouse do more of their own household labor wouldn't be particularly burdensome.
"It’s not like Jeff Bezos has only two options: bring in a low-skilled immigrant or do the cleaning himself. He can hire a low-skilled native. And if he’s unable to find one willing to work at the prevailing wage, he can offer a higher wage." Is this not where the DWL occurs, that Jeff Bezos can surely afford to do that (with the effect being to shift the distribution of surplus), but on the margin there will be unrealized gains from trade.
You sort of address this point with "The non-fiscal effects of low-skilled immigration in the economy are largely distributional. By . . . in which case low-skilled immigration does increase the size of the pie, all else being equal. But this doesn’t seem like a particularly strong point.." With provided links, but the point is largely theoretical, as in all the additional surplus that would have gone to such labour, is part of the consumer surplus. The next point about "reducing the relative scarcity", is different from reducing barriers to trade, which is the point that the theoretical economic argument is making.
I'm not sure what the sign of expected effect of immigration is at various margins by various immigrant types, I'm more confident in rank order, but this is less useful for determining whether there should be more or less of various types. But a CBA would be useful, and comparative advantage does seem like a robust benefit of non trivial size, population decline/ageing is complicated but immigration seems better than some other counterfactuals, and the biggest cost seems institutional (or related to congestion) not fiscal, that organizations and firms seem already pretty bloated with MRPL<MC . Relatedly it seems that if the net expected effect on the margin is negative, then its unlikely that countries are at the optimum, implying strong population reduction/expulsion adjusted for type. Which whilst possibly true isn't likely to be publicly endorsed.
Given that natives often don’t like alien phenotypes because it destroys their homeland (in economic terms, essentially a highly-valued consumer good), I’m surprised you don’t mention this massive externality.
Great article. Glad that you were right all along.
'perhaps, the worst economic reasoning” he had ever seen'
I realise the left like to 'fight the good fight' but I simply don't believe that he has never encountered a worse economic argument.
The good thing about arguing with Bryan Caplan is he doesn't play Gotcha if you use a word that is less than optimal. He isn't nearly so keen as those two critics to misunderstand, even if is to his advantage to do so.
You make a pervasive argument, but let's talk specifics for a moment and consider careworkers, something I know a bit about as a consumer.
I suspect few natives would consent to being careworkers for the elderly at any price. All of the ones that care for my mother are non-native born.
If we did not have these people coming here (Canada has a program that let's in people willing to work in this arena on a two-year permit, after which, they gain landed immigrant status), family members would need to pitch in, or the government would need to provide care. Either way, the society loses: If a family member does the work, they cannot utilise their more productive skills (yes, you did deal with that to some extent in that you extrapolated to the very less skilled, but I want to stick with the specific). Or tax money, that could be left in the pockets of taxpayers or at least not increase the deficit, would be used to pay the less-skill natives willing to do the work. We know that, as a general rule, services provided by government tend to be less efficient.
This, and the suggestion that there may not be many natives willing to do the work, would mean that the the life experience of the elderly would suffer.
So, in this one particular case, I would claim that bringing in careworkers helps. Further, they many not be low skilled, but simply using this avenue to come to Canada. I know of a couple of cases where bright people came here on that program. One was a nurse, who did not become qualified and continued to work in care, but brought her family in and they have become very productive. Another became a teacher once she was landed.
"I suspect few natives would consent to being careworkers for the elderly at any price."
I have to say I'm BAFFLED by this assertion. People work in waste management for a price. They work on oil rigs for a price. They are Alaskan crab fishermen for a price. This is literally how PRICES work. They rise until the demand is fulfilled.
When I was a kid there were no male nurses. As financial returns to nursing have increased I've seen lots of men become nurses.
It is certainly possible that the price of careworkers might increase and one might have to consume less carework, but even that isn't know. If cheap careworkers represent a fiscal burden on the state and an increase in living costs (they compete for real estate, etc) then perhaps not having cheap care workers would mean having lower taxes and cheaper housing. Those lower costs could mean more money to pay higher wages for care work, or give someone enough take home pay that they could afford to have one spouse stay at home and do care work.
I will make this point above, but the bottom line is that we don't really have any clue what the price of lower end labor is. It's so heavily subsidized by the state that we don't actually know the real price of it, other then the vague notion that none of it seems particularly productive.
OK, I will buy that I was a little extreme in saying few native would consider care work, but, I still think that there are few people who will consent to wiping aged asses, cleaning, dressing and feeding enfeebled strangers at any price. I know I would not.
“It is certainly possible that the price of careworkers might increase and one might have to consume less carework, but even that isn't known.“ Surely that is certain. The reason immigrants are the majority of care workers (at least in Montreal) is because they will do the work at a lower wage. And it follows that there would be less demand for care work if the price increased (Supply vs Demand curve). And, then, to my point that family members would need to give up possibly more productive labour to care for the loved one. Or government would pitch in to limit the number of people dying alone lying in their own shit.
“If cheap careworkers represent a fiscal burden on the state and an increase in living costs (they compete for real estate, etc) then perhaps not having cheap care workers would mean having lower taxes and cheaper housing.” I do not follow. How would cheap workers in general become a fiscal burden on the state and increase taxes? Because they need wages to be subsidised? I don’t think that happens. They simply live more frugally, have spouses who make more money, work more than one job etc.
However, I agree that increases in immigration are likely a key reason for the high housing prices.
Butt wiping seems less burdensome than alaskan crab fishing, and people clearly take that job because they don't have better options. I'm sure they would prefer to earn the same money behind a desk, but they don't have the skills.
"And, then, to my point that family members would need to give up possibly more productive labour to care for the loved one."
If taxes were lower it might not be necessary to have both spouses work.
Further, it becomes more necessary for both spouses to work when they can't earn a living wage, we can't all be professionals. Bringing in cheap labor doesn't change the IQ of the natives.
I don't really know what people think of butt wiping. If you allow the government to do it it's free. But if you do it yourself you don't get paid. It's like that with a lot of stuff (childcare, education, etc) and it's pretty distortionary in the household vs market consumption decision.
"How would cheap workers in general become a fiscal burden on the state and increase taxes? Because they need wages to be subsidised? I don’t think that happens."
Cheap workers require massive net tax subsidies to pay for their kids education, healthcare, eventual retirement, and other services. If your earning minimum wage, your a burden on society.
What did western nations do before the massive increase in immigration? They paid workers a living wage.
One of the reasons big business supports mass migration is that desperate immigrants will work for less and lower the pay for other workers by flooding the market.
I also personally know some non immigrant care workers who were made redundant in the last 2 years. To be replaced with 3rd worlders? Who knows. They even got vaxxed to keep their jobs without knowing redundancy was coming.
I have always wondered what a “living wage” means. I accept that I can be criticized for using anecdata, but I do try to be precise. I mean if immigrants will accept less than a living wage, how do they, well, live?
In practical terms, what can someone earning a living wage afford that would not fit into the budget of someone who is not?
Isn’t a “living wage” really an arbitrary amount that someone thinks is enough?
That being said, yes, businesses and consumers benefit from lower wages that are generally associated with immigration because immigrants increase the supply of labour.
Living wage is a meaningless concept, but let me propose something more specific.
A "fiscally neutral wage".
That is a wage at which what one receives in benefits over a lifetime doesn't drastically differ from what one pays in taxes. In such cases, the wage a person earns is at least "transparent" in that there is no hidden subsidy.
When someones wage is below being fiscally neutral then the price for the goods and services they produce are inherently subsidized by the government leading to an inefficient allocation of resources.
If your working and still on Medicaid, its hard to see how that is anything but government subsidizing businesses payroll.
As we have universal Medicare in Canada, does that mean every employer is being subsidised?
Clearly, there are members of the community who cannot or do not for whatever reason, earn what the society has determined to be “enough”. IE they need more inputs (money for rent food etc.) than they can produce in outputs. Employers will not/cannot make up that difference. If a worker produces seven bushels of grain per week, the farmer cannot pay that person eight bushels.
In the West, we accept that we will have social safety net that will subsidise those workers. I see that as a subsidy to the worker and not the employer.
"In the West, we accept that we will have social safety net that will subsidise those workers."
Have we? We certainly disagree on what "enough" is.
But I will leave that aside and assume it fixed.
Given a fixed population, the % of people who are net fiscal burdens will be X%.
Now we import lots and lots of low skill low wage workers from abroad. Naturally, this will increase the number of net fiscal burdens from X% to X% + Y%.
Your basically taking the bell curve and enlarging the left tail, while keeping "enough" constant.
Since there are now more people below the line then above those above the line have to pay higher taxes to support those people. It's not clear to me that getting their butts wiped cheaper is worth the extra tax burden.
I don't think I would be willing to commit my mother to the care of someone who finds the work abhorant, and who is doing it because there is no welfare and no other option to putting food on the table.
"I don't think I would be willing to commit my mother to the care of someone who finds the work abhorant, and who is doing it because there is no welfare and no other option to putting food on the table."
Then don't do it, it is your choice. If you think illegal immigrants would be better for your mother, that's your prerogative.
Everyone is limited to some extent in their options. But everyone should do the work they can and not live off welfare.
Economics is branch of evolutionary biology and if the profession does not embrace this fact, it will only continue to produce more shallow blank-slatist "findings" with not much real world value; the critiques of these two guys just proves this.
And regarding your last sentence; i think its more accurate to talk about the genetic, not "cultural" distance between immigrants and the host population. "Culture" just obscures whats really going on under the hood
Nothing to add to your very thorough and plausible Is it?/Isn't it?/When is it?/When isn't it? economic analysis. But there is whole other dimension to all this discussion - albeit at a tangent. This other dimension is WHY Were They Allowed to Immigrate? Three parts to an answer:
1) they were perceived (rightly of wrongly) to be good for the economy.
2) liberal opinion in the host nation felt that we 'owed' our former colonials an economic break.
3) an indigenous intelligentsia had come to have such a disdain for their fellow white peers that they came to view any non-white-European as an inherently more likeable species of human being (but with the never-spoken caveat that they'd prefer if those immigrants weren't too present in the intelligentsia's own leafy back yard). If and when their white peers demurred from this welcoming attitude...well it only proved what a nasty breed they were.
It is this No. 3 - rather than any economic calculus - that marks modern Western Liberalism as a uniquely self-destructive moral system.
Exactly correct
True, but you should also consider where the anti-white attitude originated. It started with the Frankfurt school and infected every institution.
To me, it is kinda self evident that lower-skilled members of the public will be worse for the economy. Just take it to the extreme: imagine a million extra individuals with an intellectual disability, sub 70 IQ. Will that be better or worse for the economy? Obviously, it will be worse. They won't contribute much capital. Then take it to the other extreme: a million extra mentally-gifted individuals, super 130 IQ. They will be entrepreneurs, executives, managers, engineers, doctors, and so on, creating much and buying much. But, in between those two extremes, it all evens out? Mainstream economists have not come to grips with the effect of intelligence differences. Their field is in a quagmire until they do.
Heiner Rindermanns book "cognitive capitalism" should be mandatory reading in every econ freshmen class
The economic theory of these two makes less sense than queer theory. According to their logic, a giant influx of low-skilled immigrants would be a boom for any country, perhaps on the condition that such immigrants are young, which raises the question of why the world seems like the opposite of that idea.
Countries full of low-skilled people are poor, even if they are young. For example, Nigeria is not only poor but has also had low economic growth. Mexico and Brazil are much richer than Nigeria, but are stuck in the middle income bracket, far below countries like the US, and while they have a low TFR now their populations are still relatively young compared to the US. Meanwhile old but higher IQ countries in Eastern Europe like Hungary, Poland, Slovakia, Lithuania, Latvia and Estonia, have gotten rich and are still getting richer. Human capital explains all this, the ridiculous theory of these two does not. Take South Africa, people who understood the importance of human capital predicted that the country would decline because the country's government had gone from being controlled by a high IQ group to being controlled by a low IQ group, but according to these two, SA should be in the ascendancy, after all they had year after year the influx of a young low-skilled labor force.
For any academic who believes immigration will help the economies of the West, they should be asked if they support immigration to Israel to help its economy. I think you'll get your answer about their true beliefs from that.
Yes.
Shalom, fam. Lol
Have you read George Borjas "We Wanted Workers"? The key part I'm thinking of is his calculation of the "immigration dividend," that is, the economic surplus accruing to natives as a result of immigration, using standard economic assumptions. For the entire USA: $50 billion. Which is dwarfed by the $500 billion transfer from those competing with immigrants to those employing them, as well as the (not precisely calculated, but large) fiscal transfer from natives to immigrants. This is without taking into account IQ, other genetic effects, or political/institutional effects. Highly recommend the whole book; it's a good complement to Garret Jones' trilogy and Cognitive Capitalism.
Why do academics only seem to consider one aspect of every question? Even if it's amazing for the economy, migrants from other nations aren't us and they are replacing us.
If someone argued that panda numbers were down and that importing grizzly bears was needed to get the birth rates up because pandas don't want to breed, an academic would consider this a viable solution.
It's a funny analogy, but true.
As for Nowrasteh, when I asked him whether he believes that low-skilled immigration into Europe from Muslim countries has been or will be good for the economy, he replied, “Yes”.
I don't think it's about high or low skill immigrants. I think it's about immigrants that will join your culture and become part of your civilization, and contribute to society.
If a hypothetical person moves from Ecuador to Texas and doesn't speak the language, won't learn the language, won't work, and steals from his neighbors. What is the reason why they should allow him to stay?
And yet, million of low skilled, non English speaking illegal immigrants cross the border between Texas and Mexico every day, if not week. Why should we allow illegal immigrants to stay?
"If a hypothetical person moves from Ecuador to Texas and doesn't speak the language, won't learn the language, won't work, and steals from his neighbors. What is the reason why they should allow him to stay?"
Because they will vote for shitlibs.
The first problem here is arguing economics is a fool's errand. The statement that economics is the dismal science is telling but an insult to actual science. This comment sums up economics: 'Economics is like reading tea leaves...just not as accurate.'
About immigration, using the United States as an example. Immigration should be rare, and the quality of immigrants, foremost. The United States is 'blessed' with a plethora of those suited to low-skilled labor; one example is government officials at all levels. The United States and other countries have a deficit of those of high cognitive ability. The one human trait that gives a tremendous advantage over all other animals is intelligence.
If there is a dearth of low or unskilled labor, raise the wage and/or cut welfare payments. And above all, practice meritocracy.
Noah, I would accept your reductio: "If low-skilled immigrants are good for the economy because they free up time for high-skilled workers, would the same be true of even lower-skilled immigrants (who could free up time for low-skilled workers) and so on until we are admitting the very lowest-skilled immigrants? Should we admit immigrants with absolutely no skill so they can free up time for workers with the bare minimum of skill?" Absent other factors (welfare, political influence, crime) very low-skill workers are beneficial for low skill and high skill workers.
I am wondering what your response would be to a reductio in the other direction: Imagine we had fewer and fewer low-skilled immigrants (and births) without high-skilled immigrants (and births) taking their place. Would the economy improve? At the extreme, there is only a handful of extremely productive people or one single productive person. Do they not benefit from the existence of low-skilled workers to perform certain tasks? I don't see a major economically relevant distinction between a low-skilled worker being born or coming as a migrant.
What should happen is more government transparency on how much money is being wasted on these illegal immigrants. Right now Western government are actively hiding this data.
The cost of immigration of different groups in the Netherlands. As you might guess, Sub-Saharan Africans are the worst of the lot.
https://demo-demo.nl/en/
I think one key fact is that we don't have accurate prices for what the "price" of low wage labor is.
Anyone working a low wage job or working intermittently is heavily subsidized by the state. Free education, free retirement, free healthcare, free infrastructure, free services, etc.
There is a subsidized apartment building near me where the residents appear to be all Hispanic immigrants. They get free food from some kind of charity delivered to them. They obviously send their kids to the local public school which I doubt they fully fund. They get Medicaid. If I see one of them working at McDonalds, what is the REAL PRICE of their labor. It's a lot more then whatever McDonalds is paying them.
Given all the implicit subsidies that go into low wage work, we don't really know what the "price" of a house cleaner is. We know its a lot higher then the price they charge, but we don't know the real price. We don't know how much lower taxes would be without immigration. Or what the price of housing would be. Or what the quality of services would be. Etc.
The most basic function of the market economy, to give people accurate prices so they can make efficient decisions with their resources, is a complete mess for low end labor.
Now, maybe that's just a fact of life in a welfare state. But adding more welfare clients through immigration (bulging out the left half of the bell curve) makes it a lot worse.
In truth I think that if we didn't have "cheap labor" we would either be more efficient with labor or more people would do labor themselves. But perhaps their tax and cost of living burden would be lower as well, so having a spouse do more of their own household labor wouldn't be particularly burdensome.
"It’s not like Jeff Bezos has only two options: bring in a low-skilled immigrant or do the cleaning himself. He can hire a low-skilled native. And if he’s unable to find one willing to work at the prevailing wage, he can offer a higher wage." Is this not where the DWL occurs, that Jeff Bezos can surely afford to do that (with the effect being to shift the distribution of surplus), but on the margin there will be unrealized gains from trade.
You sort of address this point with "The non-fiscal effects of low-skilled immigration in the economy are largely distributional. By . . . in which case low-skilled immigration does increase the size of the pie, all else being equal. But this doesn’t seem like a particularly strong point.." With provided links, but the point is largely theoretical, as in all the additional surplus that would have gone to such labour, is part of the consumer surplus. The next point about "reducing the relative scarcity", is different from reducing barriers to trade, which is the point that the theoretical economic argument is making.
I'm not sure what the sign of expected effect of immigration is at various margins by various immigrant types, I'm more confident in rank order, but this is less useful for determining whether there should be more or less of various types. But a CBA would be useful, and comparative advantage does seem like a robust benefit of non trivial size, population decline/ageing is complicated but immigration seems better than some other counterfactuals, and the biggest cost seems institutional (or related to congestion) not fiscal, that organizations and firms seem already pretty bloated with MRPL<MC . Relatedly it seems that if the net expected effect on the margin is negative, then its unlikely that countries are at the optimum, implying strong population reduction/expulsion adjusted for type. Which whilst possibly true isn't likely to be publicly endorsed.
Given that natives often don’t like alien phenotypes because it destroys their homeland (in economic terms, essentially a highly-valued consumer good), I’m surprised you don’t mention this massive externality.
Great article. Glad that you were right all along.
'perhaps, the worst economic reasoning” he had ever seen'
I realise the left like to 'fight the good fight' but I simply don't believe that he has never encountered a worse economic argument.
The good thing about arguing with Bryan Caplan is he doesn't play Gotcha if you use a word that is less than optimal. He isn't nearly so keen as those two critics to misunderstand, even if is to his advantage to do so.
You make a pervasive argument, but let's talk specifics for a moment and consider careworkers, something I know a bit about as a consumer.
I suspect few natives would consent to being careworkers for the elderly at any price. All of the ones that care for my mother are non-native born.
If we did not have these people coming here (Canada has a program that let's in people willing to work in this arena on a two-year permit, after which, they gain landed immigrant status), family members would need to pitch in, or the government would need to provide care. Either way, the society loses: If a family member does the work, they cannot utilise their more productive skills (yes, you did deal with that to some extent in that you extrapolated to the very less skilled, but I want to stick with the specific). Or tax money, that could be left in the pockets of taxpayers or at least not increase the deficit, would be used to pay the less-skill natives willing to do the work. We know that, as a general rule, services provided by government tend to be less efficient.
This, and the suggestion that there may not be many natives willing to do the work, would mean that the the life experience of the elderly would suffer.
So, in this one particular case, I would claim that bringing in careworkers helps. Further, they many not be low skilled, but simply using this avenue to come to Canada. I know of a couple of cases where bright people came here on that program. One was a nurse, who did not become qualified and continued to work in care, but brought her family in and they have become very productive. Another became a teacher once she was landed.
I know, anecdata, but still.
"I suspect few natives would consent to being careworkers for the elderly at any price."
I have to say I'm BAFFLED by this assertion. People work in waste management for a price. They work on oil rigs for a price. They are Alaskan crab fishermen for a price. This is literally how PRICES work. They rise until the demand is fulfilled.
When I was a kid there were no male nurses. As financial returns to nursing have increased I've seen lots of men become nurses.
It is certainly possible that the price of careworkers might increase and one might have to consume less carework, but even that isn't know. If cheap careworkers represent a fiscal burden on the state and an increase in living costs (they compete for real estate, etc) then perhaps not having cheap care workers would mean having lower taxes and cheaper housing. Those lower costs could mean more money to pay higher wages for care work, or give someone enough take home pay that they could afford to have one spouse stay at home and do care work.
I will make this point above, but the bottom line is that we don't really have any clue what the price of lower end labor is. It's so heavily subsidized by the state that we don't actually know the real price of it, other then the vague notion that none of it seems particularly productive.
OK, I will buy that I was a little extreme in saying few native would consider care work, but, I still think that there are few people who will consent to wiping aged asses, cleaning, dressing and feeding enfeebled strangers at any price. I know I would not.
“It is certainly possible that the price of careworkers might increase and one might have to consume less carework, but even that isn't known.“ Surely that is certain. The reason immigrants are the majority of care workers (at least in Montreal) is because they will do the work at a lower wage. And it follows that there would be less demand for care work if the price increased (Supply vs Demand curve). And, then, to my point that family members would need to give up possibly more productive labour to care for the loved one. Or government would pitch in to limit the number of people dying alone lying in their own shit.
“If cheap careworkers represent a fiscal burden on the state and an increase in living costs (they compete for real estate, etc) then perhaps not having cheap care workers would mean having lower taxes and cheaper housing.” I do not follow. How would cheap workers in general become a fiscal burden on the state and increase taxes? Because they need wages to be subsidised? I don’t think that happens. They simply live more frugally, have spouses who make more money, work more than one job etc.
However, I agree that increases in immigration are likely a key reason for the high housing prices.
"I know I would not."
Because you have better options.
Butt wiping seems less burdensome than alaskan crab fishing, and people clearly take that job because they don't have better options. I'm sure they would prefer to earn the same money behind a desk, but they don't have the skills.
"And, then, to my point that family members would need to give up possibly more productive labour to care for the loved one."
If taxes were lower it might not be necessary to have both spouses work.
Further, it becomes more necessary for both spouses to work when they can't earn a living wage, we can't all be professionals. Bringing in cheap labor doesn't change the IQ of the natives.
I don't really know what people think of butt wiping. If you allow the government to do it it's free. But if you do it yourself you don't get paid. It's like that with a lot of stuff (childcare, education, etc) and it's pretty distortionary in the household vs market consumption decision.
"How would cheap workers in general become a fiscal burden on the state and increase taxes? Because they need wages to be subsidised? I don’t think that happens."
Cheap workers require massive net tax subsidies to pay for their kids education, healthcare, eventual retirement, and other services. If your earning minimum wage, your a burden on society.
What did western nations do before the massive increase in immigration? They paid workers a living wage.
One of the reasons big business supports mass migration is that desperate immigrants will work for less and lower the pay for other workers by flooding the market.
I also personally know some non immigrant care workers who were made redundant in the last 2 years. To be replaced with 3rd worlders? Who knows. They even got vaxxed to keep their jobs without knowing redundancy was coming.
I have always wondered what a “living wage” means. I accept that I can be criticized for using anecdata, but I do try to be precise. I mean if immigrants will accept less than a living wage, how do they, well, live?
In practical terms, what can someone earning a living wage afford that would not fit into the budget of someone who is not?
Isn’t a “living wage” really an arbitrary amount that someone thinks is enough?
That being said, yes, businesses and consumers benefit from lower wages that are generally associated with immigration because immigrants increase the supply of labour.
Living wage is a meaningless concept, but let me propose something more specific.
A "fiscally neutral wage".
That is a wage at which what one receives in benefits over a lifetime doesn't drastically differ from what one pays in taxes. In such cases, the wage a person earns is at least "transparent" in that there is no hidden subsidy.
When someones wage is below being fiscally neutral then the price for the goods and services they produce are inherently subsidized by the government leading to an inefficient allocation of resources.
If your working and still on Medicaid, its hard to see how that is anything but government subsidizing businesses payroll.
As we have universal Medicare in Canada, does that mean every employer is being subsidised?
Clearly, there are members of the community who cannot or do not for whatever reason, earn what the society has determined to be “enough”. IE they need more inputs (money for rent food etc.) than they can produce in outputs. Employers will not/cannot make up that difference. If a worker produces seven bushels of grain per week, the farmer cannot pay that person eight bushels.
In the West, we accept that we will have social safety net that will subsidise those workers. I see that as a subsidy to the worker and not the employer.
"In the West, we accept that we will have social safety net that will subsidise those workers."
Have we? We certainly disagree on what "enough" is.
But I will leave that aside and assume it fixed.
Given a fixed population, the % of people who are net fiscal burdens will be X%.
Now we import lots and lots of low skill low wage workers from abroad. Naturally, this will increase the number of net fiscal burdens from X% to X% + Y%.
Your basically taking the bell curve and enlarging the left tail, while keeping "enough" constant.
Since there are now more people below the line then above those above the line have to pay higher taxes to support those people. It's not clear to me that getting their butts wiped cheaper is worth the extra tax burden.
"I suspect few natives would consent to being careworkers for the elderly at any price."
Oh, sure, they would...stop welfare.
I don't think I would be willing to commit my mother to the care of someone who finds the work abhorant, and who is doing it because there is no welfare and no other option to putting food on the table.
You think foreigners are ripping your moms butt because they like it.
They probably face the same financial needs as natives + possible deportation if they lose their jobs.
"I don't think I would be willing to commit my mother to the care of someone who finds the work abhorant, and who is doing it because there is no welfare and no other option to putting food on the table."
Then don't do it, it is your choice. If you think illegal immigrants would be better for your mother, that's your prerogative.
Everyone is limited to some extent in their options. But everyone should do the work they can and not live off welfare.
In England, about 80% of careworkers are native-born (source: the "The growing reliance on migrant care workers" section of https://migrationobservatory.ox.ac.uk/resources/primers/social-care-for-older-people-and-demand-for-migrant-workers/). Not to mention the most aged country in the world, Japan. Paying people money works.