WASHINGTON, Jan. 12 (UPI) -- The administration Wednesday unveiled a proposal that would allow illegal immigrants to legalize themselves on a temporary basis, provided they could get a job. George W. Bush's presentation of the proposal was filled with noble liberal rhetoric; it ignored the real situation in the murky world of the marginally employed.
It is a corollary to the doctrine of comparative advantage, much loved by globalists, that the world's economic wealth would be maximized with completely free migration. They paint an idyllic picture of the late 19th century, when the oppressed of Russia and Eastern Europe could get on a boat and find economic salvation in the sweatshops of the Lower East Side. If free immigration was so globally beneficial before 1914, they reason, why is it not beneficial today? References are made to the United States' proud melting pot tradition, epitomized by the Statue of Liberty.
The short answer is that the world is very different today to that before 1914. Communications are much cheaper and quicker, so that immigration, a lifetime commitment in 1914, can be undertaken today on a short term basis. The industrial structure of the United States is very different; before 1914 there was a more or less infinite demand for low skill labor, making products that could be exported. Today, in a much more crowded country and a fully industrialized world, the demand for low skill labor at U.S. wage rates exists only in service industries selling to the domestic market.
The economic advantages of immigration, to the U.S. middle and upper classes, remain as they were a century ago, or even three centuries ago. The northern colonists needed a supply of cheap labor to work their abundant land holdings, a problem they solved by indenturing the honest poor and transporting the dishonest poor as felons. In the South, the solution was even more direct and brutal -- slavery. So too today the option-enriched tycoons of labor intensive companies see enormous advantages in opening U.S. borders, both to skilled labor, which provides competition to domestic workers and holds down costs, and to unskilled labor, a godsend to the labor-intensive retail sector. The costs of immigration do not impinge on the tycoon class; its benefits -- in the form of enhanced earnings per share and juicier stock options -- very much do.
For the upper middle class, immigration is less of a no-brainer, but still on balance provides substantial net benefits. Domestic services are made abundant -- the hard pressed two-earner family can easily get cleaning ladies and child minders if it needs them, something that was more difficult in the low-immigration 1950s. Unrestricted immigration of young, highly skilled foreigners would be a competitive threat, but moderate numbers of IT professionals, dentists and restaurant owners, demanding close to U.S. pay scales and lacking their domestic competitors' personal networks, can be lived with.
For the immigrants, a pre-1914 free movement of labor system would be an unquestioned blessing. However the current system, where the numerical majority of immigrants are undocumented, while the remainder have to undertake a lengthy, painful and humiliating ordeal at the hands of the overworked Bureau of Citizenship and Immigration Services, is less obviously beneficial.
The tradeoff for immigrants was altered by the sharp rise in immigrant numbers from the 1970s and still more by the immigration "reform" of 1986, with its accompanying amnesty for existing illegal immigrants. For legal immigrants from the EU and Japan, the unpleasantness of the immigration process was sufficient to deter those with good prospects in their home country, even though U.S. living standards have continued high. Thus the "brain drain" of scientists and business professionals from Britain, a serious problem for the British economy in 1945-79, dried up during the 1980s, while many potential European immigrants found they could equally well improve their earning capacity by moving to lower-taxed Britain, which of course allowed EU citizens free access.
The result, even at the high-skill legal immigration level, has been a move towards immigration from poorer countries such as India, China and Latin America and, in the 1990s, Eastern Europe.. Even for professionals from those societies, the differential in earnings capacity between their home and the U.S. makes it worthwhile putting up with the INS/BCIS ordeal.
For illegal immigrants, prior to 1986, there were few social services and little apparent possibility of becoming a full U.S. resident, so even though they could sometimes get jobs in areas such as California agriculture, their numbers were limited.
The 1986 amnesty, in retrospect was a disaster. It allowed the poor of the Third World to believe there to be a good chance of getting full U.S. residency through illegal immigration. It thereby opened the floodgates, thus in turn reducing the likelihood of the immigrants finding gainful employment. By making illegal immigrants more numerous and visible it inspired the tender-hearted and left-leaning to provide them with social services, free education, the right to driving licenses, etc., thus allowing them to compete for jobs with domestic residents and further blurring their legal status.
The overall tradeoff for most illegal immigrants remains a financially unfavorable one; they have only a small chance of a decent, steady job and a large chance of being returned to their home country, with all the accompanying unpleasantness. However, to most poorly educated people, immigrants or not, financially unfavorable tradeoffs are not a deterrent if there appears a real chance of a big payoff, otherwise lotteries and Las Vegas would disappear.
The result has been a huge increase in illegal immigration, which the George W. Bush administration now wants to regularize. Illegal immigrants will be given the right to temporary visas, and will be able to obtain employment, albeit on a "guest worker" basis.
At first sight, this appears a benign move, although it must increase yet further the flood of illegal immigrants. To the extent illegal immigrants are gainfully employed within the system, they are contributing to the economy not detracting from it, thus increasing corporate profitability, stock option payouts and the availability of domestic service workers. Only the "lottery " effect, whereby the number of illegal immigrants may greatly exceed the economic optimum, might cause one to doubt the program's benefits.
However, there is one factor that has not been considered, and that changes the entire equation: the effect of increased immigration on the domestic workforce. Nearly half the U.S. workforce (47.3 percent in December 2003) has no college education, only high school or less. Except for a vanishingly small minority, these people are not benefiting from stock options, or even employing domestic servants -- but they are competing with immigrants, legal and illegal, for low skill jobs.
At this point there is a very important ethical point to be made. We do not live under a system of world government, and are unlikely to do so in the near future. Hence the U.S. government is responsible, not to the world community, or to the United Nations, or to foreign countries, or to illegal immigrants, or even to those legal immigrants that have not yet acquired U.S. citizenship and votes, but purely and simply, to voting-age citizens of the United States.
Thus the substantial benefits of high immigration to legal immigrants are irrelevant, as are its questionable benefits to illegal immigrants. On the other side, irrelevant also are the very substantial and ethically unattractive costs of high-skill U.S. immigration to Third World countries, whose best citizens are lost to their nations after graduating from college. The benefits of high immigration to stock option recipients and the minor benefits of high immigration to those who need cleaning ladies are relevant -- but so also are the costs, if there are any, to the 47.3 percent of the U.S. workforce with only a high school education or less.
There are a number of studies, no doubt commissioned by those with large stock options positions, that demonstrate that high immigration has had no effect on the living standards of low skill U.S. citizens. As any truck driver will tell you, such studies are unmitigated rubbish. To prove it, you only have to look at differential earnings since the early 1970s, when immigration began again to play a significant role in the U.S. economy, after the hiatus caused by the restrictive 1924 immigration legislation. If competition from immigrants had played no role in the economy, then whatever trend had been apparent before 1973 should have continued, with low skill workers maintaining their relative purchasing power.
This did not happen. In the low-immigration period between 1958 and 1973, low skill male workers (high school or less) increased their real earnings by 50.5 percent, compared with 42.5 percent for those with 4 or more years of college. A modest narrowing of differentials, in other words, in a booming overall economy. From 1973, the income of those with postgraduate degrees (male and female -- female figures were not available for 1958) increased more slowly, by only 17 percent. However, the average income of those with high school or less dropped substantially, by 9.5 percent, or by 16.2 percent if only male earnings are considered. For those without high school diplomas, the effect was even more severe -- a drop of 19.1 percent, or 23.5 percent for males alone. Inequality between different educational cohorts has hugely increased. The labor force participation rate, 78.4 percent for college graduates in December 2003, is 63.8 percent for high school graduates without college, and a mere 44.6 percent for those without a high school diploma.
This is what one would have expected in a period of heavy low-skill immigration, in which immigrant labor drives down the earnings of low-skill domestic labor. The increase in the great American "middle class" -- by the U.S. definition, established blue collar labor, went sharply into reverse as immigrants forced down blue collar earnings.
This increase in inequality, in turn, has increased the level of crime and other social pathologies, as blue collar youths are no longer able to get the steady jobs that propel them into the stable "middle class." Immigrants are no more prone to crime than anybody else, but heavy low-skill immigration, which proletarianizes the native population, causes crime rates to skyrocket.
Blue collar, poorly educated American-born workers are instinctively aware of this problem, of course, and in consequence are strongly opposed to heavy immigration. By the elites, their views are ignored, or decried as primitive "racism." It is not racism, it is rational self-interest.
It is an utter disgrace that in an allegedly "conservative" Republican administration, the most fundamental needs of almost half the U.S. population should be so willfully betrayed in the interests of political correctness and relations with the corrupt Mexican oligarchy.
(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that, in the long '90s boom, the proportion of "sell" recommendations put out by Wall Street houses declined from 9 percent of all research reports to 1 percent and has only modestly rebounded since. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)
