Crime Shouldn't Pay; Working Should
The American Conservative has an interesting cover story by the always intriguing Ron Unz, which you might have skipped because of the terrible title.
That title is: “Immigration, the Republicans and the End of White America.”
Now, you’d think that, with such a title, the article would be about how awful immigration is because it’s leading to the end of white America and of the Republican Party (the presumed protectors of white America). But that’s not the article’s point at all. Rather, Unz’s argument is that “white America,” if it isn’t a thing of the past already, is going to be one in the near future no matter what; the demographic change, good or bad, is already baked in. Campaigns based on outright demonization of immigrants, whether or not they are morally wrong, are a practical mistake, because they will solidify the perception that the GOP is a white ethnic party.
However, Unz goes on, mass immigration is a problem because, by keeping wages persistently low at the lower end of the scale, it is leading to an economically more stratified society, which may be a bad thing in its own right but also leads to persistent economic and political problems.
Unz’s solution, therefore, is to tackle the problem from the other end. Rather than try to restrict immigration, legislate a rise in wages. With a national minimum wage in the $10-12 range, the jobs that currently go to low-skilled immigrants from much poorer countries would go one of three places: either overseas (where they might wind up employing the same people in their home countries), or away altogether (substituting capital for labor through innovation), or to natives willing to do the work if it paid a more reasonable wage. Enforcement would still be an issue, of course, but the constellation of interests in favor of “enforce minimum wage laws” would be much stronger than that in favor of “enforce immigration laws.” Labor unions that are ambivalent about mass immigration (immigration holds down wages, but increases the number of public-sector jobs) would be unequivocally in favor of enforcing minimum wage laws. Hispanic politicians, who generally favor a high-immigration regime, also favor a regime that is more friendly to poor immigrants once they are here, and that leaves them less-subject to economic exploitation. They would certainly also be on the “enforce the minimum wage” side of the fence. And so forth.
I think Unz’s argument merits real consideration. It’s very much in the same universe as two reform proposals that I’ve long found attractive: replacing some or all of the payroll tax with a value-added tax, and replacing the existing patchwork system of visas with a simple auction, the proceeds of the auction going to offset the costs that areas with high levels of immigration bear due to rapid population growth (and, in particular, rapid growth in the relatively poorer segment of the population). The payroll tax is no big deal for a large employer, but it’s a meaningful burden on, for example, household employers, and creates an incentive to hire people off the books – which, in turn, is easier to do if the employees aren’t here legally. A VAT would bring those wages (when they are consumed) under the tax umbrella without creating a disincentive to employment; some kind of payroll-tax exemption for very small employers, meanwhile, would eliminate the incentive to hire illegal immigrants for these jobs.
My other proposal, a visa auction, would open the “front door” of legal immigration (the process for getting a visa to work at a large firm would become trivial; instead of hiring a lawyer, taking out ads, and bearing the costs of endless bureaucratic delays, you’d just pay the cost of the visa and be done with it) while simultaneously aligning forces correctly for closing the “back door” of illegal immigration (someone who employed an illegal immigrant would be illegally depriving the government of revenue; the IRS is very good at catching and punishing people who do that). Moreover, the auction would bring in revenue, which would not only offset the social costs of immigration but would create an incentive to open the “front door” to the optimally-wide level (if we could bring in billions of dollars per year by increasing the number of visas, Congress – and the electorate – might feel differently about the subject than now, when costs are socialized and benefits are largely privatized). Finally, you’d expect a visa auction to uptier the average skill level of the immigrant population relative to the current system of making it very difficult to hire skilled immigrants on the books, and relatively easy to hire unskilled immigrant laborers off the books.
A higher national minimum wage would be complementary to these kinds of reforms. Yes, it would impose a burden on very small employers – but if you also eliminated the payroll tax for such employers, the net effect might not be so significant. A visa auction system would be vulnerable to parochial lobbying by, for example, agribusiness seeking special “seasonal” visas at a lower price. But if the minimum wage were hiked as well, those employers would have to lobby for an exemption to the minimum wage as well – a taller political order. The difficulty of that lobbying effort might be enough to tip the balance in favor of restructuring their enterprises to work within the law rather than trying to change or evade the law so their operations can continue as currently structured.
Wouldn’t raising the minimum wage increase unemployment? Isn’t that a terrible idea right now? Well, maybe, but not necessarily. Businesses that had to pay a higher minimum wage would have to do one of the following things: (1) raise prices to compensate; (2) apply capital in innovative new ways to reduce the need for the job and/or make the job more productive, so it “earns” a higher real wage; or (3) shut down or relocate operations. If the inflationists are right, and what we need is coordinated expectations of higher nominal prices, then (1) is exactly what we need in our current economic circumstances. If I’m right, and what we need is coordinated expectations of higher real wages, then (2) is exactly what we need in our current economic circumstances. To the extent that (3) means that instead of people coming from Mexico, capital flows to Mexico and the people stay there, then a reduction in the growth of the American workforce doesn’t lead to higher American unemployment. And to the extent that (3) means that smaller operations simply go out of business, we should think about offsets to prevent that happening (such as payroll tax relief).
But I’d also turn the question around. Does anyone think that unemployment would drop significantly if nominal wages at the low end of the wage scale dropped suddenly? If the inflationists are right, we need real wages to drop to get out of the recession, but that’s across the board – a very different proposition from saying that declining real wages at the low end of the spectrum are beneficial. The opposite, in fact, may be true. Deflation benefits creditors at the expense of debtors. Debtors are, generally, the folks to the left of the median in terms of wages. So if those wages come under pressure, but wages at the other end, where the creditors are, remain stable, then you’re exacerbating the effects of deflation, not counteracting them.
I’m not so much endorsing Unz’s specific proposal – or even my own ideas – so much as saying that we should be thinking about the problem in terms of the title of this post. Crime shouldn’t pay. Working should. The best way to make that true isn’t to build a huge punitive infrastructure organized around stopping some people from working (an infrastructure which is then only applied fitfully and inconsistently, as any punitive infrastructure will be when you’re dealing with a large class of lawbreakers). It’s to align incentives properly. Make breaking the law more expensive. Make following the law more remunerative. And align the law more sensibly with what’s good, in general, for those from whom the law’s authority ultimately derives.
Noah:
I read three paragraphs, right up to the point about campaigns based on the outright demonization of immigrants. Could you give an example of a campaign based on the demonization of immigrants? Or better yet, give an example of the demonization of immigrants.
If you can give an example of demonization by someone other than…you know, I can’t think of anyone I respect…then I will continue reading the article.
— jd · Oct 4, 09:49 PM · #
Noah,
Unz and the topic of immigration need to be examined very, very carefully given his previous record:
http://conservativetimes.org/?p=4723
That said, this piece is an improvement over that last piece of junk and I think your use of the word “intriguing” is apt here. Ultimately, given the empirical work on what a minimum wage would mean for low-skilled_American_workers, I’d be concerned about this proposal pricing ghetto blacks and middle-class teenagers of all races out of the employment market.
I still don’t understand why we can’t make breaking immigration laws more expensive — the issue is not just “stopping some people from working” but stopping some people from living in the U.S. If the political will is there, we can figure out a way to do that (E-verify anyone?)
— Fake Herzog · Oct 5, 01:11 AM · #
Let me just stop you right there. Isn’t it the inescapable conclusion, every time someone actually looks at the data, that immigration doesn’t depress wages for anybody but the other low-skill immigrants?
I’m all for this, but we have to start by making it possible for Hispanic immigrants to actually follow the law. Currently there’s no legal way for a Mexican worker to reside here part of the year and work, so workers who want to do that have no choice but to break the law.
Forcing a worker to endure a ten year waiting list in order to come pick vegetables for six months isn’t a tenable legal situation.
— Chet · Oct 5, 02:53 AM · #
_If the inflationists are right, and what we need is coordinated expectations of higher nominal prices, then (1) is exactly what we need in our current economic circumstances. _
No, no, no. That’s confusing a supply-driven increase in prices with a demand-driven increase in prices.
— Pithlord · Oct 5, 04:37 AM · #
It depresses wages for all low-skill workers, immigrant or no. There isn’t a magic mechanism by which it applies only to immigrants, though immigrants are disproportionately represented among low-skill workers.
I’ll give Unz credit for trying to forge a common ground on immigration. He doesn’t really have a problem with immigration and it shows, but he’s willing to make a move towards the restrictionist camp. If only liberals would be as ecumenical, something might actually be done, but they’ve turned it into some sort of global civil rights and oppression theology. There’s no arguing with that.
Political reality means that, as Unz claims, business interests will need to be placated in order to do anything about illegal immigration. He suggests a minimum wage increase, but I still fail to see how a near doubling of the minimum wage will have any kind of broad-based support. The better solution, to me, is a streamlined migrant labor policy so that agriculture can have their cheap labor and we can eliminate this huge class of sorta-residents. My theory, not original, is that contra the amnesty promoters illegal immigrants haven’t suddenly fallen in love with George Washington and started carrying Constitutions in their back pockets, but rather they just want money. A well-enforced migrant labor policy should effectively make all parties happy.
— Matt · Oct 5, 03:41 PM · #
So I’ve been scratching my head for a couple days over the idea of auctioning visas, and I still don’t really get it. To some extent the idea of immigration reform as say Manzi pushes it, is to find talent that other people haven’t found yet — take that clever young lass with a Ph.D. from MIT on the way but not a penny yet to her name, and “recruit” her as it were. So you get the boffo talent for cheap before anybody else does and it pays dividends down the line. Auctioning on the other hand seems to select for folks who’ve already got a few pennies and successes under their belts, which I guess has benefits but then maybe they’ve already shot their creative wad — certainly they’ve shot some of it, which ideally you’d capture by getting them earlier — or maybe they just have inherited money or profits from criminal enterprises or great knockers or any other lucrative but not country-building assets. Plus I think you might have a worse-than-ever “coyote” problem with folks abroad being exploited to pony up visa cash to loan sharks. Could you elaborate?
— Kieselguhr Kid · Oct 5, 10:53 PM · #
KK: so, I think you’re assuming the woman has to pay for her own visa. Instead of, say, MIT, or Google, or whoever actually wants to recruit her paying for it. The notion is that visas would be freely tradable. The INS’s job would be to make sure that terrorists, criminals, etc. don’t get to participate in the process.
Right now, it is pretty easy to get a visa if you are extremely rich. Among other things, if you’re really rich you aren’t necessarily looking for a job. There’s actually a special “I agree to invest a lot of money in America” category of visa. It’s the folks who fit your profile – talented people without money or connections – that our current system selects against, in favor of people with connections and people who break the law.
The way countries like Canada handle immigration – and the Canadians let in, proportionately, something like twice the volume we do – is they actively try to recruit for occupational categories that the government feels the country needs. I’d basically be outsourcing that function to the market. Let IBM and Google and Cal Tech and Sloan Kettering decide what they need, let them buy visas at the annual auction or in the secondary market, and then let them recruit from the world. And, yes, let the random Saudi princeling and Russian minigarch buy their visas as well; they get in now anyway.
It could work for refugee policy, too: let the International Rescue Committee decide which countries’ refugees are most deserving – let ‘em buy visas at auction. Heck, let the Jewish Agency and La Raza place their bids as well. That’s the beauty of a market: we don’t have to agree on whether we want more visas for nurses or more for construction workers, more visas for political refugees or more for family unification. We can individually put our money where our mouths are, and collectively get some kind of revenue stream to offset the aggregate social costs of a more open labor market (since the economic benefits are often not as broadly distributed as one might wish).
What kind of immigration stream we’d get depends greatly on how many visas we issue and for what term and, therefore, what they’d cost. A smaller number of visas at a $20,000 price point would have a very different impact from a larger number of visas at a $2,000 price point. Auctioning green cards would give a different result from auctioning term visas from 3-months to 5-years. But that’s a determination the legislature would make annually, and at least there’d be a positive number in the revenue column to weigh in the calculus.
— Noah Millman · Oct 6, 03:07 PM · #
OK, that’s more appealing. Especially since it means the immigrant comes at a certain price premium so you bias the company towards hiring a citizen, and you can set that bias. That said I think to some extent we already have that — and you still risk a nasty new coyote problem unless you put some kind of restriction on who can buy a visa, which seems to be what you’re thinking anyway.
Presumably the function of admitting refugees is different, though, and I don’t buy the logic of your model there.
— Kieselguhr Kid · Oct 6, 10:10 PM · #
Well, now that I think about it you might give up the government choosing explicitly what kind of immigrants it wants, to the government having to choose explicitly who gets to buy visas, which might be a distinction without a difference.
— Kieselguhr Kid · Oct 6, 10:12 PM · #
Seems that both Noah and KK are demonizing immigrants here. After all, illegals won’t be participating in this auction will they? Oh, wait. KK said coyotes will present a nasty new problem because they’ll be bidding on visas instead of doing whatever it is they do now.
I like the auction idea. It’s new to me, but I like it. It’s fair and just. I don’t know how people like KK and Noah get from supporting amnesty to supporting something this discriminatory, but they got there and that’s good. But does this solve our current immigration problem. Is this supposed to take the pressure off our southern border?
— jd · Oct 6, 11:46 PM · #
At the moment actually I don’t support the idea, but I think — and suspect Noah thinks — that the problems you are discussing are related to but not the same as the ones the “visa auction” would be intended to address. But mostly I think “it’s fair and just” is an odd way of looking at the problem — so is banning all immigration or taking the first n to apply per year or many many other solutions. What these people are talking about doing is finding a way to design a policy — fair, unfair, whatever, and for what it’s worth I think it ain’t going to be “fair” nor “just” but that’s just not a priority — which allows you to build a stronger nation by leveraging the desire of people to live here. Noah’s solution might do that, I just don’t know that it does it very well, and I’m unsure it does that better than the Canadian-type system to which he compares it.
But if I go on in this vein I’ll pull us off the minimum wage idea Noah was focused on, so, I’ll leave that as my attempt to clarify at least where I am standing, unless something someone writes moves my feet.
— Kieselguhr Kid · Oct 7, 02:50 AM · #
American colleges are globally successful. How do they admit applicants? Can you sneak into Harvard?
— Steve Sailer · Oct 7, 12:40 PM · #
Can you be an undocumented Harvard graduate? How about an undocumented lawyer?
— Steve Sailer · Oct 9, 08:47 AM · #
Working’s not going to start paying until the policy elite abandons its hard money fetish.
— Pithlord · Oct 11, 10:55 PM · #
why are we not allowed to discuss whether the “end of white America” might have certain negative side effects? not because Mexicans are evil but due to cultural issues arising from illegal immigration when you have whole communities not assimilating/not being equipped for the economy/communities self-segregating and feeling alienated from each other.
of course this ties into the economics of the issue, i just think it’s kinda silly how “intellectual” conservatives these days feel like they can only discuss that aspect of it, since if you bring up the difficulties of assimilating a large amount of immigrants with a language/cultural barrier you’re automatically a racist, besides America’s a land of immigrants don’tcha know. it’s not as if we should deport everyone here illegally, but then, it’s not as if we need to have major cities (and California) giving all them a free pass either.
— JDP · Oct 13, 02:33 AM · #
I feel like some stuff has happened in the world. Wouldn’t it be great if the TAS luminaries could bestir themselves to mention something about it? Then maybe the most recent post wouldn’t be 12 days old.
Last contributor out, please remember to turn out the lights. Thanks!
— Chet · Oct 18, 03:23 AM · #