Tuesday, May 16, 2006

Illegal Immigration: the Solution

The U.S. immigration issue is a painful topic to write about, for a number of reasons. The two most important ones are (1) the debate is largely informed by bad economics and bad data, and (2) the solutions generally offered won't work and are worse than the status quo.

There is a solution to the issue, but it has two drawbacks -- it requires understanding of economics, and no one will like it.

Here's a bit of economic analysis, by no means complete, but as much as I wish to say about this hopeless topic.

1. The overall economic effects of illegal immigration appear to be positive for the U.S. Illegals pay taxes -- this helps reduce the U.S. budget deficit, and also extends the time horizon of the current social security system. (Actuaries for SSA explicitly take illegal immigration into account -- illegals "contribute" taxes to Social Security but take almost nothing from it.) Economist Julian Simon's work showed that immigrants to the U.S., and especially illegals, tended to be net payers of taxes, compared to native born citizens who tend more to be net consumers of taxes. There certainly are harmful distributional effects (some school systems and medical services being driven into the red by illegals, for example) but the net effect is positive. Ileegals come here to work, and that increases America's total output.

2. Illegals do not reduce the number of jobs available to Americans. The idea that there is a fixed number of jobs is nonsense. Employment rates depend upon the demand for workers, which in turn depends on a stable monetary environment, on low levels of regulation and intervention into the market, on productivity of technology and organization of business enterprises -- things at which America excels relative to most of the rst of the world (although the Feds are working hard to overturn some of these). Illegals probably do help to reduce wage rates for unskilled labor, but the solution to the problems of the perpetually impoverished isn't higher wage rates for unskilled labor -- it's skills.

3. Regardless of what the United States do to curb illegal immigration, such immigration will continue. The U.S. is the world economic powerhouse, and it cannot help but attract foreigners -- poor and rich alike -- looking for better opportunities. The only thing that can change this dynamic is an end to the disparity -- presumably through higher growth rates in the countries experiencing out-migration to the U.S. (Of course, the U.S. could always undergo a lingering depression to make itself less attractive, but that's not much of a solution.)

The remedy for Latin American economies is relatively simple to write (implementation is a different matter):

1. Macroeconomic stability (cut government spending and push for balanced budgets, avoid inflating the money supply)

2. Microeconomic liberalization (free prices, free entry and exit, abolish gov't monopolies and privatize state industries, open the borders to free trade)

3. Drastically reduce corruption

4. Develop private property rights for the poor (Hernado de Soto's remedy -- the poor have enormous potential capital they could use for productive investment, but corrupt elites refuse to protect the rights of the poor)

5. Hanging Hugo Chavez and that goofball in Bolivia (this would have a salutory effect on Latin America's would-be socialists; hanging Pinochet in the interests of being "fair and balanced" would be a reasonable step as well)

For Mexico, I suppose the easiest way to do achieve all this would be for the U.S. to simply annex Mexico as its 51st state, imprison any corrupt Mexican officals (i.e. all Mexican officials) and grant automatic citizenhip to Mexicans. We'd then have traded an immigration problem for a "re-unification" problem similar to Germany's -- but unlike Germany, we have a dynamic economy that could handle the problems.

Of course, this is a ridiculous proposal that no one but me (and maybe a few poor Mexicans) would ever support, and so it has no chance of even being considered. But still I like it... unlike the "solutions" under consideration (sealing the borders , guest worker programs, felonizing anything vaguely connected with immigration, tattooing "U.S. Property" on all citizens, etc.) it actually addresses the root problem and doesn't involve setting up a system of internal passports in the U.S.

Economic reform and growth in Latin America is the only solution. Expect to see it implemented in, oh, 40 to 50 years.

New Lyrics for an Old and Honorable Song

Anonymous pointed out in a comment on my post on the Spanish Spangled Banner (two post down) that this was not a translation, but a new set of lyrics.

I'm reminded of the following:

To Anacreon in Heav'n, where he sat in full glee,
A few sons of harmony sent a petition
That he their inspirer and patron would be.
When this answer arrived from the jolly old Grecian.
"Voice fiddle and lute, no longer be mute!
I'll lend thee my name, and inspire thee to boot!
And what's more I will teach thee like me to entwine,
The myrtle of Venus with Bacchus' vine!"

These are the original words (as best as I can recount them from memory) to the lovely drinking song "To Anacreon in Heaven." They recount a prayer to the Greek Gods, requesting guidance in better drinking, woman-chasing, and partying -- sentiments with which I can agree. Frances Scott Key dropped the lyrics and wrote his own to give us another magnificent song, the "Star Spangled Banner."

The real musical threat to America isn't from those who follow in the time-honored tradition of writing new lyrics to this magificent music, but from those traitors who advocate replacing "Star Spangled Banner" with the insipid "America the Beautiful" as our national anthem. The "Star Spangled Banner," in any of its versions, has life to it. It ranges up and down the scale, it is a workout to sing it, and it is bold and exciting. "American the Beautiful," on the other hand, is whiney and mewling and lends itself only to the wimpiest of words -- only the late great Ray Charles could breathe any life into it.

Anyway, adding new verses to "To Anacreon in Heaven" is an old and honorable tradition. Perhaps "we" here at UnforeseenContingencies will offer a new lyrics contest sometime in the future.

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