sábado, 22 de noviembre de 2008

Our Dear Illegals and the Economy: Part the Second

Graphs won't show up... argh! =)

The United States has a terminal illness – immigration cancer – caused by the idea that illegal immigrants are flooding the nation increasing unemployment wherever their politically and economically infected feet may land. While many believe that increases in unemployment in certain states are due to illegal immigration, their belief is an example of both the false-cause fallacy and the fallacy of composition, and also analyzes the economy ceteris paribus without taking into account other forces. Furthermore, many proposed solutions to the problem are myopic and do not bow to the power of the economic forces at work.

The first question essential to this inquiry is: is there any statistical correlation between high concentrations of illegal immigrants and unemployment? According to data provided by the Bureau of Labor Statistics, there is no correlation whatsoever. The two highest unemployment rates are found in Rhode Island and Michigan, neither of which has a large concentration of illegal immigrants (at least when compared to other regions). States with exceedingly high concentrations like California and Florida had almost identical rates to Illinois and North Carolina, both low concentration states. Furthermore, the Northern and Central states had similarly high rates when compared to the Pacific Coast. A scatter plot of this data reveals that the relationship between the two is extremely weak. The truth is that there is no statistically viable link between concentration of illegal immigrants and unemployment.

Consequently, it remains clear that blaming unemployment solely or significantly on illegal immigration is a false-cause fallacy. Furthermore, if one were to argue that the statistical evidence above is not valid because of a specific example where say agricultural workers were replaced by illegal immigrants, it would be the fallacy of composition. While this it is true that illegal workers act as a substitute good and drive down the demand for legal labor, thus decreasing the both the price and quantity of legal labor, arguing that this causes higher levels of unemployment is clearly ceteris paribus, since there is no statistical link between the two. The truth of the matter is that illegal immigrants do not pose some sort of diabolical threat to the poor of America, instead, their real danger is in their burdening of the tax base as well as the shadow economy, which they create with their illegal status, which could hide any number of dangers. Therefore we do look to a solution, but not for unemployment caused by illegal immigration.

Many believe that the solution to this issue is by harnessing the power of the market forces. I entirely concur. One market force which we could seek to control is demand. By slowing sliming the demand for illegal labor, the shadow economy would waste away, because I assure you that most illegal workers do not come here for our smiling faces and warm hospitality for workers of all kinds, legal and illegal. They come because there are economic incentives for doing so, and by eliminating those incentives we can use demand where supply has eluded us and fight the status quo. Some possibilities include using Federal funding to entice rogue state and local governments into no longer flaunting Federal law and harboring illegal activities. Improved resources for ICE and tougher penalties for businesses could increase the risk of investing in illegal labor, driving down demand. The potential effects of these policies are visualized here: However, all the above policies could have significant side-effects, and so must be pursued with caution. Furthermore, even if they work perfectly, the price of illegal labor drops (as the graph demonstrates), which means that the illegal immigrants left will work for even less and be even more dependent on government handouts and the like, but as least the quantity would decrease. Perhaps we should look to demand’s accomplice supply to find an option with more desirability.

Decreasing the supply of illegal immigration would indeed help to remedy the problem. If there were a decrease in supply of illegal labor, the market would adjust and the substitute good of legal labor would rise in demand, increasing both the price and quantity of legally accountable labor. Such a harnessing of the market power of supply is visualized here: However, supply is not a force that we can affect with force. A border fence and increased abilities of the Border Patrol do not solve as no more that 50% of the illegal immigrants in the U.S. come across the border; the other half have overstayed their visas. Furthermore, allowing the Border Patrol to shoot immigrants crossing the border is similar to execute traffic violators. It is a civil not a criminal act and allowing the Border Patrol freedom to end the life or seriously wound an immigrant is unethical and immoral and cannot be tolerated in civil society. Furthermore, such increased funding would extensively strain the governmental budgets, which is the main economic defect of the current system anyways, and so doing so would be rather pointless and counter-productive. There is one policy which outshines all the rest; open the legal floodgates. The current United States immigration process is notoriously complex and difficult and it has taken even ten years to get the foreign spouse of a military personal into the country. If the potential illegal immigrants could more easily come legally, they would, as they would work for higher wages than with the current system. This incentive would prove irresistible, and the supply of illegal labor would be dramatically replaced by legal labor. This would decrease the supply of illegal labor, thereby increasing the price and decreasing quantity of illegal labor (as demonstrated on the graph). That is the only incentive that any company, large or small, needs to switch from illegal to legal labor. Release the legal river of immigration and watch the market forces of supply and demand mend remove infections in the current economic system.

We cannot by force of arms and law defeat the challenge of illegal immigration, but we can utilize the power of supply and demand in order to save the economy from itself without massive expenditures or immoral actions. The solution to invasion of illegal labor is the invasion of legal labor. If we succeed with the powers of the market forces, other countries with massive illegal immigration like Argentina and the Dominican Republic will take note and follow suit. May all workers who wish to come do so and flood the country – legally.

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