...Archive for June 2018

Sandwichman Sunday

Sandwichman offers a précis of the putative economic basis of Stephen Miller views on immigration.

Back when Miller was a Congressional staffer in a world where certain norms applied, his restrictionist position took care, according to Sandwichman, to “discretely avoid[] any overt expression of racism or white supremacism.” Instead, Miller framed his position in terms that from someone else’s mouth might be described as left-populist: There aren’t enough good jobs to go ’round, immigrants compete with natives for those jobs and put downward pressure, and so exacerbate “principal economic dilemma of our time…the very large number of people who either are not working at all, or not earning a wage great enough to be financially independent.” (Miller’s words, via Sandwichman) Miller presents liberal immigration as an “agenda pushed by the world’s most powerful interest groups and businesses that clearly results in fewer jobs and lower wages for Americans.” I am an admirer of Bernie Sanders, and decidedly not an admirer of Stephen Miller, but in their positions circa 2015, it’s hard not to see some common ground.

Sandwichman segues to the usual rebuttal of this view by liberal economists, handing the mic to Simon Johnson and Walter Ewing to point out that immigrants are a source of employment demand as well as employment supply, so that even in a very static analysis it is unclear whether the net effect of immigration is to put downward or upwards pressure on wages and employment. As Sandwichman concludes of broad conjectures of wage suppression or economic stimulus, “they are both right and they are both wrong.” You cannot make a reasonable guess about the employment effects of immigration, or conduct a meaningful empirical analysis, without a lot of context about the immigrants who would likely arrive and the structure of the economy that would receive them. There is no immigration policy that is not also economic policy, and like economic policy in general, it can be tilted towards this interest or that.

(“It depends” is supposed to be an economists’ cliché — Harry Truman famously cried “Give me a one-handed economist!” — but ambidexterity is unfortunately antiquated. The authority in which the profession has garbed itself has created a lucrative market for the kind of people willing to make helpful pronouncements, so the custom now is to fill in the gaps left by missing context with impressive thickets of theory and quantitative analysis and appeals to the literature, all of which support whatever the professional subculture to which the analyst belongs is paid to support.)

In musing about this now stereotyped argument between immigration-employment optimists (new demand means more economic activity!) and pessimists (new workers means fewer or lower-paying jobs for current workers!), a cutesy irony occurred to me. In the static, ceteris paribus world in which this argument plays out, each worker is basically an aliquot of labor supply bundled with an aliquot of labor demand, and the question is which is bigger. So, if you want employment stimulus, your ideal immigrant should carry a duffle bag of labor demand but just a dainty purse of labor supply. Who might that look like? Well, a so-called “scrounger” or “welfare tourist” would do the trick nicely. As long as we permit only the most demanding people with a strict aversion to hard work to immigrate, and provide state support if necessary to accommodate those preferences, Stephen Miller should welcome the newcomers. I guess it is not a novel observation that immigrants can’t both be welfare layabouts and putting everybody out of work at the same time. So if disemployment is your main concern, pick welfare layabouts.

In less stereotyped real life, of course, this is all stupid. Ceteris paribus does not hold, and states have the capacity to generate labor demand at will simply by borrowing or creating money ex nihilo and distributing purchasing power to people likely to use it to buy labor-intensive goods. For reasons beyond any effect on employment, we prefer to discourage rather than encourage the practice of living on state support without doing anything useful (although us UBI-ists and JG-ists would like to broaden the range of activities considered “useful” beyond paid market work). If we want a lot of immigration without disemployment or (nominal) wage suppression, we can have it, or we could have it, if we had the political capacity to run the economy hot, that is, to distribute new purchasing power in order to engender labor demand, and accept the risk of inflation that would come with that. We can always put everybody to work, but the question of how productively — of whether our “hot” economy would leave almost all of us better in real terms or amount to a redistribution (or worse) from existing creditors and workers with safe jobs to immigrants and the marginally employed — is a hard question well beyond the kind of facile quantitative reasoning that surrounds this debate. Thinking seriously about this stuff would be thinking about the institutional details of production, how we might engender collaborations that create services we genuinely value from the underutilized talents of citizens and newcomers alike, and prevent frictions and conflicts that might undermine those collaborations. But the morally fraught politics of immigration, and the economic debates that surround it, are mostly orthogonal to these questions. The things we do that are bejeweled with the accoutrements of being smart are mostly stupid.

Sandwichman links to an earlier piece of his, on debates in the 1920s and 1930s surrounding the campaign for an eight-hour workday. He quotes economist Dorothy Douglas, describing the theories of 19th Century labor advocate Ira Steward:

Douglas condensed the two main aspects of Steward’s theory and their interconnection:

One, the stimulating effect of leisure and leisure-time consumption upon the standard of living and hence the wage demands of the lowest classes of labor… and the other, the stimulating effect of this more expensive labor upon the technique of production itself — the effect of “driving” labor saving machinery. Finally, uniting the two, is a plea, now familiar to our ears of mass demand as alone making mass production possible.

It strikes me as remarkable how current these ideas are, and should be. Generous social policy does not stand in opposition to productive work. On the contrary, if well arranged, it is the basis for productive work. To the manager of a firm, cheap labor is a source of productive advantage, but that’s a perspective that fails to compose. Economies that offer cheap labor must import external demand. A good economy is composed of workers with time and money to consume, and of firms with strong incentives to innovate, to use dear labor ever more efficiently.

Update History:

  • 25-June-2018, 4:10 p.m. EEST: “…is a harder hard question well beyond the kind…”
  • 25-June-2018, 5:55 p.m. EEST: “Miller presents liberal immigration as an ‘agenda pushed by the world’s…”