Arnold Kling  

Let's Increase Poverty

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On heterodox Economics and Inn... Mindfulness and Mindlessness...

Lant Pritchett writes


The principal way rich countries disadvantage the poor world is not through unfair trade, or through intrusive and ineffective aid, or by forcing repayments of debts. The primary policy pursued by every rich country is to prevent unskilled labor from moving into their countries. And because unskilled labor is the primary asset of the poor world, it is hard to even imagine a policy more directly inimical to a poverty reduction agenda or to “pro-poor growth” than one limiting the demand for unskilled labor (and inducing labor-saving innovations).

Thanks to Kerry Howley for the pointer.

I spent the last couple days at a national symposium on poverty sponsored by the Community Action Partnership. I probably "contributed" more than they wanted to hear. Talking up capitalism in that setting was sort of like talking up bacon at a Yeshiva. So I bit my tongue more often than I used it.

One of the many things I did not "contribute" was a suggestion that we ought to try to double the U.S. poverty rate in the next decade. The way everyone else looks at it, if a Mexican comes here legally and earns $350 a week, poverty has increased, regardless of whether he is earning 10 times as much as he was before.

I think we ought to try to find a humanitarian way to "increase" this type of poverty. We can argue about citizenship vs. work permits. But I think that labor mobility is a really good thing.


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COMMENTS (8 to date)

Daniel Henninger had a very good statement of what the situation actually is in the WSJ today. It induced cognitive disonnance in Rush Limbaugh that was quite funny:

Notwithstanding all the calls for enforcing the borders and obeying our laws--unassailable as ideas--one is still left with the legislative challenge of transforming several million people who are going to work every day into a national "problem." Not for nothing has this congressional effort turned into the most amazing Rube Goldberg contraption--a point system to measure a worker's worth, a $5,000 fine for working here, a go-home requirement and a system whereby the boss has to conclusively prove that José and Maria are kosher.

No wonder it's hard to pass a bill. It's hard because Congress is trying to elevate one American value, respect for the law, by demoting an American value that up to now has been an unambiguous, uncontested ideal--respect for work, for labor. The tension here is especially difficult for conservatives.

Conservatives and liberals will fight unto eternity over whose notions of the law, society and justice are right. But the one idea owned by conservatives is the market.

For many Democrats in politics, the market--the daily machinery of the private economy--is a semi-abstraction. It's a barely understood thing that mainly sends revenue to the government, without which the nation is incapable of achieving social good. Liberals happily concede the idea of salutary "market forces" to their opposition. For them, markets are for taming.

Why, then, would Republican politicians and conservative writers want to run the risk of undermining, perhaps for a long time, their core belief in the broad benefits of free-market economic forces in return for a law that hammers these illegal Mexicans?

John S Bolton writes:

Pritchett's statement is not a reasonable one, since it assumes that unskilled can move to rich countries without destroying those countries' wealth, as if there were only a few million unskilled in poor countries who would ever emigrate.
If the foreign unskilled were so few in number that they could never have a negative effect of size, then their non-migration cannot explain mass poverty on the scale which is actually seen in the world.

John S Bolton writes:

Pritchett even appears to be admitting the long-unmentionable truth that restrictionism of immigration induces labor-saving innovations.
Lacking in loyalty to the continuity of the advancement of cvilization, this effect can even be made to sound like something negative.
Regarding the Henninger claim, or implied claim, that those who believe in markets must want markets even for citizenship; no, there is no reason to apply such a preference in such an irrationally broad way. Immigrants do not pay for residency or citizenship more than rarely; it is outside market determinations.
Likewise one does not psy for a security clearance, an officer's commission or a judgeship.
The morally handicapped might nihilistically chuckle that sometimes one does, or even that there's no reason why it shouldn't always be that corrupt, but they're not valid entrants in moral or political deliberations.

Steve Sailer writes:

To revise Bryan's notorious question, "Why are Mexicans the moral master race?" They are above the world average in wealth. Five billion people live in countries with lower average per capita GDPs than Mexico's.

TGGP writes:

You might want to make the U.S more like Mexico, but like the immigrants themselves, I much prefer living in the United States. Maybe when Patri Friedman succeeds in creating artificial countries out in the ocean I won't mind as much when you destroy this unusually free country, but for now I do.

Jordi writes:

Why do they need to come to any developed country when you can import the fruit of their labour?

Aren't import and export taxes worse for developing countries than immigration regulation?

If you can't find a cheap waiter then you'll have to raise your salaries.

What's the economical problem of waiters, painters, shop attendants or cashiers earning more money at home when I can buy manufactured goods for less money?

Immigration implies immigration mobsters abusing and trafficking with human people. There are economical and social limits to the integration of immigrants. There are no economical nor social limits to the import or export of free trade goods.

stuart writes:

Steve, I think Arnold is in favour of letting in a lot of poor people from other countries too. Though, of course you know that.

Mark Seecof writes:

Arnold is really disappointing today. Endorsing Pritchett's thesis is not libertarian, but Marxist. Let's see--the "rich" are "oppressing" the "poor," in this case by limiting the rate at which the poor arrive to collect the dole in rich countries.

Arnold goes so far (check out the last line of that quote) as to endorse the anti-libertarian notion that "labor-saving innovations" are "inimical to poverty reduction." Phooey. Nearly all of the increased wealth in the world from the Renaissance forward has come from labor-saving innovations. The only reason that even poor immigrants in the USA today eat better than Henry VIII did is labor saving innovations. Show me a hungry population and I'll show you one that cultivates staples by stoop labor.

Pritchett's main assertion contains a core of self-contradiction. He admits that rich countries are rich now, despite their lamentable shortage of unskilled labor. Ask him: how did they get that way? Really, if unskilled labor is so useful, why aren't all those poor countries rich, or at least increasing their wealth rapidly?

Contrary to Pritchett's underlying assumptions, the evidence shows that an oversupply of low-IQ unskilled labor retards economic growth.[1] So any rich country R that admits a flood of dim-bulb manual laborers from a poor country P will likely reduce itself to the same level of poverty as obtains in poor country P.

To destroy the future of R's citizens to offer a (temporary) benefit to P's unskilled masses would betray libertarian principles for Marxist ones. Libertarians can only enjoy economic and political freedom in a country run by and for libertarians. Any country run (allegedly) "for" laborers (proletarians?) by a morally-posturing elite ("the vanguard of the revolution?") will consign libertarians to the Gulag plenty fast. Importing a vast army of unskilled laborers to be mobilized by the next Marxism-spouting demagogue to come along amounts to national suicide for a "libertarian" rich country.

[1] By the way, the evidence also supports the inverted form of this argument: importing high-IQ people increases economic growth. Look at, say, Rhodesia/Zimbabwe. Or Kenya. Or Nigeria. Or South Africa. All experienced great economic growth during the period of "colonial exploitation" and none even kept up average growth after expelling the "exploiters," despite retaining their abundant supplies of unskilled labor.

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