Bryan Caplan  

Market Forces vs. Discrimination: What We Learn from Illegal Immigration

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Illegal immigrants are one of the few groups that modern Americans openly despise.  Indeed, most people can't even say "illegal immigrants" without sneer italics.  Illegal immigrants are also one of the few groups that effectively can't sue their employers for discrimination; if they make a stink, they get deported before they get to trial.  The upshot: If anyone nowadays suffers from labor market discrimination, it's illegal immigrants.

But notice: Americans have zero confidence in the ability of legal discrimination against this hated group to "protect their jobs from illegals" or discourage border crossing in the first place.  No, they think American employers are far too greedy to pass up this golden opportunity to hire on the cheap.

In other words, it looks like most Americans already implicitly accept the Beckerian thoughtcrime that market forces alone heavily discourage - and ultimately eliminate - discrimination.  Not for minorities, women, or gays of course; there Americans imagine that regulation and lawsuits explain virtually all progress since 1950.  But for discrimination against the most despised minority of all, illegal immigrants, Americans firmly believe that greed trumps prejudice.  And that's why discrimination against illegals isn't just legally allowed, but required.



COMMENTS (18 to date)
David R. Henderson writes:

Bryan,
What a fantastic insight! Kudos.
Best,
David

Blackadder writes:

I think the common view about illegal immigrants is that discrimination would have an effect, but that this is more than cancelled by immigrants' lower wage demands.

For example, a typical businessman might prefer to pay a native $10 an hour than pay an illegal immigrant $7 or more an hour. But if the immigrant is willing to work for $6 an hour this doesn't matter, as the employer will still opt to employ immigrants.

I'm not saying that the story is correct, only that it is consistent with the efficacy of anti-discrimination laws.

John M writes:

Eliminate is a very strong word. Repeated studies have shown that when employers are asked to choose between (say) a black person and a white person for the same wages and work ethic, they are highly biased to choose the white person, and there's no market mechanism (as it is set up in experiments) that would influence them to change their behavior.

It's also important to note that people are actually willing to incur economic cost to discriminate, again belying your absolutist argument that markets might actually eliminate discrimination.

But I completely agree with the point that the market exerts strong pressure against discrimination, a point which liberals would be wise to understand.

GU writes:
"Illegal immigrants are one of the few groups that modern Americans openly despise. Indeed, most people can't even say "illegal immigrants" without sneer italics."

Perhaps it's because I've been living in Blue states my whole life, but I haven't encountered too much of this; my grandparents and maybe a few oddballs are the only people I've ever heard sneer about illegal immigrants.

Hyena writes:

Part of your case that market forces eliminate discrimination against illegal immigrants is that they are paid less than their legal counterparts?

So, when feminists complain that women do not receive equal pay for equal work, we should tell them it's not discrimination but proof that the market has eliminated discrimination?

Floccina writes:

A better example would be:

http://en.wikipedia.org/wiki/Marge_Schott

Margaret Unnewehr Schott (August 18, 1928 – March 2, 2004) was the managing general partner, president and CEO of the National League's Cincinnati Reds franchise from 1984 to 1999. She was the second woman to own a North American major-league team without inheriting it (the first being New York Mets founder Joan Whitney Payson), and the first woman to buy an existing team rather than inheriting it.[1] She is perhaps most well known for her controversial behavior during her tenure as owner of the Reds, which included slurs towards African-Americans, Jews, the Japanese and homosexuals.

But of course she hired black baseball players, a job is not a gift you hire someone because the hire yields more utility than the money that you have to pay them would yield.

  • Some people will say that employees are all exploited. That hire someone is exploitation.
  • Other people seem to think that when you hire someone you are giving them a gift.

I think that they are both wrong. I think that for the most part, the employer and and the employee are both trying to make as much money as they can.

Chuch writes:

"Illegal immigrants are also one of the few groups that effectively can't sue their employers for discrimination; if they make a stink, they get deported before they get to trial. The upshot: If anyone nowadays suffers from labor market discrimination, it's illegal immigrants."

So let's see: Law breaking intruders are "hated" because they're law breaking intruders. And they don't have rights because they are law breaking intruders. Are they law braking intruders or not? What you're saying is that conceiving of illegals as law breaking intruders is wrong. You're basing this on your political frame, a frame in which, ideally, there would be no such thing as an illegal immigrant. While I understand why you think that no form (or amount) of immigration should be illegal -- some forms are and the vast majority of citizens here believe that this is how things should be. Given that some immigrants are illegal enterers and therefore intruders, it's not clear why you think, people are wrong in conceiving them as what they are.

That's like saying that it's wrong to sneer at Ephebophilics when the laws and norms classify their behavior as wrong. It would make sense to argue and advocate that criminalized instances should be decriminalized and normalized, but it makes no sense to say that criminalized instances should be treated in the same manner as if no crime was committed.


Kurbla writes:

Hyena is right.

The capitalists hire illegal immigrants exactly because they are able to discriminate against them, i.e. pay them less than other workers.

How it turned in your mind that you see actual discrimination as discouragement of discrimination?

Andy Hallman writes:
Perhaps it's because I've been living in Blue states my whole life, but I haven't encountered too much of this; my grandparents and maybe a few oddballs are the only people I've ever heard sneer about illegal immigrants.

You must not watch much campaign advertising.

Jacob Oost writes:

Before I begin: I favor open immigration, and I want myself and others to have the right to hire and fire anybody at will, and not let national borders get in the way, and I believe open immigration leads to economic growth and increased prosperity.

Now then, some huge mistakes I see many libertarians and leftists make about people who oppose illegal immigration or have a bad attitude towards immigrants are the following:

1) Lumping everybody together when there is in fact a broad spectrum of people opposed to illegal immigration with a variety of rationales for their beliefs and with differing arguments (which sometimes contradict the arguments of other anti-illegal immigration people)

2) The phrase "anti-immigrant," either to describe people or policies. In fact, while all "anti-immigrant" people are opposed to illegal immigrants as well, not all people opposed to illegal immigrants are necessarily anti-immigrant. My extensive boots-on-the-ground experience with conservatives is that most of them favor limited-but-generous legal immigration.

3) It's also a Rule of Law issue. To them, allowing illegal immigrants in this country to stay or even partake of tax-payer-funded social services is akin to allowing a car thief to keep the car he steals so long as he pays the tax on it. It's like letting line-cutters keep their place in line even after cutting. It's seeing the law being blatantly ignored right in front of their eyes. As a major believer in the Rule of Law, it rankles me as well (of course, my solution is to convert illegal immigrants into legal immigrants so that it's no longer illegal and the Rule of Law is being upheld).

4) There have been many outrages and miscarriages of justice which float by unnoticed by most boosters of open immigration. A rancher had his land taken away from him by a judge and given to illegal immigrants simply for defending himself against their burglary. Immigrants, contrary to what many people have you believe, do indeed take fierce advantage of the welfare state while contributing comparatively little to the national economy, I've seen it firsthand more often then I can count. It seems to vary from culture to culture. For instance, many East Asians are notoriously self-sufficient, but Somalian immigrants are like a kid with their dad's credit card. Nobody, and I mean nobody, seems to like Somalians that much, especially not other African immigrants. They get the Cadillac treatment from the welfare state, they get perks in their education and health care and many Americans see this as looting and are outraged. Many people in favor of open immigration are either willfully blind of these problems or they ignore them for fear that it undermines their argument. But ignoring it only angers people further, which undermines the cause of open immigration far more than does addressing these issues honestly, and reforming the welfare state.

5) Assuming people are motivated by job insecurity or fear of economic competition. Yes, lots of people buy into the Lou Dobbs-style myths about free trade and immigration, but my experience is that plenty of people are motivated primarily by concern that the welfare state is being abused and that the law is being ignored by the police, courts, legislature, etc. People want to be ruled by laws, not by men. By rules, not discretionary action. If immigration law is ignored, who's to take that the laws which secure our property rights won't be ignored next?

GU writes:
"You must not watch much campaign advertising."

I try not to! But I guess I was reflecting on private conversations and not public discourse.

David C writes:

"Not for minorities, women, or gays of course; there Americans imagine that regulation and lawsuits explain virtually all progress since 1950."

For minorities, I get what you mean about affirmative action, but women and gays? What regulatory changes? Even for black people, I feel the main complaints today are about the police and prior to 1964 they were mostly upset about Jim Crow. Both of those are pushes for deregulation. Where are you getting this from?

Evan writes:
How it turned in your mind that you see actual discrimination as discouragement of discrimination?

Bryan isn't making any statements about his mind, he's making statements about the minds of others.

Many Americans believe that women make less money than men at the same job, but that employers need to be forced to hire women in spite of this. The average American believe that the will to discriminate is so strong that someone just plain won't hire someone they like discriminating against.

Lower pay can probably be regarded as another form of discrimination. But Bryan is pointing out that most people think that, when it comes to blacks and women, nothing, not even getting to pay them less money will get a discriminator to hire a woman or a black. Yet they also believe that the economic savings that hiring illegals brings spurs people to choose them. That's kind of inconsistent, and Bryan is right to point that out.

Ben writes:

If voters are irrational, then why do they understand Becker?

Steve Sailer writes:

No, the general opinion is that illegal immigrants from south of the border have, on average, lower violent crime and burglary rates and better work ethics than Americans who would be tempted by similar wages, especially poor African-American men.

Occam's Razor would suggest that the reason for this general belief is that it is, statistically speaking, true. But anti-discrimination law is based on Occam's Butterknife, so it's pretty much hopeless to try to come up with logical zingers.

The reality is that affirmative action and anti-discrimination law is essentially the Slave Trade Tax (just as Indian casinos are the 1492 tax), and we'll be paying it forever. The crucial thing, therefore, is to stop importing so many people whose descendants will qualify for legal privileges due to their race/ethnicity.

Do you get how it works now?

Dale Moses writes:

Evan Wrote:

Many Americans believe that women make less money than men at the same job, but that employers need to be forced to hire women in spite of this. The average American believe that the will to discriminate is so strong that someone just plain won't hire someone they like discriminating against.

No. Many Americans believe that women make less money than men at the same job and that this is evidence that employers need to be forced to hire women.

Assumption: Women has no material difference from man in the labor market holding other things constant (this is not quite true, but the theory suggests that women should receive higher initial salaries due to these differences)

Assumption: Building from above, women and men ought to be in the same labor market.

Conclusions: Given the above, the going rate of labor for men and women ought to be the same.

If it is not, then something is wrong and there is some force that is preventing it from being true.

If you look at it as two markets with demand for women and demand for men, the two should return equal price given women and men are homogeneous goods and perfect substitutes. That or, given perfectly elastic supply, the lower cost option would be chosen universally(I.E. if long run supply is perfectly elastic in the micro market then we would expect business to hire women and only women)

It is only if they are not, if organizations are less willing to hire a woman at any given price than a man (Per definition to comparing demand curves) that the situation could result. This is regardless of the total number of women hired.

People understand incentives. They understand that even if they don't want to do something, often they can be paid to do it. By invoking opportunity costs we can see that businesses have to be paid to hire women who are equally qualified as men. Which is evidence of discrimination.

The same mechanic is working here. Businesses can discriminate against illegals(though in this case they are likely to use "legal" methods to do so) which is evidenced by their lower wages.

Vince Skolny writes:

If any market in question were free, the illegals' willingness to work for a much lower wage would ultimately reduce the price of labor for that market and it would clear at a much lower wage level, thus eliminating the gap.

Lower wages are perceived as discrimination only when we assume de jure price controls, rather than competition as the norm.

Andy Hallman writes:
I try not to [watch campaign advertising]! But I guess I was reflecting on private conversations and not public discourse.

Good! I hate that advertising, but I think it does tell us a lot about what groups of people the two political parties scapegoat. I think the Democrats can be as bad when they talk about disloyal corporations that "ship jobs over seas." As if people in India shouldn't have jobs too!

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