Art Carden  

Talk this Morning: "More Immigrants, Please"

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I'm speaking this morning to the New Horizons Program at UAB--a lifelong education program for senior citizens--on immigration. My outline and bibliography are here. I'll discuss jobs, wages, culture, crime--and the eugenic origins of immigration restrictions. I'm also going to discuss terrorism. Commenters on my earlier posts about statistics and terrorism point out--correctly, given the probabilities--that a randomly-drawn Muslim is probably far, far more likely to be a terrorist than a randomly-drawn non-Muslim, but this (again) expresses the ratio of a very tiny number to an even tinier number. Those who urge us to look upon Muslims skeptically because "they might be terrorists" are seriously over-estimating the risk of terrorism.

I'll be showing Ben Powell's LearnLiberty video "Top Three Myths About Immigration:"

I might also show my first LearnLiberty "Trade is Made of Win" video if there's time:



COMMENTS (20 to date)
Bostonian writes:

Is "eugenics" a dirty word? Libertarians oppose welfare. One important reason to do so is that the welfare state encourages less productive and intelligent people to procreate and taxes away the income of more productive people, discouraging them from having large families. Because intelligence and other traits are inherited, as Bryan Caplan documented in his "Selfish Reasons to Have More Children" book, the welfare state reduces the average level of human capital.

Eric writes:

"Those who urge us to look upon Muslims skeptically because "they might be terrorists" are seriously over-estimating the risk of terrorism."

In this thread, I feel like people are talking past each other. I agree totally with the above statement, and yet the high ratio of randomly drawn Muslim Terrorists to randomly drawn non-Muslim Terrorists has practical implications for profiling.

Imagine 100,000 Non-Muslims and 2,000 Muslims in a country. Exactly 2 Muslims are terrorist (.001 probability for a randomly drawn Muslim). Exactly 1 Non-Muslim is a terrorist (.00001 probability for a randomly drawn non-Muslim). TSA has resources to screen exactly 2,000 people. If those two thousand people are selected randomly, they will catch, on average, 3/102,000*2,000 = 0.0588 terrorists (practically zero)[1]. If those 2,000 people are selected in the ratio 2 Muslims to 1 Non-Muslim, they will catch approximately (2/3*.001+1/3*.00001)*2,000 = 1.34 terrorists. If they select the 2,000 Muslims, they will catch exactly 2 (without replacement) or on average 2 (with replacement).

Despite the existence and relatively high number (1/3) of nonMuslim Terrorists, the correct strategy (presuming you want to catch on average the most terrorists) is to profile Muslims entirely[2]. The math would work even with 4 non-Muslim terrorists and 2 Muslim Terrorists as long as Muslims were more likely to be terrorists. The math above gives 0.118 terrorists for random, 0.68 for a 4/2 strategy and 2.00 for profiling only Muslims.


[1] Yes, I realize this is sampling with replacement and I should be sampling without replacement.

[2] There may be other reasons besides maximizing the catching of terrorists for not profiling Muslims exclusively. I agree with some of them.

ivvenalis writes:

What's wrong with non-coercive eugenics? The benefits of having a higher-quality general population are painfully obvious, as are the downsides of fecund barbarians.

Also, assuming immigration is inevitable, if some populations are going to be more likely to produce terrorists than others, why would you want more of them? Why import a million Pakistanis (or 10000 Chechens, lol) and end up with ten terrorists when I could import a million Mexicans and get two terrorists?

8 writes:

If the immigration bill passes, the native response is going to be a secessionist movement (most likely Deep South),matched by a secessionist movement in the Southwest (La Raza). If the libertarian deep game is to render the federal government unable to govern U.S. territory, it is a good strategy.

Michael writes:

Immigration doesn't depress wages? Let me give you an example of how it - in fact - does.

Resorts in the Phoenix area only pay (as of 5 years ago) $8/hr. That is not for teenage, part-time work. It's full-time grown-up work. $16k/year without benefits. Of course, these ridiculously low wages will never attract Americans. So instead of doing what the free market requires - increasing pay until the jobs are filled - they short-circuit the free market by importing workers from the Philippines. These workers live 4 to a one bedroom apartment and save as much as they can to take back to the Philippines with them - another blow the the local economy, btw.

Those who argue that the resorts can't afford to pay more are very mistaken. If the average housekeeper cleans 4 rooms per hour, and the average room rate is $200/night, going from $8/hr to $15/hr would be no problem.

Emily writes:

@Michael: Economists are aware that in some areas/sectors, for some workers, immigration depresses wages. When economists say that immigration doesn't depress wages, they mean overall: immigrants can both depress wages in some areas/sectors for some workers and increase them in other areas/sectors and for other workers, so the discussion on this has to do with the net effect. (Or sometimes the net effect on particular groups of workers, like by educational-attainment group. A major position is that immigrants increase wages for most workers, but depress them for the least educated Americans.)
Of course, wages aren't the only way immigrants may affect non-immigrant Americans (or other immigrants). You refer to a couple of others - living very densely and sending money home.

NZ writes:

@Michael: the open borders free marketeer will respond "Who cares? The quality of life for those Filipinos is still way better than what they would have had in the Philippines. In fact, their improvement in utility is probably greater than the resulting lowering of utility to Arizonan citizens. You have a silly irrational bias in favor of your countrymen! Get over it!"

@Emily: How convenient. Immigration results in a net increase in utility to people in the north-ier, east-ier parts of the country, which means the effects on citizens in south-ier, west-ier parts cancel out. I shouldn't feel bad that a spa in Phoenix won't pay Americans a decent wage, because now more people can afford to go to the spa! By the way, what happens to those neighborhoods where immigrants are living like sardines? Would you move there with your kids?

To Art, I reiterate my point about profiling and terrorism: we should be looking at more than just how many Muslims per thousand are terrorists; how many Muslims per thousand are likely to support, be sympathetic to, or not report terrorist plans?

Michael writes:

NZ: Who cares? People that understand how the actual economy works. Nothing could be more simple to understand than this: rising production MUST be matched by rising consumption.

In the US, consumption is driven by wages and borrowing. When employers use cheap imported labor and "free trade" with China to keep wages down, it's great for corporate profits and CEOs. But falling wages lead to rising household debt until borrowing limits are reached. Then the economy goes through a long and painful deleveraging period. Like now. And the 1930s. And the gilded age.

My concern is anything but "silly and irrational bias".

David writes:

"Those who argue that the resorts can't afford to pay more are very mistaken. If the average housekeeper cleans 4 rooms per hour, and the average room rate is $200/night, going from $8/hr to $15/hr would be no problem."

@Micheal
You are making a huge assumption here. A lot more goes into the price of that room than just housekeeping cost. So almost doubling the wage could have a major effect. You say Americans wont take the jobs at $8hr, is this because they have a better option? If they don't, choosing between 16k a year and 0k a year seems simple to me.

Consumption is also driven by the price of goods. You make even bigger assumptions in your second post.

Michael writes:

@David-

If I could prove to you that GDP was dependent on wages and borrowing (and not the price of goods) would it change your opinion?

http://econopolitics.com/2012/10/29/real-problem-us-economy/

David writes:

@Micheal
Does this article take into consideration the increase of employee fringe benefits? So wages could be down but total income could be up?

Michael writes:

@David-

Increase in benefits?! Most people have seen their benefits decrease. Far fewer people have pensions today, and 20+ years ago employers picked up 100% of health insurance premiums. Those missing wages have gone straight to corporate profits, not benefits.

In the late 70s, Wages were 49% of GDP. Today they have fallen to 44% - a 5 point drop.

Over the last 50 years, after-tax corporate profits have averaged 6% of GDP. Today they have risen to 11% - a 5 point increase.

BTW, 5% of GDP comes out to about $800B. If those higher than average profits went to workers instead, GDP would probably get a boost of about $1T, and we would be at full employment right now.

David writes:

@Michael
Give these a listen or read the articles under podcast readings. Your numbers maybe misleading or just false.

http://www.econtalk.org/archives/2012/04/burkhauser_on_t.html

Or

http://www.econtalk.org/archives/2011/10/bruce_meyer_on.html

NZ writes:

@Michael: I fundamentally agree with you; I was playing the ironic devil's advocate.

One thing I have to nitpick though: no single person or, arguably, group of people understands how the actual economy works.

Ken B writes:

Art:

Those who urge us to look upon Muslims skeptically because "they might be terrorists" are seriously over-estimating the risk of terrorism.

Speaking as one of the more forceful critics of your earlier posts I can endorse THIS wording and THIS conclusion. But that is not remotely the same thing as saying profiling is based on statistical ignorance.

Michel writes:

@David

I'm not sure which numbers you think are misleading or false? Here is a link to my source data for wages and corporate profits, you can clearly see the trend of falling wages matched by rising profits.

http://research.stlouisfed.org/fred2/graph/?g=hQB

I read the Burkhauser article you linked to and agree that you need to take transfer payments, taxes and benefits into account when looking at income inequality. I think his estimate of 36.7% real growth in median incomes between 1979 and 2007 is a good one. The CBO report finds a similar increase of 35%.

But considering that productivity increased 69% over that period, that still leaves the median household 34% behind - even with all benefits, transfer payments and taxes considered. And things are much worse when you look at the bottom 20%.

David writes:

@Michel
Yes, productivity has risen and employment in industries that hire the bottom 20% has decreased. Much of this is because production has shifted away from labor to capital, which has become increasingly cost effective.
Ed Learner explains it well here:

https://www.youtube.com/watch?v=aFN6X0O-wak&playnext=1&list=PLKruweaZqDNeQU9a-0xp1Pl-DS0lUXkeI&feature=results_main

You cant really blame business for shifting to more cost effective means of production. The minimum wage law and the deteriorating public school system are more to blame for the lack of growth of the bottom 20%.

Michael writes:

Ed Learner is explaining that supply-side economics doesn't work! Too bad for him, he can't connect the dots.

Low skill workers have been slowly replaced by machines since 1750. There is nothing new going on, just new excuses for robber baron capitalism - which doesn't work and never has. Blaming the "microprocessor" for low wages at Walmart is ridiculous!

The pre-Reagan recoveries were strong. Those recoveries took place with tax rates above 70%, high union membership, low household debt and wages >49% of GDP.

The post-Reagan (weaker) recoveries took place with tax rates below 40%, low union membership, growing household debt and wages

David writes:

@Michael

Your thoughts on so called "robber barons" seem very bias. Would you consider Steve Jobs or Henry Ford robber barons? Painting every producer as a robber baron is very naive.

Yes, microprocessors do effect walmart workers. Technology has decreased the demand for low wage workers. This gives walmart workers less alternatives thus a lower wage.

Your correlation between recoveries and tax rates is irrelevant. Govt. spending was and has been increasing since those years you are talking about. Reagan and every president since has ran huge deficits. So you're saying if Reagan would have spent 30% more we would be living in a utopia? I don't buy that.

People have freely decided they no longer want to join unions. A simple study of labor economics would show you that.

It seems your solution for a better economy is forced union membership, high taxes and laws against substituting capitol for labor. Seems like a terrible solution to me.

Michael writes:

Robber barons get rich at the expense of their workers. The Walton family and Andrew Carnegie are perfect examples. Henry Ford increased his worker's pay and reduced their workday from 9 to 8 hours. Steve Jobs (and most high-tech companies) give workers stock options. That's a big reason why the American high-tech industry is so successful.

Again, technology has increased productivity steadily for the last 200+ years. Please explain why the last 30 years are different. It's not technology that's changed, it's our economic ideology.

My correlation between tax rates and recoveries is not irrelevant. Low tax rates lead to high income inequality. High income inequality leads to weak consumer demand - that was true in the 1930s and it is true today.

Alternatively, when tax rates are too high for too long, it leads to too little inequality and weak supply - like in the late 70s and early 80s.

People have not "decided" they don't want unions. They have been mislead into believing that unions are bad. But all unions do is level the playing field between employers and employees. Right now, employers have all the power, that's why corporate profits are at record levels, Medicare Part D prohibits negotiation lower drug prices, we engage in "free trade" with communist China, etc.

BTW, look at the German automakers - more unions, higher pay, labor gets a seat on the board (by law) and they are more profitable than US car companies...

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