Tuesday, October 27, 2009

Dumb Question #2

Why do we just let illegal immigrants stay here, lowering our wages, using our schools, getting free health care and welfare benefits?  This is a dumb question for anyone with any substantial knowledge of economics.  To paraphrase Milton Friedman, open borders and a welfare state are incompatible.  People simply respond to incentives.  People know that they can come to America and have a chance to work and make a living, or have the social safety net of our extensive welfare system catch them.  And many are caught in the safety net.  Providing an incentive for failure in the form of welfare is just asking for trouble.

The dumb question is asking, how do immigrants leach off of society?  The good question to ask is, why does a profit and loss system create a circumstance in which immigrants are capable of leaching off society?  The answer to that is that we do not have a profit and loss system.  The immigrants of the 19th century, when America essentially operated under open borders policy, knew that they came here facing the same odds as anyone in a capitalist society.  They could either succeed or fail.  We, however, have created a system in which one can neither fail nor succeed, and therefore there is less incentive to succeed at all.  I am in favor of open borders, but only if the welfare state is eliminated.

What about lower wages, you may ask.  I would argue that lower wages serve a great benefit to society.  First, lower wage jobs allow low skill workers to be employed, and develop skills and experience which they can parlay into new, better paying jobs.  Second, lower wages mean lower costs of production, which means lower prices for consumers.  Low paid labor available overseas explains why we choose to import just about everything we buy.  And all of us benefit from this low paid labor.  Finally, lower labor costs and lower prices for consumers leave everyone with more money to invest into the creation of new wealth.  The employer who has access to low cost labor is able to invest in new capital to produce newer, better, cheaper goods.  A newer, better market with more employment opportunities for everyone is created thanks to the low cost labor.

A welfare state is incompatible with open borders.  But if it was taken away (and minimum wage laws and other barriers to hiring were eliminated) open borders would be the best policy for everyone.


  1. I really only have one thing to say regarding illegal immigration, and that is that our government is spending way too much time and money on it and not achieving any desired results. The same goes for the "war on drugs"; both policies are extremely large wastes of time, money and resources that the government could and should be spending on the most important issues at hand; i.e. returning to free-market capitalism, abolishing the federal reserve, and getting out of two needless wars.

  2. I agree with you, Jon. I would have no problem with immigration if not for the welfare state.

    It's a trap, a baited trap.

    Discuss all the jobs leaving America and how it relates to unions and artificially high wages. Wages the market can't bear.