January 11, 2004

What Does the New Immigration Initiative Do?

There is a very silly idea going around that the immigration initiative is going to increase immigration and therefore is bad. This completely misunderstands basic economics and the President's goals.

Donald Sensing links to a prime example of this foolish sort of analysis by Bill O'Reilly. What the "poor of the world" face is a situation with three choices. They can stay home (with very low wages, possibly subsistence agriculture), they can go legally to the US, and they can go illegally to the US. Staying home is a recipe for continued poverty for the next generation so that's out for a lot of the world's poor. The present situation makes going illegally more attractive than going legally because the $30-$40k that they pay to get across the border with snakeheads or coyotes is more than made up in the 10-12 years it would take many of them to get a green card or a legitimate labor visa. But under the new Bush plan what happens, the home situation stays the same so the impulse to immigrate is exactly the same, the cost of the snakeheads and coyotes does not drop (in fact it probably will rise), so the market for their services is not enlarged, what changes is the substitute good of legal immigration. Cousin Manuel or Grigori can land you a job? You're in with minimal fuss and full US protections. In fact, the market for these illegal transport services drops greatly because anybody who can get a job for a lower search cost than the illegal transport fees (plus false papers, plus the cost of dodging the police) will take the legal route. That will leave a much more manageable people smuggling problem, terrorists, white slavers, and border crossing by other criminals who wouldn't be admitted.

For the employers, you have the same sort of recalculation going on. The availability of legals shoots up so the incentive to hire an illegal drops. The end result is more immigration, sure, but it's more immigration that goes through border checks. And that's where the part about misunderstanding the President's goals comes in. He's not trying to limit immigration as an economic measure to raise US wages. He's trying to eliminate the snakeheads and coyotes who are eventually going to be bribed into bringing in Al Queda or other terrorists along with a radiological, chemical, biological, or nuclear bomb.

The argument that lowering the price of legal immigration will promote illegal immigration is as foolish as predicting the repeal of alcohol prohibition will increase illegal distillation. It's just economically wrongheaded. Donald Sensing says that he doesn't often agree with Bill O'Reilly but this time he's making an exception. He should have stuck to his normal rule.

Posted by TMLutas at January 11, 2004 12:41 PM