Wednesday, March 29, 2006

Immigration and Economics

Paul Krugman with some good thoughts on immigration:

"Give me your tired, your poor, your huddled masses yearning to breathe free," wrote Emma Lazarus, in a poem that still puts a lump in my throat. I'm proud of America's immigrant history, and grateful that the door was open when my grandparents fled Russia.

First, the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.

Second, while immigration may have raised overall income slightly, many of the worst-off native-born Americans are hurt by immigration -- especially immigration from Mexico. Because Mexican immigrants have much less education than the average U.S. worker, they increase the supply of less-skilled labor, driving down the wages of the worst-paid Americans. The most authoritative recent study of this effect, by George Borjas and Lawrence Katz of Harvard, estimates that U.S. high school dropouts would earn as much as 8 percent more if it weren't for Mexican immigration.

That's why it's intellectually dishonest to say, as President Bush does, that immigrants do "jobs that Americans will not do." The willingness of Americans to do a job depends on how much that job pays -- and the reason some jobs pay too little to attract native-born Americans is competition from poorly paid immigrants.

Basic decency requires that we provide immigrants, once they're here, with essential health care, education for their children, and more. As the Swiss writer Max Frisch wrote about his own country's experience with immigration, "We wanted a labor force, but human beings came." (my em) Unfortunately, low-skill immigrants don't pay enough taxes to cover the cost of the benefits they receive.

Worse yet, immigration penalizes governments that act humanely. Immigrants are a much more serious fiscal problem in California than in Texas, which treats the poor and unlucky harshly, regardless of where they were born.

We shouldn't exaggerate these problems. Mexican immigration, says the Borjas-Katz study, has played only a "modest role" in growing U.S. inequality. And the political threat that low-skill immigration poses to the welfare state is more serious than the fiscal threat: the disastrous Medicare drug bill alone does far more to undermine the finances of our social insurance system than the whole burden of dealing with illegal immigrants.

Realistically, we'll need to reduce the inflow of low-skill immigrants. Mainly that means better controls on illegal immigration. But the harsh anti-immigration legislation passed by the House, which has led to huge protests -- legislation that would, among other things, make it a criminal act to provide an illegal immigrant with medical care -- is simply immoral.

We need to do something about immigration, and soon. But I'd rather see Congress fail to agree on anything this year than have it rush into ill-considered legislation that betrays our moral and democratic principles.

Too late, Mr. Krugman: Our "moral and democratic principles" have already been sold rather than betrayed. Oh, they're still there - it's just that if you invoke them you'll be accused of being a radical and asked why you hate America.

Go read Mr. Krugman's complete post. I had to exert what little will power I have to not post the whole thing, it's that good.

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