With the 2016 Presidential election season in full swing it seems nearly every candidate (from far right Trump to far left Sanders) is falling all over themselves to do “something” about illegal immigration. Problem is, the top three economic reasons cited in favor of “closing the border” are utterly fallacious despite their unquestioning acceptance by the media and voters alike.
Fallacy#1: Immigrants force wages down making Americans poorer.
Reality: Wages have two parts: a money part (the number) and a real part (the buying power). The money wage is arbitrary and irrelevant because all that matters is the real wage – how much that arbitrary amount will buy. Lower money wages (like lower prices) reflect a concomitant increase in production and should be welcomed. Yes, the money wage is lower, but there is more “stuff” available to buy at lower prices than before, thus real wages increase. Where would you rather live, in a town with a population of ten or one thousand? How much more must everyone work to produce everything needed in the town of ten vs the town of one thousand? Many hands make light work – on this principal alone we should be welcoming more, not fewer, immigrants into this country.
Fallacy#2: Immigrants steal jobs.
Reality: This fallacy is rooted in the mistaken notion that “jobs” are a form of fixed resource welfare. It views jobs like soup at a soup kitchen; there’s only so much to go around (see Fallacy#3 below). This view sees jobs as a completely one-sided affair when in fact it is of course a mutual exchange; you can’t be “stealing” if you are giving something in return. So jobs “given” to immigrants are not welfare – they produce something in exchange. Ah, but you say a job “given” to an immigrant was thus “stolen” from an American. This rests upon the assumption that there is some ideal level of workers and we must not exceed that. Well if that is true than how can we have this totally unregulated system of childbearing in this country? There is no control over how many children are born and who ultimately enter the work force only to “steal” jobs from other Americans. Should we restrict births in order to ensure just the right amount of jobs in this country? Shall we soon face the specter of the “illegally birthed”?
It is not possible to “steal” a job because one cannot own their job. The term “stealing” is a red herring that misdirects us into thinking a crime of sorts has been committed when in fact the real issue is one of competition. Competition lowers prices or increases quality. Normally we welcome that…when we are the buyer of a good. But when we are the seller, well then the story changes doesn’t it? Immigration control is simply another flavor of protectionism intended to limit competition. It is no different than tariffs or other import restrictions. The seen benefits accrue to the sectors of the economy so protected (whether that be agriculture, steel, or labor) while the unseen harms inflicted upon the consumer paying higher amounts are ignored.
Fallacy#3: There are only so many jobs so more immigrants means fewer for everyone else.
Reality: Jobs are unlimited. They are unlimited because humanity will never quench its desire to alter the world. We create our own jobs when we perform work for our own benefit. Others can create jobs for us if they are allowed to save that which they do not consume (profit) and use it to entice others to perform work on their behalf. Since the creation of jobs by others is a direct function of the amount of money they have saved and the amount of money saved is a direct function of profit, then it follows that decreased profit (through higher taxes or costs) will necessarily reduce the quantity of jobs at a given money wage. If one could pay any wage that both parties agreed upon there would be no limit on the quantity of jobs available. Jobs could be doubled overnight if everyone paid one-half the prevailing wage.
Now you may be aghast in horror at the thought of making one-half what you do now. And therein lies the problem. We have becomes so fixated on the money wage we ignore the reality staring us in the face, which is that with twice the number of people employed, output would increase far beyond two-fold (owing to the synergy of combined resources). Honestly, would you really care if you made one-half the money wage you do today if it bought five-times as many goods than your current wage does?
The blind spot that infects every conversation about immigration vis-à-vis jobs is this central fact: we are all buyers and sellers in the economy. You cannot simultaneously protect yourself as a seller without harming yourself as a buyer. Decreasing money wages, when driven by the competition originating from increased production, are reflective of a necessary growth in real wages.