Monday, May 24, 2010

Do They Hate Everyone Who Breaks Dumb Laws, Or Just Some?

It bothers me how many people get upset about illegal immigration simply on the grounds that the illegal immigrants are here illegally. They are upset that the immigrants didn't go through the (ridiculously convoluted, nearly impossible to penetrate) legal process to gain entry, permission to work, and citizenship. Laws that keep out peaceful people who just want to be productive are dumb. Shouldn't we be mad at the lawmakers, and not the people who break the dumb laws?

I wonder if the same people think the operators of speakeasies during alcohol prohibition were also moral monsters. Were they evil for allowing people in to drink? I think most people now agree that alcohol prohibition was a dumb policy. What about jaywalkers? What about someone who loses his temper and cuts off one of those "Do not remove under the penalty of law" labels on mattresses? Do illegal immigrant-haters hate those people, too?

Here are two seldom-heard reasons to want a lot more immigrants:
  • They tend to be young, and they pay payroll taxes, which means that they would postpone our problems with social security for many years. 
  • They all need to live somewhere. We have a lot of excess housing. It's not "re-inflating the bubble" if increases in housing prices are the result of more people buying houses to live in!
Check out Art Carden's posts on Division of Labour regarding immigration herehere, and here.

UPDATE: Hat tip to Art Carden yet again for this great Jeff Miron piece on illegal immigration. 

ANOTHER UPDATE: A friend who wants to remain anonymous says:
Another example of law-breaking relevant to the immigration debate is this: in the South before the war, you were BREAKING THE LAW by teaching slaves to read and write.  Might this look familiar:
Now, I'm not a racist and I'm all for people learning how to read and write, but they need to do it LEGALLY and not BREAK THE LAW of our sovereign country.


Andrew said...

I don't think its just about the illegal part...jaywalkers and people who drank during prohibition didn't get tax dollars to go to school, get food stamps, and healthcare - or send a large percentage of their income back home and thus leaving the US. It's not "just" about breaking the law...but no nation serious about defeating terrorism and defending itself from terrorism can have an unsecured border.

Mike Hammock said...

Andrew, I think you've made several mistakes.

First, some immigrants get social services, but many do not. Most immigrants come here to work, and almost all of them pay payroll taxes--and even worse for them, they never collect on Social Security. They pay income tax through withholding, and they pay sales taxes when they buy things, and they pay property taxes (indirectly through rent, or directly through an owned home). In fact, almost all immigrants provide a net positive tax contribution--they contribute more than they consume in tax revenue. Only the very lowest-skilled immigrants have net negative tax contributions. If this really does bother you, then your goal should not be to keep them out, but to charge them an entry fee and then let them in, en masse, if they can pay. I have to wonder, when someone doesn't like this idea, are they really worried about the services consumed by illegal immigrants or do they just want want more immigrants, period? If you're worried about taxes and social services, why wouldn't you want to just make all the immigrants legal and give them all social security numbers, and then tax them? Problem solved.

For more reading on immigrants and taxes, read this.

Second, whether or not they send the money back home is irrelevant. What happens to the U.S. dollars they send home? Mostly they cannot be spent overseas; Mexicans want pesos, Europeans want Euros, etc. They have to be traded for some other currency at a currency exchange. What does the currency exchange do with those dollars? They sell them to someone who wants to use them. For what? There are two primary uses for dollars:
1) To buy U.S. exports.
2) To invest in U.S. assets (stocks, bonds, land, whatever).
Either way, the money ends up coming back to the U.S.

A small fraction of the dollars will be held overseas as a hedge against inflation and other economic problems, due to the dollar's relative stability. Even this benefits us, in a way--by reducing our money supply, they reduce the price level. Or the Fed can print more money to counteract the money held overseas. Think of it this way: These immigrants who hold onto dollars are giving us valuable services, in exchange for pieces of paper which they'll never spend--they'll never ask for goods or services or resources in return. That's an awesome deal for us.

Finally, the terrorism argument is just silly. Only the tiniest portion of immigrants are interested in committing acts of terrorism. Even if you are worried about terrorist Mexicans, when did I mention an unsecured border? Letting lots of people in doesn't mean an unsecured border. In fact, if done correctly, it means we can stop wasting time trying to stop Central Americans who just want work, and funnel them through a fast and easy immigration system instead, leaving more resources available to try to find real terrorists.

Mike Hammock said...

That second paragraph should read "I have to wonder, when someone doesn't like this idea, are they really worried about the services consumed by illegal immigrants or do they just want want fewer immigrants, period?"

Eric Gottlieb said...

Love your blog. My impression is that most of the objections to illegal immigration are actually objections to immigration, dressed up in moral outrage over the "illegal" part.

Some of these objections are based in racism or other irrational philosophies, but at least one is legitimate: people making $12/hour are not happy to see competition from those willing to work for $10/hour. Funny thing is, lower wages seem to be the strongest argument (alluded to indirectly in your post) for allowing more legal immigration.

It always puzzles me when defenders of immigration say that immigrants are willing to do jobs that Americans won't do. No, they're willing to do them for less pay. Most people would gladly pick fruit, or work construction, or clean hotel rooms, if they were paid a good wage to do it.

Other folks seem to be concerned about crime, though I don't know what the evidence is re: crime rates in immigrant communities v. economically comparable non-immigrant communities. I'm sure that crime is worsened by making legal immigration so difficult, thereby encouraging immigrants into an underground economy upon arrival.

Andrew said...

I see what you are saying about the sending dollars back home...and i was definitely off on that.

but the notion of giving illegals a SSN seems pretty unreasonable...if they had an SSN wouldn't they be able to demand at least the minimum wage?? Employers wouldn't be able to get away with having "legal" employees making below federal minimum wages.

This may be just ignorance but if illegals are getting paid under the table how are they subject to payroll taxes? I know they can't get completely off the tax grid because of sales tax, etc..

The legal immigration process definitely needs some reform. The US government is probably the most inefficient entity in the world (although i'm almost convinced the red tape is a necessary evil just so they can give people "jobs")
Even still, I wouldn't want to get in a substantially bad wreck with someone who didn't have car insurance just because the process was sucky.

Mike Hammock said...

Eric, I think I agree with just about everything you said. You're absolutely right that, other things equal, immigrants push down wages of domestic workers. It's equally important to point out, however, that immigrants also push down prices. In fact, we should expect the latter effect to dominate the former, because of specialization and division of labour.

To put it another way, consider the following thought experiment: Suppose we decided to banish every third citizen of the U.S. If disallowing immigrants makes Americans wealthier, then kicking out some Americans should make the remaining Americans even wealthier still. It wouldn't, of course--we would be forgoing all the opportunities to trade with all those people we kicked out. And that's leaving aside all the benefits of having a lot of people thinking about stuff, coming up with new and better ways of doing things. That, by the way, is the focus of Matt Ridley's new book, which is summarized here.

Restrictive immigration laws should be expected to make immigrants more likely to commit crimes (ignoring the fact that their very presence is a crime). Successfully getting to the U.S. and remaining undetected should be expected to attract those immigrants with expertise in subterfuge, which might also make them good at crime. Also, their reluctance to venture outside areas they consider safe makes them vulnerable to organized crime (a language barrier alone can cause this, but being here illegally makes it worse).

Despite all this, and conceding that the evidence on the matter is a bit murky, it seems to be the case that immigrants (including illegal immigrants) actually commit less crime than native-born citizens. Here's a California study on the subject and a good Radley Balko piece on the subject. It's also worth pointing out that the data on this subject might suffer from reporting bias--if illegal immigrants commit a lot of crime against other illegal immigrants, for example, the crime might go unreported.

Mike Hammock said...

Andrew, you're right that giving (currently) illegal immigrants social security numbers would make it really difficult to pay them less than minimum wage (there might be ways around it--say, have the illegal immigrants pay a bit to the employer under the table--but I suspect they'd be too easy to detect). It's funny that you mention that as a defect--for those of us who think there should not be a minimum wage, this will indeed result in inefficiency (specifically, people who cannot be hired at the minimum wage but who would be employable at a lower wage). The ironic thing about this is that most people would see this as an advantage. People who hate immigrants would see this as a good thing since it would eliminate a disadvantage suffered by some American workers, and people on the left who empathize with immigrants would think it's a good thing because employers would have to stop "exploiting" their immigrant workers.

In any case, if, when faced with earning the minimum wage or more, immigrants become unemployable, they'll lose interest in moving here.

Apparently most employers accept fake social security numbers and actually file tax forms for their illegal workers. Check out this surprising story from 2005. I think they tried to crack down on that sort of stuff a couple years ago, but recently I've heard that the focus is now much more on screening out terrorists, rather than tracking down illegal immigrants via their employers.

I think making immigrants legal reduces the odds of having an accident with an uninsured immigrant. They're trying to avoid interfacing with the legal system whenever possible, including registering cars and other bureaucratic stuff, out of fear that it will get them deported. Removing that fear should make them more likely to do all the things that previously worried them.

One more point: As I suggested previously, we could charge an entry fee to immigrants who plan to reside in the U.S. If it is set high enough, we could use it to pay for tax externalities, expanded immigrant screening, and even programs to make sure they take care of the basics (such as buying car insurance), in case the problem is ignorance instead of fear. I would rather just let lots of people in, personally, but I could live with, say, a $3,000 one-time fee to enter and reside in the U.S., subject to possible screening (for, say, dangerous communicable diseases and serious violent crimes).