Amnesty Driven by Voodoo Economics

Voices calling for amnesty do not really understand economics or free enterprise. They offer garbled misconceptions -- with graphs. But they would be kicked out of the economics courses I took in business school. The pro-amnesty camp argues from "voodoo economics."

Amnesty will grow the economy, they argue. Well, if there are more people, technically the economy will be bigger. But each person may be poorer. A growing economy is only 'better' if the economy grows faster than the population increases. Otherwise, each individual is worse off among a larger crowd.

Gross Domestic Product (GDP) measures total activity -- not household income for each individual family. Amnesty will create a worse economy for everyone, even if total GDP is larger. (Actually, amnesty just transfers workers from Mexico to the U.S.A., so there isn't really any growth in GDP, just a transfer.)

An estimated 30 to 40 million low-skilled workers will be added. The borders won't be secure. Millions more trespassers will invade. 'Blue card' holders can bring in their husbands, wives, children, parents, etc. to join them. Many who have already been deported can return.

Amnesty promoters insist that trespassers won't get a green card until the borders are secure. But, who cares? RPI status does everything a green card does except it just isn't green. 'Registered Provisional Immigrant' status will be granted 6 months after Obama signs a bill. Some are calling RPI status the new 'blue card' -- blue for States that vote Democrat.

Of course, amnesty will elect more Democrats. Democrats will enact government policies that destroy the utopian economic pipe dreams of the libertarians and business lobbyists pushing for amnesty. Utopian libertarians and naïve business interests are pushing for their own extinction. Political activist John Kwapisz, who taught me much, put it all together for me:

Regulations hostile to free enterprise, business, and libertarian pipe dreams will multiply because of 11 million new Democrat voters. Anti-business regulations are often passed at the state, county, or city level. A few cities already allow illegal aliens to vote in city elections. Immediately after amnesty, many more county, city, and state elections will allow amnesty recipients to vote.

But businesses need more high-skilled, high-tech immigrants, we are told. Employers need more Science, Technology, Engineering, and Mathematics (STEM) workers.

Wrong. In fact, American colleges and universities are graduating twice as many STEM graduates as there are STEM jobs in the USA. This is the report of Steve Camarota of the Center for Immigration Studies. We have U.S. high-tech graduates who can't find work.

The solution to getting high-skilled workers is to reform our schools and universities. It is education that needs reform, not immigration. But data -- rather than anecdotes -- show that we already have too many unemployed high-skilled workers. (Perhaps we need to import better human resources directors to recruit more effectively and fill vacancies.)

The naked truth is that businesses want to drive down salaries. Flooding the economy with millions of unneeded, surplus workers will lower the market rate for labor. But who will buy their products and services when family budgets shrink? Employers may pay cheaper wages, but will sell fewer products and services. (We have to consider other errors also to determine that outcome.)

"Specialization" or "comparative advantage" is the last desperate attempt of amnesty supporters to patch together an argument with bubble gum and twist-ties. "Comparative advantage" is a truth, but it simply does not apply to the hair-brained scheme of amnesty. This is the biggest error.

For example, society is richer overall if a heart surgeon devotes her time to doing heart surgery and pays a less-skilled person to mow her lawn. It would be a net loss for a heart surgeon to mow the lawn (except perhaps as mind-renewing relaxation). Economics teaches that workers should be allocated to their most productive capabilities.

In free market theory, a higher salary allocates workers to their most productive job. The heart surgeon earns more money performing operations than mowing lawns. These "price signals" are the information that makes a free market work. The higher salary encourages surgeons to perform more operations and mow fewer lawns.

But amnesty promoters don't want to pay the going rate for workers. They want to use government policy to drive down wages and salaries. That disrupts comparative advantage price signals, causing market distortions and misallocation of economic resources. (In technical terms, a few companies earn surplus "rents" (profits) by lobbying the government to distort the economy on their behalf. A few benefit at the expense of everyone else.)

Since we already have too many unemployed, low-skilled workers, adding more cannot grow the economy. Supplying what is missing can unleash a stalled economy. Making an existing surplus bigger won't help. In fact, it will drain the public Treasury, reducing available investment capital in society. Comparative advantage theory merely allocates the existing population among various jobs.

The biggest error is that high-value jobs are relatively scarce. An unlimited supply of high-value jobs is the false assumption of utopian amnesty defenders. Therefore, they fantasize, if we flood the country with high-school dropouts with poor language comprehension and few job skills, this will free up native-born American citizens to move into higher-value job positions. This will unleash a utopian renaissance, they dream.

But there simply aren't that many higher-value jobs in any society. A scarcity of high-value jobs is the limiting factor, not a shortage of high-school dropouts available to facilitate specialization. The U.S.A. is perfectly able to generate plenty of our own, home-grown high-school dropouts, thanks to the National Education Association. Adding to a glut of poorly-educated workers will not crypto-magically grow the economy.

Why are their home countries poor if 11 million illegal aliens will benefit the U.S. economy? If high-school dropouts are a burden back at home, how will they spark an economic boom here? Shouldn't they stay there and create prosperity back home?

Will amnesty recipients fit in as good employees? They won't know English (not for years at least) and won't understand our economy, our country, our culture, or our laws. I once had a client as a lawyer whose house was damaged by a sloppy paint job in a wealthy suburb of Washington, D.C. After the "respectable" painting company got the contract, the actual painters arrived who couldn't speak English and ignored the agreed plans. The family had to spend thousands of dollars getting paint out of the hardwood floor. And the paint job was done wrong.

Should a company pushing for amnesty trust someone to handle money, work with coworkers, or drive a company vehicle who has already proven they don't care about following our laws? Employers often run background checks on job candidates. Increasingly, businesses won't hire an applicant with bad credit. Employers won't trust workers to handle money or with company assets if they have a shady background or bad credit rating.

Yet the lemmings are stampeding. Cartoonish economic myths motivate Republican insiders to rush toward the cliff of amnesty for illegal aliens. GOP leaders feel the instinctive, genetic itch to leap irresistibly into the abyss, to their own political destruction. When the business lobbyists' arguments just don't ring true and violate common sense... they are probably snake oil.

 

Voices calling for amnesty do not really understand economics or free enterprise. They offer garbled misconceptions -- with graphs. But they would be kicked out of the economics courses I took in business school. The pro-amnesty camp argues from "voodoo economics."

Amnesty will grow the economy, they argue. Well, if there are more people, technically the economy will be bigger. But each person may be poorer. A growing economy is only 'better' if the economy grows faster than the population increases. Otherwise, each individual is worse off among a larger crowd.

Gross Domestic Product (GDP) measures total activity -- not household income for each individual family. Amnesty will create a worse economy for everyone, even if total GDP is larger. (Actually, amnesty just transfers workers from Mexico to the U.S.A., so there isn't really any growth in GDP, just a transfer.)

An estimated 30 to 40 million low-skilled workers will be added. The borders won't be secure. Millions more trespassers will invade. 'Blue card' holders can bring in their husbands, wives, children, parents, etc. to join them. Many who have already been deported can return.

Amnesty promoters insist that trespassers won't get a green card until the borders are secure. But, who cares? RPI status does everything a green card does except it just isn't green. 'Registered Provisional Immigrant' status will be granted 6 months after Obama signs a bill. Some are calling RPI status the new 'blue card' -- blue for States that vote Democrat.

Of course, amnesty will elect more Democrats. Democrats will enact government policies that destroy the utopian economic pipe dreams of the libertarians and business lobbyists pushing for amnesty. Utopian libertarians and naïve business interests are pushing for their own extinction. Political activist John Kwapisz, who taught me much, put it all together for me:

Regulations hostile to free enterprise, business, and libertarian pipe dreams will multiply because of 11 million new Democrat voters. Anti-business regulations are often passed at the state, county, or city level. A few cities already allow illegal aliens to vote in city elections. Immediately after amnesty, many more county, city, and state elections will allow amnesty recipients to vote.

But businesses need more high-skilled, high-tech immigrants, we are told. Employers need more Science, Technology, Engineering, and Mathematics (STEM) workers.

Wrong. In fact, American colleges and universities are graduating twice as many STEM graduates as there are STEM jobs in the USA. This is the report of Steve Camarota of the Center for Immigration Studies. We have U.S. high-tech graduates who can't find work.

The solution to getting high-skilled workers is to reform our schools and universities. It is education that needs reform, not immigration. But data -- rather than anecdotes -- show that we already have too many unemployed high-skilled workers. (Perhaps we need to import better human resources directors to recruit more effectively and fill vacancies.)

The naked truth is that businesses want to drive down salaries. Flooding the economy with millions of unneeded, surplus workers will lower the market rate for labor. But who will buy their products and services when family budgets shrink? Employers may pay cheaper wages, but will sell fewer products and services. (We have to consider other errors also to determine that outcome.)

"Specialization" or "comparative advantage" is the last desperate attempt of amnesty supporters to patch together an argument with bubble gum and twist-ties. "Comparative advantage" is a truth, but it simply does not apply to the hair-brained scheme of amnesty. This is the biggest error.

For example, society is richer overall if a heart surgeon devotes her time to doing heart surgery and pays a less-skilled person to mow her lawn. It would be a net loss for a heart surgeon to mow the lawn (except perhaps as mind-renewing relaxation). Economics teaches that workers should be allocated to their most productive capabilities.

In free market theory, a higher salary allocates workers to their most productive job. The heart surgeon earns more money performing operations than mowing lawns. These "price signals" are the information that makes a free market work. The higher salary encourages surgeons to perform more operations and mow fewer lawns.

But amnesty promoters don't want to pay the going rate for workers. They want to use government policy to drive down wages and salaries. That disrupts comparative advantage price signals, causing market distortions and misallocation of economic resources. (In technical terms, a few companies earn surplus "rents" (profits) by lobbying the government to distort the economy on their behalf. A few benefit at the expense of everyone else.)

Since we already have too many unemployed, low-skilled workers, adding more cannot grow the economy. Supplying what is missing can unleash a stalled economy. Making an existing surplus bigger won't help. In fact, it will drain the public Treasury, reducing available investment capital in society. Comparative advantage theory merely allocates the existing population among various jobs.

The biggest error is that high-value jobs are relatively scarce. An unlimited supply of high-value jobs is the false assumption of utopian amnesty defenders. Therefore, they fantasize, if we flood the country with high-school dropouts with poor language comprehension and few job skills, this will free up native-born American citizens to move into higher-value job positions. This will unleash a utopian renaissance, they dream.

But there simply aren't that many higher-value jobs in any society. A scarcity of high-value jobs is the limiting factor, not a shortage of high-school dropouts available to facilitate specialization. The U.S.A. is perfectly able to generate plenty of our own, home-grown high-school dropouts, thanks to the National Education Association. Adding to a glut of poorly-educated workers will not crypto-magically grow the economy.

Why are their home countries poor if 11 million illegal aliens will benefit the U.S. economy? If high-school dropouts are a burden back at home, how will they spark an economic boom here? Shouldn't they stay there and create prosperity back home?

Will amnesty recipients fit in as good employees? They won't know English (not for years at least) and won't understand our economy, our country, our culture, or our laws. I once had a client as a lawyer whose house was damaged by a sloppy paint job in a wealthy suburb of Washington, D.C. After the "respectable" painting company got the contract, the actual painters arrived who couldn't speak English and ignored the agreed plans. The family had to spend thousands of dollars getting paint out of the hardwood floor. And the paint job was done wrong.

Should a company pushing for amnesty trust someone to handle money, work with coworkers, or drive a company vehicle who has already proven they don't care about following our laws? Employers often run background checks on job candidates. Increasingly, businesses won't hire an applicant with bad credit. Employers won't trust workers to handle money or with company assets if they have a shady background or bad credit rating.

Yet the lemmings are stampeding. Cartoonish economic myths motivate Republican insiders to rush toward the cliff of amnesty for illegal aliens. GOP leaders feel the instinctive, genetic itch to leap irresistibly into the abyss, to their own political destruction. When the business lobbyists' arguments just don't ring true and violate common sense... they are probably snake oil.

 

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