patrick.net

And thanks to astrid --didn't refresh before I saw your last posts. Tons of good points about labor supply & demand and the two-income trap.

Joe,

Another point I failed to mention--I am not sure it is fair to attribute the cost of education to the parents. Public education is an investment. Even if it does cost $11k/year for 12 years of compulsory public education (assuming the kid graduates), at least some (if not all) of this $132K investment will be recaptured over the kid's working life.

astrid,

Huh? But even in a user tax only world (assuming that it can work relatively effectively), the unskilled migrant workers would pay less in taxes than they get out in usage of government services.

If your goal is to create a pay-as-you-go system, then no system existent, past, or proposed will do that. There will always be those who get more than they pay in. Midwestern farmers in this utopian homogeneous land others speak of, from which I herald, receive immensely more in farm subsidies than they ever pay in taxes. I propose a pay-as-you-go system for them too. Let's see how that flies with all wise middle america.

My point is merely that use-tax is the only method of a fair taxation policy. That is, if you define fair as all taxes are elastic and discretionary--if you don't want to pay candy-bar tax, then don't buy candy bars. Illegals of any ilk would be irrelevant because everyone pays every tax on every consumption/use. The only worry would be tax-cheats, but we have those in this system, just ask any Bermuda-based hedge fund accounting manager.

Glen,

I don't disagree, but it still needs to be pointed out that illegals are a net drain on government resources. Some of our "investment" in them may be repaid eventually, but in year one we are very much in the red.

Also, while I agree that government bureauracy is ineffient, I think it'll be a lot more feasable to build a fence at the border than to instantly eliminate all corrpution and waste from the public schools. To me, one seems a lot more politically feasable than the other.

I personally hope that all of those who are here right now can stay, because while they may be a drain in economic terms I like and admire them very much. However, I would like to see the flood of illegals end, because our system really is overtaxed by their massive numbers, and if they keep on coming, it will only be more overtaxed.

Joe,

In some way, you are correct. When I was in Shanghai, my friends (and to a small degree I) were avid followers of American pop music (and Euro, too), NBA, and choice TV series. Those were what we thought what America was like.

When I applied for US colleges, I viewed it as a great adventure. My first stop was Maine. Thank God for it. It was completely unlike what I had imagined by watching the TVs and listening to the pops. Real America is vastly different from one sees and hears through the media. Had I landed in LA or NYC, I would've had a completely different experience.

Did anyone read Jubak on MSN Investor today. He is saying

the Bank for International Settlements, based in Basel, Switzerland, the bank for the world's central banks, warns in its most recent annual report that global stagflation is a real possibility

Nice article. I recommend it. To summarize, it is the "money supply that increased without check all over the world during the last few years" is the real concern now.

If it's politically incorrect for Fed to increase the cost of money, can they without advertising as such, reduce the supply of money ? Do they have what it takes to do this ?

Randy,

I'm willing to go with you on the taxes thing (though like Peter P, I'm not sure we can effectively collect enough taxes via use taxes)

My point was that the poor in the US are already here, and we have a responsibility and some selfish reasons to take reasonably good care of them, even if they were a net cost to society. But that's no reason to import/permit addition poor into this country and drain more resources.

- addition
+ additional

Let’s assume that our alien never makes a trip to the emergency room or gets an infected tooth; he never sets foot inside a hospital or sees a doctor. His kids are required to get checkups and vaccinations for school, and these things are paid for by the state. His wife got prenatal care, again at the state’s expense.

We can absorb some illegals, and I hope that we continue to do so, sinc they are good people and we are a rich country. But it’s got to stop. They really will bankrupt us if they all come here.

Correct me if I'm wrong, but if those kids are born in America, aren't they Americans? Why quibble over their benefits anymore than the benefits of some white trash in the Ozarks?

And what about his wife, odds are pretty good he could meet someone in America and "horrors" marry an American (Mexican).

Read the Dharma Bums by Kerouac, he describes the exact same stuff going on in the 50s. Where do you think all the current legal latino-american citizens came from?

Face it, a great many of the people being labelled and lumped into this problem immigrant group probably already have US citizenship.

Thanks to CB as well.

Funny how Canada manages to enforce the law, pay immigrants a living wage, ensure worker safety and they STILL have a higher per-capita immigration rate than we do.

tsusiat,

Just because a society is willing to expend resources on some individuals does not mean it can do so indefinitely when there's a great increase of similar individuals. Plenty of people quibble over the benefits provided to those Ozark white trash, if they're not working when they could be. Numbers do matter, and the most obvious bright line test for who is deserving and who is not (though one that seems arbitrary on the individual level) is current citizenship.

"Funny how Canada manages to enforce the law, pay immigrants a living wage, ensure worker safety and they STILL have a higher per-capita immigration rate than we do."

Precisely. The guest worker program or the continuation of the current nudge nudge wink wink approach to illegal immigrants are the worst possible solutions to the problem.

Astrid - so are you saying that if in a family of 4, 3 are American citizens, the three are entitled to their legal benefits without race baiting or complaint?

'Cause if so, the real discussion should be focusing on the completely misguided and problematic nature of american social programs like medicaid, public education etc, and not on the citizenship of the users of those resources.

Social Security is broke - and that's just supposed to be paying Americans. How do you blame that one on guest workers?

astrid, I said the guest worker program is a good idea. I do not necessarily agree that these workers are needed by the society to do jobs that nobody wants.

Correct me if I’m wrong, but if those kids are born in America, aren’t they Americans? Why quibble over their benefits anymore than the benefits of some white trash in the Ozarks?

Who said anyone is quibbling over race here? You injected race into the diuscussion, not I.

And what about his wife, odds are pretty good he could meet someone in America and “horrors” marry an American (Mexican).

My wife is ethnically hispanic, though just as American as I am. Again, who is injecting race into the discussion here? The supposedly enlightened pro-"diversity" folks such as yourself?

Read the Dharma Bums by Kerouac, he describes the exact same stuff going on in the 50s. Where do you think all the current legal latino-american citizens came from?

Face it, a great many of the people being labelled and lumped into this problem immigrant group probably already have US citizenship.

I'm not concered about citizens, legal immigrants or visa-holders of any color. Again, we have a typical liberal arguing race instead of law & economics.

HARM said:
The two-income trap in which most Americans now find themselves is nothing to celebrate. What’s more, economics 101 tells us that neither the cost of goods nor labor is a constant. Both can and do adjust in response to changes in aggregate supply and demand. If low-skill illegal immigration were drastically curbed, we would see wages for those jobs begin to rise. We would also see much more automation in previously labor-intensive jobs, which itself creates more demand for high-skill occupations (robotics, automation, SW, manufacturing, etc.). A virtuous cycle –in contrast to the vicous cycle/race to the bottom we now have.

The "two-income trap" is a function of our desire to have more stuff (big houses, big cars, fancy trips, etc.). If someone wants to work 60 hours a week and hire a nanny in order to maintain their quality of life, instead of driving a Toyota and living in a cramped apartment, who are we to deny them this pleasure? Not my personal preference, but so what? Let people make their own choices. They are much better at it than the government. Similarly, let the immigrants choose to work and live in the US. Just because we let them in does not need we need to supply them with cradle to grave public benefits. This, too, is a choice.

If immigration were drastically curtailed it is true that some wages would go up. But the cost of this is two-fold: (1) an employer in the US is paying artificially high wages; and (2) a prospective employee is forced to accept artificially low wages in their home country.

Anyone who claims to support free market policies (and I don't know if HARM includes himself in this category) should support a free market for labor, just as we have a free market for capital.

Hmmm… let’s see… maybe because I’m an AMERICAN? Maybe because as a U.S. citizen I cannot (and should not) have any say in how another country manages its affairs or citizens, while I have an obligation (and duty) to care about my own?

We live in a global society. The policies of other governments *do* affect you (coal burning in China, deforestation in Brazil, terror camps in Afghanistan, bird flu, AIDS, etc...) Get used to the fact that our policies affect others and the policies of others affect us. As global citizens, we should concern ourselves with poverty, disease and deprivation wherever they occur. And we should try to do something about these problems when we can, instead of just burying our heads in the sand and saying "I'm an American. The rest of the world can go to hell, for all I care!"

tsusiat,

I agree with you on the state of America's social welfare system. It's in tatters and is likely to suffer complete breakdown in the next 20 to 30 years.

As for your American family. For me, yes. I don't dispise the individual immigrants or blame them for their cumulative effect on American society. But I'm not going to deny those effects either.

Hopefully, the bright line test can be held at legality or citizenship. However, a society can only support so many poor people. If you add too many children of illegal immigrants, don't be surprised if the whole system breaks under the strain.

Glen,

The analogy of US citizen = my kids, foreigners = neighbor's kids holds. You can try to restrain or persuade the neighbor's kid, but you can't control them and you don't have the legal responsibility to care for them. This global citizen business is cute but nation states are still in effect and is likely to be in effect for decades, probably centuries to come.

I think the two-income trap is more complicated than that. 30 years ago, I would have been able to buy a single family home on my salary. Now I can't. In a lot of couples, both spouses work so that they can approximate the standard of living that their own parents enjoyed, not becuase they are greedy and insist on living in a 4,000 square foot McMansion.

It's certainly true that technology and the march of time give people in today's society access to a lot more consumer goods than were avaialble 30 years ago. Computers, DVD players, better and more reliable cars, etc. But I still think that in many families, both parents work in order to secure the basics, not so they can afford to buy Ipod's and plasma screen TV's.

If I had to make a purely guess, I'd say that roughly half of two-income families work to keep up with the Jonses, the other half work to keep their heads above water.

The “two-income trap” is a function of our desire to have more stuff (big houses, big cars, fancy trips, etc.). If someone wants to work 60 hours a week and hire a nanny in order to maintain their quality of life, instead of driving a Toyota and living in a cramped apartment, who are we to deny them this pleasure? Not my personal preference, but so what? Let people make their own choices.

Glen, basically what you're saying here is that our only two choices are between a two-income, workaholic, expensive-crap obsessed lifestyle or poverty. This is ridiculous. Prior to the 1970s, most households managed just fine on one income, while the average worker still managed to have more free time, buy a house and enjoyed big gains real wages (purchasing power). Prices for consumer goods and labor will adjust up or down, depending upon relative supply & demand. Granted, we have (mostly) Boomers to thank for the two-income trap and it's not likely to reverse anytime soon, but I reject the notion that my lifestyle choices boil down to: (a) greedy Yuppie asshat, (b) poverty-stricken JBR.

Similarly, let the immigrants choose to work and live in the US. Just because we let them in does not need we need to supply them with cradle to grave public benefits. This, too, is a choice.

Unfortunately, this is not reality. Once people are here, they begin to use public services & public infrastructure. Then there's the impact of on the local labor markets. There's really no way to completely prevent this from happening, either practically or politically. So the best way to deal with immigration is to incentivize/encourage legal immigration of the type (and in amounts) that we can successfully assimilate and are of the most benefit to our society, while prosecuting law-breakers --especially businesses who hire/subsidize illegal immigration.

If immigration were drastically curtailed it is true that some wages would go up. But the cost of this is two-fold: (1) an employer in the US is paying artificially high wages; and (2) a prospective employee is forced to accept artificially low wages in their home country.

Again, how is this bad for me and other working-class Americans of all colors? How are labor/wage issues in other countries my problem?

Anyone who claims to support free market policies (and I don’t know if HARM includes himself in this category) should support a free market for labor, just as we have a free market for capital.

I am not a market fundamentalist, nor do I agree that "free market" = completely open borders or One-world government. See "The Libertarian-Morality Conundrum" thread if you'd like more information.

A lot of the consumer goods are cheap now, so it makes sense to own them. The two income trap, in so far as it relates to higher RE prices, is a giant wealth transfer from younger buyers to older sellers.

The employment environment does make one wage earner families a bit risky. Unless you have a lot saved up or are in a very high demand field, the wage earner's loss of work means the family is entirely without support. That was unthinkable back in the days of blue collar unions and white collar lifetime employment.

I think the consumers are at fault.

First of all, NZ and Oz are helped by the fact that they are surrounded by water.

Second, they both hold English tests for immigrants, skilled or unskilled, you don't speak English? Sayonara, adios, au revoir.

Third, they don't like parents, except rich parents with a fat bank account. To show how much they dislike parental immigration, Oz has an annual quota of 500 for all those poor slob parents. If each parent can come up with $35K AUD, $10K bond, and promise not to dip into the Oz welfare system for 10 years, then he will be let in right away. Otherwise, wait in the queue. America imports way too many poor parents who are going to drain on our welfare and medicare system. I believe old people should generally die in the country where they spent most of their life, because that country has a moral obligation to take care of them, unless they can come up with enough money to make the new country NPV neutral in taking care of them.

Fourth, Oz takes advantage of poor students rather than poor, say, Indonesians, to pick fruit during peak seasons. Oz issues 12-month travel visa to most industrialized countries, so you see plenty of "cheap labor" from Japan, Germany, US, Canada working in the fields as they tour around the country. These students do it for fun, they are unlikely to stick around and cause troubles.

American INS should send a team down under to study the best practice.

The builders in the last five years have been notoriously cheap and shoddy. They have no problem with sticking you with a $10K problem five years down the line, if they can save $100 today and hide the problem. So, tons of foundation and dry wall problem, material problems, bad wiring, etc. I'm unlikely to ever buy anything in the BA built btwn 1996 and 2007.

American INS should send a team down under to study the best practice.

I completely agree, except of course they won't. The INS is already aware of how successful immigration policies work (to benefit working-class citizens) in other countries. The problem is, they are under orders from our government NOT to implement good policies or even to enforce existing laws. They are also severely and deliberately understaffed.

If our government (or the corporate interests it is beholden to) ever really wanted to do something about illegal immigration, they could do it in a heartbeat. The means and resources are there. The political will is not.

"Fourth, Oz takes advantage of poor students rather than poor, say, Indonesians, to pick fruit during peak seasons. Oz issues 12-month travel visa to most industrialized countries, so you see plenty of “cheap labor” from Japan, Germany, US, Canada working in the fields as they tour around the country. These students do it for fun, they are unlikely to stick around and cause troubles."

Yup, there's no reason why kids in this country only work suburban fast food jobs or ("if they're lucky") internships. A lot of the cheap labor hole was filled by kids before the illegals came in. In parts of the country without a lot of immigrants, those jobs are still filled by the (often middle or upper middle class) kids.

I also wonder why America has this hurry up and wait attitude towards the young and work. Plenty of young Europeans, Aussies, and Canadians take time off to travel and find themselves during and after university(could it be because our lives are mortgaged and we can't afford to take any time off?). Many American youths my age seem so narrow minded and ignorant in the ways of the world.

HARM,

We seem to be talking ourselves out of CA today. I wonder where WWII went, he would love us today. :)

Prior to the 1970s, most households managed just fine on one income, while the average worker still managed to have more free time, buy a house and enjoyed big gains real wages (purchasing power).

Prior to the 1970s, the world was very different. Japan and Europe had to rebuild from the ground up after WWII. Their industrial infrastructure was decimated by the war. Most of the developing world lived under oppressive socialist or quasi-socialist governments (China, Soviet states and client-states, Cuba, much of Africa and Latin America...even India), so no competition there. GM had 50% of the domestic car market and a huge export business. GM could afford to make gas-guzzling behemoths and sell them world-wide, while paying generous wages and benefits to unskilled US workers. US manufacturing ruled. Oil was cheap and plentiful. Legalized segregation and exclusion of women from the workforce after the war contributed to the above-market wages for unskilled white men. The long boom in consumer credit was just beginning to get rolling with the introduction of 30 year mortgages... I could go on.

Even if you kicked out all the immigrants, we would not be magically transported to the 1950s. Instead, as we already see happening, if the people can't come to the jobs, then the jobs will go to the people (overseas). Why not capture tax revenues here by letting workers in, instead of letting jobs go to places where the wages of the workers can not be taxed by the US?

Can someone unlock my last comment?

astrid,

Yeah, I seem to be talking myself out of CA pretty much every day! :-) I grew up here and am saddened by how far the quality of life here has degraded for most working-class people. Every day, I'm reminded of how little my + wife's salary buys us vs. what my parents or grandparents were able to afford on one salary. I see the whole state unnecessarily transforming itself into a third-world country --thanks to anti-working class policies at both the federal and state levels.

Oh well, I'll just manage to make do until I can get my ticket out of Bubble-Central. And pray that the CA equity locusts and "diversity" fanatics don't try to mass-migrate to other states and ruin them too.

Glen,

Can't unlock. But in response. The runup in CA RE prices mean much of the reason for the two wage earner rat race is to pay for an expensive house in a good school district. If the house prices were lower, those one wage earner family would be productive enough to get by. Indeed, with one parent at home, many of their childcare and transportation expenses may be avoided.

You're also ignoring how much of the US economy is entirely internal and not subject to outsourcing. Is it really productive for this economy to have so many realtors and mortgage brokers? Wouldn't this economy be even more productive if there were fewer of them looking for their next big score? There is no iron rule that the US needs to arrange its financial priorities as it has. In Europe, people have arguably better quality of life for much lower GDP. That would be good for us as individuals, but bad for corporations trying to sell us crap and for retirees trying to stick up with their overpriced houses. (due to fewer buyers willing to pay crazy prices)

HARM,

Hehe, meanwhile, I need to persuade my boyfriend to buy a convertible, to up my utility of CA's pleasant weather (before climate change turns it into half Seattle, half Mojave). :)

I think Washington State and Washington DC definitely has the edge over CA, especially for families or anyone over 40. They've gotten a lot more expensive than they used to be, but they have good social services and a broad middle class. The housing prices are only 1/2 of CA prices and the weather is reasonably mild.

CB,

I see that too. Most fast food places are so clannish, partly as favoritism and partly because its easier to for minority owners/managers to oppress other members of their ethnicity.

I don't ever go to McD's or Burger King except in airports. In CA, In-N-Out is just so much better. Great service, good product, good pay, and lots of diversity in their staff. It helps that they're not franchises but owned by one well runned company.

Glen,
I approved your post.

Even if you kicked out all the immigrants, we would not be magically transported to the 1950s. Instead, as we already see happening, if the people can’t come to the jobs, then the jobs will go to the people (overseas). Why not capture tax revenues here by letting workers in, instead of letting jobs go to places where the wages of the workers can not be taxed by the US?

I agree that allowing the maximum number of legal, taxable immigrants that can be assimilated is a good policy. However, we cannot allow everyone who wants to come here to immigrate overnight, or we would have a population of about 4-5 billion (approx. = third world's population). I doubt that you or I would not want to live in a U.S. with 4-5 billion impoverished inhabitants.

And, yes, there is little we can do to curb global wage arbitrage. Capital tends to go where labor is cheap. However, one thing we can do is to promote new high-wage/high-skill job creation through innovation, investing heavily in technological R&D and education. High-skill, high-tech jobs that require extensive training & education (human capital investment) are not so easily exported (or automated) as low-wage, low-skill jobs.

Glen,

I wholly agree with most of your last comment. The low-level manufacturing industry here really does depend on low wage immigrant workers, without them the garment factories and machine shops really would get outsourced to China.

However, I don't think that the illegals are truly "necessary" to our economy, or that we "cannot get along without them."

The recent "Day Without Immigrants" protest here in LA really opened my eyes to this. The car wash was closed, and all but one of the parking valets at our office building didn't come into work. But that was it. The city of LA did not come to a screetching halt. However, traffic was light.

A lot of the cheap labor that immigrants provide is a luxury, plain and simple. We don't "need' affordable car washes and landscaping. We would get along just fine wihout vast numbers of immigrants to supply us with these things. Moreover, our ability to engage in more lucrative work, such as desigining software and building Boeing jets -- is not in any way dependant on having a steady supply of illegal aliens working at the local car wash.

So I pretty sure that we could survive without illegals. I don't want us to do that, becuase I admire and respect them and think that America has always benefited from hardworking immigrants. But do we need them? I don't see how.

@CB & astrid,

I'm shocked --SHOCKED I tell you!!

Are you trying to tell me that it's possible for NON-WHITES to perpetrate RACISM against other ethnic groups?? How can this be? When I was growing up, all of my liberal CA teachers and textbooks explained to me how racism was possible in only ONE DIRECTION.

I am truly disillusioned... :roll:

Also, we already have a version of unskilled guest workers engaging in low end manufacturing. In the Mariana Islands, where they don't comply to the federal minimum wage.

Consequence? Near slavery conditions and workers owed months of backpay. All so they can put the "made in USA" tags on cloth while saving less than a dollar a shirt on labor. Is that really the optimal or humane solution? When this sort of thing happens abroad, we can at least claim distance, or that we're helping developing economies mature. When we allow it to happen within the control of the US government, we are collective responsible for the bad consequences that follow.

HARM,

I'm really really sorry about that. If only Americans weren't saddled with student loans and could travel the world more, maybe they would have realized it sooner. ;)

Hehe, once a person sees a little of the world, or even make an effort to pay attention to the work dynamic of the local fast food store, they will quickly realize most of those student activists on campus have their head up their nether regions.

Like it or not, we're creatures of human evolution. Clannishness was an evolutionary necessity and it dies hard. Every one of those little vegan peaceniks (and keep in mind that I almost never think war is a good solution for any problem) had ancestors who scalped enemies and oppressed slaves.

Astrid,

You know, there is a Federal Dstrict Court in the Marianas Islands. A federal judge here in the Central District of CA began his legal career by clerking there and liked it so much that he stayed for several years before coming back to LA.

I've seen pictures of Saipan, and it looks pretty sweet. I don't know what your career plans are, but maybe you can talk your firm into letting you clerk for a year? I'm sure they'd be thrilled to do it, an associate with a clerkship will add to their prestiege.

What could be better than a clerkship in the Northern Marianas? You still have to clerk all day -- but you can chill on the beach all night! And your salary will allow you to live a pretty comfortable life there; the same cannot be said in LA, SF, or most of the other major US cities.

Joe,

That was a good observation. On top of this, I maintain that it is the average consumers who are at fault for their own long-term plights. They want to emulate the life of the riches. The only way to afford such a grand albeit pretentious lifestyle is to import cheap labors who eventually cause social disintegration. Cheap manufactured goods, too. Immigrants are not to blame but the greedy and pretentious consumers.

Ok, you've convinced me. Deport all the illegals. Some expected consequences re: housing:

- Double Income families would have to pay more or drop one earner out of the labor pool. Net result - even more jobs available and less competition on future house bids. DI FBs with kids are thrown to the wolves.

- Baby Boomers and Silent Gen forced to mow their own lawns. Increased housing turnover due to a sudden surge in Heart Attacks.

- Rental Prices plummet with huge new vacancy rates applying downward pressure everywhere.

All this benefits me personally, so I should support it, right?

Kant's Categorical Imperative says otherwise.