patrick.net

HARM said:
Let me pose another question: How is it that low-immigration countries (Aus, NZ, most of Europe, Japan, etc.) with far more restrictive policies manage to grow food, build housing, staff hotels & restaurants and maintain gardens/lawns? Could it be that they AUTOMATE a lot more of these functions (as in mechanical harvesting machines, factory-produced pre-fab housing, etc.)? Could it be that many of the unskilled low-pay jobs that cannot be automated are transformed into skilled higher-paying jobs? Just a thought.

According to the CIA factbook, the net migration rate is 3.18/1000 in the US, 3.63/1000 in New Zealand and 3.85/1000 in Australia. So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do. As for Europe and Japan--declining populations, stagnant economies, unsustainable welfare states, etc...no thanks.

The big picture is that we need more immigrants (skilled and unskilled), not less. If we didn't need their labor, they wouldn't be coming here. People tend to migrate to the place where their labor is most highly valued. In order to have an efficient market, labor (like capital) should be mobile.

Let’s be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

And illegal immigrants have figured out a way to avoid use-taxes? I'd be interested to know how. Then again, my mother in Ohio insists that Mexicans are issued special tax-exemption cards which they can show at 7-11 to avoid paying sales taxes on cigarettes and slim jims.

My biggest worry about immigration, echoing sentiments in some earlier posts, is that massive immigration will permanently alter the culture in this country. Not there is a splendid culture here: At grad school, my American co-advisor told me bluntly, "There is only money and movies in this country." But there is still the celebration of rugged individualism -- that almost borders barbaric -- which seems to be a cardinal virtue (and feature) of the Northern European races.

Many immigrants come from cultures that celebrate closeness and togetherness: India, Communist China, Latin countries, South America, etc.. My former Indian colleague -- I've since distanced myself from him after discovering him to be a blatant liar -- once commented that if I were in India they would break down my barrier of cold aloofness. I hope US won't turn into another Latin country.

And illegal immigrants have figured out a way to avoid use-taxes?

There are many "cash" businesses around.

This is why I use credit cards whenever possible, even if they may give incentives for paying cash.

Joe Schmoe said:
He has three kids. LAUSD spends about $11,000 per pupil per year. The state is already spending more than it receives to educate just ONE of his kids.

In this sense, I suppose all poor people with kids are a drain on society. But we don't generally deny education to poor kids. Maybe we should be exploring ways of paring down our ridiculously bloated government expenditures. $11,000 per pupil is unconscionable. But it is not the immigrants' fault that we engage in such largesse. I'm sure they would continue sending their kids to public school even if we spent 1/2 or 1/3 as much. The public school system is an inefficient, wasteful, monopolistic anachronism. But that is an off-topic subject for another day...

But there is still the celebration of rugged individualism

It is completely a pluto-in-leo thing.

Glen,

We already have a guest worker program for skilled workers, HB-1s have been around and been fully exploited by big companies. (And the ex-HB-1 complain of employer abuse even though they are legal and highly educated)

As for Europe and Japan, firstly, they're not that badly off. Secondly, how does the immigration situation affect those conditions you've cited?

It's really pretty simple: net cost of unskilled laborers > net benefit of unskilled foreign laborers. Just because much of the costs are hidden does not mean they're not there.

Randy,

Huh? I thought Joe added the use taxes to the mix.

So NZ and Aus have *more* immigrants than the US. But they regulate the flow better than we do.

It probably helps that they're both surrounded by water.

I am not worried that the illegals will change the culture of this country. Not at all. They all become Americanized. Our culture is like a virus that infects all who come here, there really is no cure. The first generation or two may retain some vestigal immunity from the homeland, but eventually everyone succumbs. And heck, our culture is already invading other nations. People in other nations are becoming more American with each passing day without ever setting foot on our shores.

The thing that worries me is the short-term econimic pain caused by the illegals.

Glen,

Any society has some poor people and for their sake and ours (so they don't rob me at gun point), society tries help them. That's no reason to add more poor people to this society.

If you don't like government, then you can move Somalia or Haiti, they're very light on governments, and I heard immigration is easy so long as you bribe the customs.

Joe,

The mass culture you referred to is indeed contagious and dangerous. But is it really the essence of Americanism? I thought the quintessential (and old) Americanism is the way of the WASP. No judgement here.

Has it occurred to you that maybe it is silly to have a law prohibiting someone from working as a nanny or a gardener in the US? Are these jobs really off limits to poor Americans? Or do poor Americans just decide that such work is “beneath” them? Do you really think the average homeowner would pay union scale wages and benefits to have their yardwork done by a poor American if all the illegal immigrants were suddenly deported? I doubt it. We should allow for the *legal* hiring of immigrant workers in a well-regulated way.

There's the old "Americans won't do the jobs that our Mexican slaves immigrants will do" argument again. Poppycock. Americans used to do such jobs, Europeans, Aussie, Japanese manage to do these jobs now, and so would Americans --if they paid a LIVING WAGE.

Access to low cost labor contributes to the American quality of life. Not just because of the often-cited cheap lettuce and grapes. It also makes it possible for more professional couples to maintain two careers (since housework, yardwork and childcare can be outsourced)–thus higher productivity. The cost of a variety of household goods and services (and probably houses themselves) would inflate if immigration laws were more strictly enforced (as if house prices weren’t high enough already).

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.

I did add use taxes to the mix.

Also, I will confess that I am nostalgic for the days when the US was whiter. I would much rather raise my kids in Iowa, whcih is probably 97% white, than in Los Angeles, which is mostly nonwhite. I am willing to raise them here, but that is becuase I have the means (I hope) to recreate a basically white, generic American environment. But the enviornment I create, while beneficial, will be artificial. I may take the kids to the monster truck rally, encourage them to join the Boy Scouts, and teach them to shoot, but these experiences are not the norm for most kids here. And I think that's sad.

Astrid,

I'm just pointing out that all use-taxes are irrelevant to the discussion. That is, unless one proposes eliminating all forms of income, payroll and property taxation and instead all taxes are derived from use-taxation. In such a regime then all tax-related arguments about illegals and gov't services would be rendered moot.

It is completely a pluto-in-leo thing.

Please explain in plain English.

Joe,

Part of being American is the American dream, which is supported by a large middle class. If the middle class gets decimated here, we may find that we as a society lost the American dream even as it continues elsewhere.

That is, unless one proposes eliminating all forms of income, payroll and property taxation and instead all taxes are derived from use-taxation.

That is a good idea. Difficult to implement though.

It is completely a pluto-in-leo thing.

Please explain in plain English.

It is a boomer thing.

GC,

That's funny, I have always thought that American culture was white trash culture. The John Kerrys of the world have often tried to portray themselves as our cultural arbitrers, but I think Jim Bob Jones, white trash dude from Wisconsin or West Virginia, is the true driving force.

And I think that is what makes American culture so powerful. We don't export Phillip Roth novels, old episodes of Masterpiece Theatre, or Andy Warhol paintings -- nope, we export rap music, the NBA, and Dallas and CSI. American culuture is the culture of the commons, and that is why it is so attractive to common people around the world.

To lighten things up:

I went to a showroom for the upcoming "faux brick" row houses in downtown Bellevue. The salesman quoted me $500/sqft. I was completely shocked. 3-4 years ago, the per square foot price in the same area was around $250. The RE prices in the greater Seattle area is becoming very crazy. I wonder if the BA flippers have migrated to our area.

Joe Schmoe says:

You could not be more wrong about this. Consider a day laborer, landscaper, or factory worker who earns $25,000 per year, and pays approximatley 25% of his income in state, local, and FICA taxes (we won’t count the EIC.), or $6,250. Let’s be incredibly generous and assume that he pays half as much again in sales and use taxes, taxes for phone service, etc. This person is generating a total of @$9,500 in tax revenue for the state and federal governments.

Thanks, Joe. Beat me to it.

Randy,

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.

Glen and Peter P speaks as if though the American poor are permanently unable or unwilling to participate in the workforce. I think that's patently false. Most of the underemployed poor can work if they have the incentive to work (less welfare, more support for working poor, living wages).

Current rent is about $1-$1.5/sqft. At the $500/sqft RE price and $1.5/sqft rental price, the price/rent ratio is roughly 27.8. This is scary.

What is a good price/rent ratio at which one can enter the RE market?

tannebaum,

Thanks for the article. The last sentence captures it all.

The rates are still low. Economy is doing kind of OK. Real inflationary pressure s are still there. And even then, everyone is shouting from their roof top to stop the rate hikes. "We still need cheap money". And this is just the beginning.

Till now, the long term rates went up only because the Fed hiked the short term rates. Once Fed pauses/stops, we will see the long term rates remaining steady for a while. Then it all depends on, for how long the world remains washed in liquidity. China, Bank of Japan and foreign investors etc will determine the future of long term rates. I will use Gold prices as my clue to understand how much respect for US$ people have.

I think after the imminent Fed pause, it's going to be very interesting.

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!"