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Immigration and borders

August 22, 2011 2 comments

We have discussed free markets, but barely touched on the most regulated market of all: the labour market. And the biggest barrier to a free market for labour is the national border.

Which of the world’s borders are the most tightly controlled? Those of the rich world. Why would that be?  It has something to do with the privileges afforded exclusively to citizens under the welfare state. Having lots of children means a welfare system is potentially sustainable, though it is largely unnecessary, as children will take care of their parents. Since welfare states were implemented, mostly in the wake of WW2, fertility rates have dropped. Overall fertility rates have historically fallen as prosperity has risen. However, this drop in fertility has made welfare states unsustainable. This problem is particularly acute when people live longer and technology improves: health care systems require more money to buy the equipment to keep more people alive longer. But since the austerity of the War, citizens of the rich world have acquired an entitlement mentality. Now that the austerity generation is nearly gone and the first welfare generation is retiring, the belief that we somehow deserve all the important things is entrenched. Entitlement is supposed to guarantee jobs, minimum wages (or for some “a fair wage”, which presumably means something higher than market wage), schools and universities, recreation centers , hospitals and clinics, medicine, retirement at 65 or younger and pensions. Given the enormous government spending required to maintain all these things, again, in their current forms these privileges are not sustainable. Without a rise in taxes to pay for it, which would mean less money for the productive sector and thus less wealth to go round, the welfare state cannot continue to dole out the same level of benefits it always has. There is, however, an alternative: immigrants.

Though it may seem unfair to ask the poor to pay for our luxuries, there might be billions of people around the world willing to do so. But the people of the rich world do not want immigrants; at least, not many. Immigrants burden our public services, take our jobs and worst of all, threaten “our way of life”. As a result, we tighten the borders. Tight or closed borders, like unions, reduce competition for jobs, raising wages and with thus the costs of doing business. Corporations ship jobs overseas where they can pay lower wages and avoid burdensome regulations (though due in part to that trend, other countries now offer other advantages as well). Workers get angry that they have lost their jobs, and instead of either considering that their lack of competitiveness, the welfare state or the closing of the border had anything to do with it, they advocate policies of violence (arrest and deportation) against the immigrants they think are the reason for all their troubles.

Many people are opposed to immigration, and are opposed to trade that affects their jobs, and are opposed to the offshoring of their jobs. They blame big business for offshoring, as big business is only in it for themselves. Well, labourers are only in it for themselves, too. In fact, so is everyone. That makes us all selfish and greedy, not just rich people. Calling corporate executives selfish is hypocritical, as workers who are protecting their jobs by not letting anyone else into the country could easily be described as selfish as well. When immigrants enter a country, many of them (depending who is allowed in) gravitate toward the lowest-paid jobs, because these jobs are jobs for which you do not need much English, a college education, local accreditation, and so on. If native-born people believe they should have those jobs rather than others who had the misfortune of being born elsewhere, let them work for them. If they cannot do the jobs at market wages, which is whatever the workers who are available and good enough to do the job will accept, then they could either upgrade their skills, look for another job, start their own businesses or figure something else out. Throughout history, when technology and immigration have destroyed jobs, the newly unemployed typically find new jobs. When jobs are destroyed, as thousands are every day, a roughly equal number (depending on conditions such as economic boom or bust) are usually created. There is nothing to fear from job destruction, or from people who will accept lower wages’ taking jobs, because there is no fixed number of jobs to go round. A related economic fallacy is the belief that war would be good for the economy. War employs many men, but the activities they perform are destructive, as opposed to productive. They are employed by the state, which sucks money and people from the productive sector of the economy. If they had been left in the private sector, it might have taken longer for them to find jobs or get their businesses off the ground, but they would have done so eventually, adding far more to the economy over time.

When working people start complaining that foreigners are snatching up their jobs, calling people illegal and demanding deportation and giant fences, corporations are forced to pay higher wages. There is less competition for the same job because the government is distorting the labour market and denying entrance to the country to people who have as much right to be there as anyone else. Who cares who was there first? There is no moral case for immigration laws. When corporations are thus hobbled, they want to reduce costs and thus seek out cheap labour in other parts of the world. If the workers had accepted less, they would not have done so. But people who believe that having the same job for 40 years is somehow a right get self righteous. Instead of improving themselves, they blame immigrants, corporations and the government. The entitlement mentality blinds us to our own faults, and to the irrationality and immorality of fortified national borders.

Borders make sense when they are amicably agreed on by owners. The borders of your property, for example, or unguarded borders in Europe that now demarcate cultural boundaries rather than the do-not-pass-or-we-shoot variety, make good neighbours. But when nationalism comes into play, and groups that, hundreds or thousands of years ago (before national boundaries were invented), used to control this territory, feel that it is theirs (and by extension, not yours), they are willing to kill each other to secure that border. This is our property and our people and our resources and our little lines drawn on the map.

But where is the logic of these boundaries? Even the idea that “we” used to control this or that territory, or have done for a long time, usually has no merit. Almost every (if not every) national boundary has been created by war and empire. The empires of Britain, France, Spain, Portugal, Germany, Italy, the Netherlands, Belgium, Russia, China, plus all the empires that disappeared before the Treaty of Westphalia, all drew lines around their possessions. They needed to be clear what was whose. At the same time, these possessions contained people not native to the empire’s centre of power on them so they needed to keep them in line by inventing nationalities. Almost every (if not every) one of these borders did not reflect the cultural makeup of the people it enclosed; they were arbitrary. But when the empires left, instead of redrawing the borders, the elites decided they wanted to make everyone inside those borders think they were a cohesive group—a nation—because it would help them gain power. No government wants to relinquish control of part of its territory because it means less power; and less power is out of the question for anybody in it. So they invented myths about how everyone within the imperial borders has always been a nation, and since we are the political party who will help keep our nation together, support us. The story of post colonial electoral politics in a nutshell.

So why are there so many border disputes? Why not dissolve the borders and share these artificial creations called countries as equals? Because the empires and post-colonial elites have already made the people feel they are indivisible and proud nations that must retain territorial integrity at all costs. They do not want to share with outsiders. Children know how to share. If children were at the helm, they would share. But adults would rather send people to die before that happens. There is no sharing within our border.

And God forbid one might call those who would deny others access to a piece of land because they are from the wrong country racist. It certainly seems that way to me. Borders and anti-immigrant policies of any kind strike me as inherently racist. There is something superior about people from within our imaginary line, but those outside just do not deserve the same benefits. Of course, that is not how the argument is framed. Instead, it is considered unrealistic to think that a country like Canada, the US, Australia, etc. could ever absorb tens of millions more immigrants. But why not? There is obviously space for them. “Overpopulation” is not a problem anywhere people are free to move and create their own opportunities. The problem is lack of money to feed and house everyone. As we will see below, the claim that integrating newcomers will come at enormous expense or would cause food shortages is largely baseless, especially in a free society. But the racism is still there, under the surface, whether the non-racist people against immigration realise it or not.

Illegal immigration to the USAre you afraid your culture will change? It makes sense to think you culture is superior to that of others because it is what you are used to. It is the culture you understand best; every other culture is full of freaks. If we do not understand other people beyond the surface, and we do not try hard to understand, it is easy to see them as inferior. Ruben Navarrette believes that the arguments about border security, lower wages and overburdened schools are nonsense. No, he says, it is cultural change that makes us shiver, and any rhetoric disguising that fact should be exposed.

It conjures up the alarm bells that Benjamin Franklin set off about German immigrants in the late 18th century, who he insisted could never adopt the culture of the English, but would “swarm into our Settlements, and by herding together establish their Language and Manners to the Exclusion of ours.” It popped up in the mid-19th century amid worries that Chinese immigrants were “inassimilable,” which led to Congress approving the explicitly-named Chinese Exclusion Act of 1882. And it helped welcome the 20th century when Massachusetts Sen. Henry Cabot Lodge warned that immigrants (read: the Irish) were diluting “the quality of (U.S.) citizenship” and others complained that Italian immigrants were uneducated, low skilled, apt to send all their money to their home country and prone to criminal activity.

I think opposition to immigration stems from a combination of factors economic and cultural, but Mr Navarrette’s argument is worth considering.

It is not just the welfare system and jobs that attract the “invaders” (a term used, ironically, pejoratively by many people who supported interventions in Iraq or Afghanistan). It is also the avoidance of wars. The US government’s War on Drugs has killed some 35,000 Mexicans, not to mention Colombians, Guatemalans and other Latin Americans. Not only do they have a reason to leave where they are, an argument could be made that a certain government with a certain agenda owes them something. The war in Libya, along with the overfishing of the coasts of Somalia, have created refugees that have been rejected by the European countries that sponsored those efforts and let innocent people drown in the sea. One commentator describes letting refugees die in Fortress Europe’s moat a strategy for keeping them out. But at least they are not burdening our welfare system.

As with most laws, a few people making money off the status quo are a hindrance to their repeal. Your country as a whole does not benefit from restrictions to immigration, but some people do. Well-connected corporations make millions of taxpayers for locking up undocumented immigrants. The criminalisation of movement keeps prison operators happy. Like workers who fear newcomers, special interests will fight to the bone to influence legislators to retain their legal privileges. A few people win, but desperate people who risk their lives crossing an invisible and arbitrary line on a map for a better job lose. If we want to boost economies, reduce poverty and promote freedom, let us open all borders.

A further reason immigration is so restricted is that the anti-immigrant argument is partly a scapegoat contrived to divert attention to people who are different from the underlying causes of unemployment, violence and other things people blame on newcomers. A government that induces financial crisis and takes away money from people so they have less ability to defend themselves against them has a major interest in pointing fingers. Who better to blame than people who are visibly different, poor and cannot stand up for themselves? There is no longer any case against immigration. Should we do away with borders altogether? Well, have they brought us any benefits?

Are we freer than ever before? Until a hundred years ago, people who wanted to cross borders did not carry passports; they just went. Now, we need passports and visas, obtained following time-consuming and expensive (in fees and taxes) bureaucratic processes. And not everyone can get a visa. We can be denied access to the US-Canadian border for a record with a DUI, possession of a medical marijuana card, shoplifting or arrest for attending a peace rally. You do have legal recourse, which you can apply for after five years, but you need to send in court, police and FBI records, and a $200 fee. It’s a good thing about that fee, eh? Without that, how would the people who don’t let peaceful people cross borders make their livings? The persistence of borders seems to be little more than another bureaucratic rule designed to justify the existence of the bureaucracy.

The argument that national welfare systems would be overwhelmed first ignores the fact that immigrants contribute more to it than they take out, but more importantly underlines the flaws of the welfare state. Why would we get rid of immigrants at great expense in order to perpetuate this expensive and self-defeating system of welfare when we could welcome immigrants, who would contribute greatly to the economy? We would not have the exclusivity of borders and the violence of deportation on our consciences.

The myths are that immigrants steal jobs, commit more crime, go on welfare and contribute poverty. The reality is different. Most immigrants are young men, which one would think would mean more crime and incarceration. But in fact, the incarceration of natives in the US is five times higher than that of immigrants of every ethnic group, without exception. And why not? Immigrants go to work, not to commit crimes. Moreover, welfare case loads have fallen as illegal immigration has increased. Overall poverty have decreased too. It is not simply due to the high-skilled immigrants but the low-skilled ones as well.

A book by the Center for Global Development’s Lant Pritchett called Let Their People Come: Breaking the Gridlock on Global Labor Mobility cites two studies (Hamilton and Whalley 1984; Winters et al. 2003) that reach startling conclusions. Far from harming economies, the full liberalisation of labour markets could result in gains to global GDP at nearly forty trillion dollars. Actually, given what we know about how well free markets generate growth, and given the strict laws preventing a free market for labour, this figure may not be so surprising. Most of the benefits would accrue to the poor, but a rising tide of poor people would probably lift the boats of anyone working for any business they bought from. On a purely cost-benefit analysis, it makes sense to let all immigrants in. Economies would burst with growth, and though temporarily unemployment might increase, over time it would probably remain low. The short-term consideration of losing one’s job should be measured against the potentially enormous long-term benefits to nearly everyone.

Immigration reduces world poverty. Anyone who says they care for the poor and support barriers to immigration is either lying or does not understand poverty. When they support foreign aid to reduce poverty but not opening borders to reduce poverty, they would rather throw a bone to homeless man in order to ease their consciences than integrate him into their neighbourhood. And everyone who sees famines on television and throws up their hands in despair needs to consider that if starving people could emigrate, most of them would survive.

If crops fail in one place, it is likely they will flourish elsewhere, at least if people can move. In a free market, supply almost always rises to meet demand: existing producers produce more and new producers enter market that offer lucrative returns. Naturally, it is possible that climate change, in a much more advanced stage than it is today, would lead most crops to fail all over the world; though as we will see in my post on the environment, it is by no means impossible for a stateless society to have better means of protecting the environment than the status quo. Open borders might be a cure for famine.

But the real reason it is wrong to hold back immigration is that it is wrong to initiate force against peaceful people for any reason, and wrong to close off a country and call it yours. It’s not your country. It’s everyone’s world. Stop being so selfish. Either way, if you believe we should use coercion to keep others out of our country, you advocate violence and exclusivity and you do not believe we should help the poor.

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Don’t fear the free market, part 3: Rich and poor

August 13, 2011 17 comments

Redistribute wealth?

“What’s ‘just’ has been debated for centuries but let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn ‘belongs’ to you – and why?” – Walter Williams

My neighbour has far more money than I do. Should I be allowed to go over there with a gun and force him to pay me? No. When I do that, it is called robbery. But why is it okay for the government to do so? Is it no longer robbery? No, because calling it “law” makes it legitimate. Is it altruistic to force others to give someone else their money? Does anyone else deserve that money? Is taking it from people who earned it justified? Is that the only way to help the poor?

The problem with many statist arguments is that they confuse the ideals of government, which vary depending on the person, but which may well include a perfect redistribution of wealth and opportunities, with the reality, which is that government does not make us more free, more wealthy, more educated or more equal. Government is the institutionalisation of thuggery. The desire to redistribute wealth is an excellent example of this flawed thinking. We need to take more from the rich and give it to the poor. But such policies do not make things much better for the poor.

If a man acquired his wealth ethically, which means that he provided goods and services that people were willing to pay for, then any so-called transfer or redistribution of that wealth is theft. It punishes the people who contribute most to the general prosperity and provides a disincentive to do more. Because it makes it harder for those people to do what they do best, which is create jobs, wealth, products and services, the argument that redistribution of wealth adds to social welfare falls on its face. It is giving a man a fish. Letting the captains of industry strengthen the economy raises social welfare. If people want to raise their individual welfare, they can upgrade their education, learn new skills and start their own businesses, provide what people want and get paid for it, relying on themselves rather than on force.

But a redistribution of wealth is not really a redistribution anyway. Even if you believe it is good to use violence to take money from people who have made it legitimately, most of that money does not go to the poor. It goes into the enormous pool of the government revenues, which pay for the generous salaries and pensions of politicians and bureaucrats, subsidies to large farms and airlines, and making war on weaker countries. Does any of it go to the poor? Sure. But not much of it. And the poor are still poor, even after decades of welfare.

Besides, along with their providing jobs, goods and services, wealthy people give to charity. Facts about who gives and how much can be difficult to come by, as many donate anonymously. Nonetheless, we know Bill Gates, who brought the world Windows and innovated the hell out of computer software, has given some $28b to charity. Warren Buffett, who has financed many successful companies, has given about $40b. The Waltons, the Dells and the Rockefellers have all given in the hundreds of millions. And if you get rich, probably making others rich in the process, you can too.

The rich do not want to keep the poor poor. They have not for at least a hundred years, when industrialists like Henry Ford and John D. Rockefeller began paying their employees more, in part so that they could buy from the corporations for which they worked. (Also because if they wanted the best workers, they needed to offer more. That is how the labour market works.) No one who is not simply cruel wants the poor to stay poor. The more buying power the people have, the better off the rich, as well as the poor, are.

Inequality of wealth is only a problem because of jealousy. It does indeed cause serious problems, such as, to an extent, the current riots in the UK. But taking from others is not the way to solve those problems. Government is not making the poor any richer. The poor are taxed, just like the rest of us; not necessarily through their income, but through taxes on food, housing, and cell phone plan activation fees to name a few. They are taxed by central bank policies that encourage inflation. Sometimes you need to save to buy assets. Inflation eats away at savings. People with weak skills are kept out of the labour market by minimum wages, which discourage hiring. They cannot start art stands at the side of the road without a permit and government stamps.

Instead of resenting the rich and using violence to take their property, we could either learn how to become rich ourselves, which would benefit everyone, or we could learn to move beyond our base emotion of envy and be content.

Protect us from the rich?

A lot of people believe that we need government to protect us from the rich and powerful. I think people who think that way do not understand the nature of government very well, and they have it backwards. The rich and powerful use government to become more rich and more powerful. Whatever party you vote for will be the powerful people of your country. They will have control of a big chunk of the money and the ability to make whatever laws they want. The rich will ally with them, they will take their share, as they always do, and the government will continue to protect them, as it always does; or else a new elite will emerge, as it did under communism. If you really believe that getting more people out to vote, or getting the right person in power is going to fundamentally change that, I think you are naïve. There is no reason to believe that the powerful become any less powerful for any meaningful length of time when there is a new government. And to think that the rich would be more powerful in an anarchic state I believe is wrong, because in fact they wouldn’t have any political power, and they wouldn’t have state protection. That means no more riot police protecting world government-G8-WTO-IMF-whatever-you-don’t-like meetings—there could be security guards, but the people at the meetings would have to pay for them out of their own pockets. In fact, no more of those billion-dollar photo ops at all. No government means no more lucrative insider no-bid government contracts. It means no subsidies for the well-connected, just the people deciding whom to give their money to. It means no government protection and bailouts for the corporations no one likes, only the whims of the market. It means no more police breaking into the wrong house and shooting the wrong man for suspecting him of selling drugs (the war on the poor). It means no more soldiers going to fight for private control of resources overseas (the war on Islam) and coming back in body bags, or coming back as nervous wrecks who do not get treatment. It means more money for the productive sector, which means more and better-paying jobs. And sure, it might mean the rich go to better schools and get better health care, but I think it is fair to say they already do now.

The rich would have the most to lose from an anarchic society, because they would no longer receive all the various handouts they get in the form of bailouts, subsidies, government contracts, and laws that create barriers to entry and monopolies. There would be no limited liability, so people would be accountable for what they do, rather than hiding behind a legal corporation. And though it’s a bit simplistic, it is basically true that managers of public corporations are legally bound to pursue profit. If there were no laws, that would not be necessary. If there is someone with power, which by definition is unaccountable, and he has the power to tax and pass laws, he will pass laws that favour rich people so that he can get some of that wealth for himself. The very existence of government is why the elites can concentrate both money and power in their hands and not have to listen to the voters on the bottom. If you are afraid of the rich, let us start cutting off by cutting off the money they make from taxpayers. How about eliminating bailouts and stimuluses that take trillions of dollars from the productive sector and hand it to any lobby group from failed banks to the wives of failed bankers?

The more wealth is concentrated in the hands of one person, the more others will attempt to rob that person. As such, he or she needs greater and greater security. At the moment, the rich outsource their security to the state, which means they get the taxpayers to pay for the defense of their property. (Find a more robust discussion of this topic here.) The police protect the rich and beat the poor, and yet everyone is paying for them.

Then there is this perpetual fear that anarchy would mean that the rich would have their own private militias to take from everyone else. Well, what do you think the government is? It is a tool of the elites to take from everyone else. But it is also a professional salesteam, selling the illusion that it works, or maybe that it can work, for the people, so that people keep showing up on election day, and the elites keep going to the bank. At least in a free market, rich people would need to pay for their own militias, instead of making you pay for them like now. But I do not know why they would want their own militias. Everyone can pay private security firms for protection, but obviously rich people would not need to use militias to steal from others if they already have money. Of course, voting for a party promising to redistribute wealth is similar to using a militia to steal from others. Left-wing government is a tool of the well-meaning but ignorant.

If you really resent the rich that much, don’t give them your business. It’s as simple as that. If Sam Walton is a bad person, don’t shop at Walmart. If Ray Kroc spends money to finance wars in South America, stop going to McDonald’s, and shame those who do.

Having no state, no concentrated political power, would mean a more egalitarian society, not less.

Save the poor?

“If there were no government, what would be done about poverty?” First, what is the government doing about poverty now? Governments have had anti-poverty policies for decades and poverty has not gone away. If anything, it has become entrenched. (Some data: most money going to welfare programs is wasted; most charitable giving is not.)

Second, welfare has existed before and beyond the welfare state. The welfare state as we know it emerged in the wake of World War Two. Governments wanted to maintain the massive spending they had begun, as reducing spending means reducing government power, and governments hate relinquishing an inch of territory they have grabbed. (A case in point: even after the wave of privatisation in the late 1990s, government spending continued to increase rather than decrease.)

Third, there are ways in which government can alleviate poverty, but simply channeling tax money to the poor is not one of them. Property rights and legal contracts help, though those things are part of the reciprocal nature of normal human trade and interaction, and a state that takes away your property through taxation and imprisonment is not a guarantor of it. (Does the state confiscate property and give it to the rich? Yes.) Businesses operating in a free market end poverty. Look at China, or any of the middle income Asian economies. Walmart alone has brought millions of people out of poverty. People complain about sweatshop labour, but how else do they think hundreds of millions of people could have sent their children to school? Conditions are terrible, but if they were better, they would be more expensive and the corporations would hire fewer workers, be less productive and have less profit to invest back into their operations.

Poverty is beaten with economic growth. That was true during Europe’s development, America’s development, the development of the Asian tigers, and it will hold anywhere. Economic growth means clean drinking water, better nutrition, reduced child mortality, more access to electricity (which replaces burning much dirtier coal, wood and dung), and the freedom to take care of yourself and do what you want with your life. But economic growth takes time. It is not something that the government can fix in a few months with stimulus packages, regulations, makework projects and redistribution of wealth. People need to be able to start their own businesses and operate them without knowing thousands of pages of regulations and tax codes. It takes many years of free enterprise for people to understand, adjust to and plan according to a set of rules, which cannot happen when the government keeps adding to and changing them.

Who are the poorest people in North America? Native North Americans. The indigenous people. Why is that? It is obviously not for lack of government assistance. In fact, it is because of government assistance, and other regulations (like Canada’s “Indian Act”), that they are poor. It is because handouts called “help” are not actually help. The US government spends an average of $7000 per native on healthcare, in contrast to $2000 for other Americans; and yet natives still do not get good healthcare. The problem is with the incentives. Natives who pull themselves up by their bootstraps do just as well as anyone else; those who remain under government stewardship are crippled by dependence. They do not own their resources, meaning they do not have property rights. As Hernando de Soto explains in The Mystery of Capital, property rights is a major factor in enabling people to increase their earning power, because if they own their land and house and other property, they can put it up as collateral for a loan, which means they have credit, which enables them to expand their farms or businesses and make more money off them. It is the same principle as that of microloans. Government bones do not help; property rights just might.

Poor people are simply better off where they have more economic freedom, not more government. In the US, poor people can start businesses (though they might be hampered by fees, forms and other red tape), they can use their property as collateral, they can provide goods and services on a relatively free market and end up surviving and sometimes prospering. We do not need laws for ownership. As Frederic Bastiat once said, “Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.” Government, like religion, expropriated the laws of human nature and added to them unnecessarily, and has come to make everyone believe those laws could not exist without it. Let the poor climb out of poverty and many of them will.

If the people think something is a good idea, it will get done. And if they are not willing to pay for it, how could it be all right (or democratic) to force them to? That one is lost on me. But let’s say for the sake of argument that it is okay to force people to pay for schools, hospitals, roads and the fire department. I can understand that, although I still think people would pay for those things themselves, and save money by purchasing from a competitive market rather than a sclerotic public sector. I really do not see why they would not. We help those in need because we are sympathetic, we take time and money to improve our neighbourhoods because everybody gains, especially people who are recognised as putting their time and effort into doing so.

Why do you think that every culture and every religion has some tradition and institution for dealing with poverty? It is because the desire to help others is universal. Try it out some time: if you feel bad, do not try to get more for yourself; do something for others. Give something of yours away. Spread love to other people. As you shed your selfishness, you will feel better. It is a universal truth of human nature.