Immigrants have become more, not less important as technology grows more complex. Immigrants in the 1800s built the nation’s railroads, but today’s immigrants have built the information economy. 60% of our 25 largest tech companies were founded by first- or second-generation immigrants. Apple, IBM, Google, Oracle, Amazon, Intel, Ebay, EMC, Texas Instruments, VMware, ADP, Yahoo!, are all children of the Statue of Liberty. Most of our best jobs are the result of immigrant brainstorms… even to look for a job we use LinkedIn, founded by an immigrant.
Scapegoating Immigrants: Good Politics, Bad Logic
So why are immigrants blamed for our economic problems? Because as politicians before and after Hitler have known, scapegoating “foreigners” is the easiest path to political success. Also, it’s the safest… it takes no bravery to attack working-class immigrants, rather than facing up to the wealthy corporate-welfare interests.
So, let’s go through the various economic fallacies used to blame working people for the collapse of the US economy…
“Immigrants Don’t Pay Taxes”
Immigrants, tragically, do pay taxes. Everyone knows that immigrants pay sales and gasoline taxes. They also pay property taxes (passed on in their rents) and corporate income taxes (passed on in the products they buy).
Less well publicized is the fact that two-thirds of illegal immigrants pay Social Security, Medicare, and income taxes. Starting in 1996, the IRS began issuing tax numbers to about 8 million illegals. Of course, being illegal, they can never collect Social Security or Medicare; the taxes paid by poor illegals go to support the improvident American middle class in their old age. This robbing of the poor to support the rich amounts to about 50 billion per year.
In fact, these immigrant SOBs pay too many taxes. How un-American! Haven’t they ever heard of the Boston Tea Party?
“Some Immigrants Are On Welfare”
As in any welfare state, this is a problem. The problem is the welfare, not the immigration, however.
In 1996, Clinton took time out from launching cruise missiles at medical factories in the Sudan and signed the welfare reform bill. The 1996 bill banned illegal immigrants from food stamps, housing assistance, Medicaid and Medicare-funded hospitalization. So welfare for the able-bodied poor is still a crisis… but primarily a crisis caused by native-born Americans who adapted to the ecological niche offered by ADC and other family-replacement programs.
Immigrants, like other Americans, do use government-provided emergency medical care and public schools. Both education and medical care are dysfunctional… in fact, it may be our terrible public schools (25th out of the 34 OECD countries) that cause our STEM worker shortage. Again, it’s not immigrants that decided to Sovietize US education and medicine.
The only solutions for government-created failures are markets. We have to privatize medical care and public schools. This has to be done anyway, unless we want to produce yet another generation of expensively uneducated Americans.
“Immigrants Hurt the Economy”
Every economic success story is based on free trade. Regardless of cultural or ethnic factors, it’s always economic freedom that drives success. Liechtenstein or Singapore, Hong Kong or Dubai, they’re all free trade zones. There are even the “controlled experiments” of East vs. West Germany, North vs. South Korea, Taiwan vs. Mao-era China, New Hampshire vs. Vermont… freedom always wins.
The laws of economics are impersonal. They don’t distinguish between trade in different factors of production. Human beings are a factor of production, and blockading immigration has the same economic effect as blockading steel or computer chips.
In the time of Adam Smith, people understood the good effects of free trade. In war, you blockade the enemy to prevent trade. This is how you destroy an economy. Today economic literacy is less common… so our politicians have convinced us to blockade ourselves.
Trade is not war. You can’t make yourself better off by hurting your trade partners; that just means they have less wealth to buy your products, and the prices of your goods suffer. Other people’s work, in the long run, makes you richer. Everyone specializes, the overall economy becomes more efficient, and instead of a nation of 99% peasants we have a nation with thousands of occupations.
Economists disagree on how much new immigrants help the economy, but the effect is clearly positive. If sealing borders made you rich, North Korea would be the world’s most thriving economy… instead of a dark blot on night-time satellite pictures.
“Immigrants Take Our Jobs”
Yes, all those tomato-picking jobs that Americans clamor for. Not to mention all those molecular biology postdoc jobs that require Ph.Ds. Most immigrants take jobs that Americans can’t or won’t do.
But even in those cases where an immigrant is “competing” with an American job seeker, it’s still a good thing. “Competition” in the job market just creates more niches, more new and different jobs. This shouldn’t be surprising… real wages rose in the US for most of the 19th and 20th centuries, even though the workforce was growing steadily.
“Comparative advantage” is a basic economic concept. Comparative advantage doesn’t mean that there is an economic “winner” who gets all the money. It means that in a free economy, everyone does what they are relatively better at, and everyone’s income is raised. Even if Bill Gates were twice as good at picking tomatoes as the average tomato-picker, he would still specialize in making annoying operating systems. (Which is a good thing, because tomatoes engineered to carry every possible virus would be very dangerous).
In the same way, even if you are a tomato-picker, if there is an influx of immigrant tomato-pickers, that doesn’t mean that you will be forever unemployed. You will just move on and get a better job, as did the 96% of Americans who no longer work on small homesteads plowing behind mules. Perhaps as a tomato-picker supervisor, or perhaps as a Wal-Mart manager who sells things to tomato-pickers. Somewhere, the new wealth created by the tomato-pickers is making new jobs for you.
“Immigrants Cause Crime”
We, the descendants of the drunken, violent Irishmen, Jewish gangsters (the feared Kosher Nostra), Ital… uh, other ethnic groups, accuse today’s immigrants of “causing crime”. Well, when you make it illegal for people to work, then by definition they commit crime by supporting themselves with honest labor. Amazingly, the vast majority of them manage to do so in spite of every obstacle that government puts in their way.
Of course people living with insecure property rights cannot be as stable as those whose natural rights are (somewhat) respected by the laws. Making immigration legal would instantly raise the stability, incentives, and productivity of all the currently illegal workers. Legal status would make it more profitable for the workers to invest in their own homes, education, retirement funds etc.
The high (though falling) crime rate in the US comes from two things that are not part of our traditional Irish-German-Italian-African-Japanese-Chinese-etc. culture (and therefore did not exist during the previous immigration waves): a permanent welfare class, and Drug Prohibition. Illegal immigrants did not cause either of these problems, Congress did.
“Immigrants Threaten Homeland Security”
Terrorism, the all-purpose excuse for any program that doesn’t produce any tangible benefit. “We have to control our borders to keep out terrorists”. This certainly sounds nice; everyone would like to keep out terrorists. If we could deport the CIA officials who funded terrorist groups in many countries, that might actually help. But the fact that all the 9-11 terrorists were here legally (while millions of honest workers were here illegally) should make us very skeptical that North Korea’s security solutions are going to work for us. (Considering that Dennis Rodman got into North Korea, maybe their system isn’t working that well for them either).
Legalizing immigration (at least, if we also ended Drug Prohibition) would make security much better. Under the current system, we have millions of illegal crossings… there is so much nightly traffic that an armored division or two would barely be noticed. If workers were allowed to cross at freeway checkpoints in a civilized fashion, then anyone sneaking across the desert would really stand out on a drone’s IR sensor… and could be assumed to have bad intent.
And when push really comes to shove… in an isolated America we wouldn’t have to worry about minor terrorist attacks. Without Einstein, Fermi, and the other immigrants who built our defense technology and defeated the Nazis, we would already be part of the Thousand-Year Reich and/or Rising Sun Co-Prosperity Sphere. Do we really want to force the high-tech geniuses of the world to stay home and work for dictators?
The Real Threat to American Exceptionalism: Welfare for the Rich
Welfare for the rich costs trillions of dollars. Bailouts and routine subsidies for our new privileged class cost so much that they have rendered the dollar, our very means of economic calculation, unstable and untrustworthy.
When Obama took office in 2009, the national debt was $10.6 trillion. It’s now at $17.5 trillion. (This is only the “official” debt, which doesn’t count Social Security, Medicare, Medicaid, finance-industry guarantees, military obligations, etc. Estimates of the real debt vary, but are over $100 trillion). The US GDP was $16.8 trillion in 2013. If the US were a family we would be in credit counseling.
Since 2008, Federal Reserve “quantitative easing” has kept interest rates at artificially low levels. This has allowed the government to evade paying market rates on its debt. But an economy cannot function forever without real, market-driven interest rates. Interest rates, like all prices, are information. An economy without real information cannot function. Nor will the dollar hold its value if we keep printing like Zimbabwe.
Fed Chairman Paul Volcker is famed for “saving the dollar” under President Reagan. In order to do this, he had to reduce the rate of dollar creation, and allow interest rates to rise. By 1982, the prime rate was at 21.5%.
But in 1982, the Federal debt was only $1.1 trillion. If Ms. Yellen tried to “save the dollar” with Volcker’s interest rates, 21.5% of our current debt would be $3.76 trillion. The OMB estimates that total tax collections for 2014 will be $3 trillion dollars. So the entire US Federal budget would be absorbed by interest payments… and wouldn’t be enough.
It wasn’t Mexican construction workers or Indian computer programmers who bankrupted our country. It was bailouts for banks, crony deals for car companies, subsidies for the many faux-Green Solyndras, endless military interventions and nation-building. The US economy is broken because we turned away from free markets and put our faith in crony socialism.
To be Exceptional, We have to be Free
America can be exceptional again, if we choose to be. We can follow the recipe of economic success again. Our children can go on to cure cancer, colonize the Solar System, rebuild ecosystems; possibly even Detroit can be made habitable again. But we can’t do it with mindless ethnic-cleansing tribalism.
We are all immigrants or children of immigrants, whether our ancestors traveled by 747 or walked across the Bering Land Bridge. If we are going to fulfill the Founding Fathers’ dreams, we will do it as a nation of immigrants.
Bill Walker of Plainfield, New Hampshire is a member of the Sullivan County Republican Committee. His ancestors immigrated from Prussia in 1870.