Friday, April 06, 2007

And you think the Right supports free markets?

What’s a little fraud between bigots? I am on numerous mailing lists from the Loony Left and Bigoted Right both. It’s dirty work but someone has to do it. Today I got a mailing from the Theopublicans at the Right-wing TownHall website. It purports to be a survey on whether you want to crucify undocumented immigrants or allow them to stay in the country.

I voted to let them stay. Now it promises to give you immediate results of the “survey”. Except it is no survey at all. No results are being counted. It’s a fraud, a lie, a deception, dishonesty, etc. It’s the typical Right-wing bigoted nonsense. If you vote for amnesty you are immediately told that 99% of the public disagree with you and that you ought to join some radical left-wing group.

If you vote “yes” you are immediately told that 99% of the public agrees with you and given the option to send a fax, free to yourself, to Congress attacking the free market in labor and whining about evil immigrants who live on welfare and steal our jobs at the same time. They are very cleaver those immigrants to do both!

There is nothing that 99% of the American agree about. Nothing! They may be the most religion soaked nation outside of Islamic “republics” but even 99% don’t believe in God. And that is probably the one issue there is the most unity over. The fact is that the survey is fraudulent.

While the bigots at TownHall put it out it is actually a paid advertisement for another group NumbersUSA. What is interesting about this mental midgets is that they manage to combine some of the worst economic fallacies together into one package. They take Left-wing nonsense about the “overpopulation threat” and combine it with Right-wing bigotry about how immigrants destroy “quality of life” and “wage fairness.”

They also help prove that the Right today is anti free market as free market economists are almost united in noting that immigrants do negatively impact wages. The jobs immigrants take go unfilled for the most part because most American workers are more highly paid in better jobs. These people, just starting out on the economic ladder, start by necessity at the bottom of the ladder. But it improves their lives and their kids start higher up on the ladder.

An immigrant cleaning up the garden doesn’t depress the wages of office workers, lawyers, or most Americans. The Right pulls the typical Left-wing fast one when they prove it does.

If you have a community of 5 workers each of whom earns $100 per week you know the average is $100 per worker. Someone comes along and takes a job no one else is doing. He earns $50 per week. You know have 6 workers earning an average of $91.66. So the average dropped by almost 10%. This is proclaimed proof that immigrants depress wages. But notice something important. Those other five workers are still earning $100 per week.

Averages are tricky that way. If you have a room of basketball players the average height is rather impressive. If you now add a class of of first graders to the room the average height has fallen dramatically. But it did so without the basketball players becoming shorter. What the bigots are doing is implying that, in fact, the basketball players are getting shorter.

Millions of immigrants have come to America and that depresses the average. Yet Americans are among the most economically well-off people in the world. And the growth rates in their prosperity put most other developed nations to shame.

Here are a few facts for you from someone who spends a lot of time in Europe (the other main center of economic development). Americans are far better off economically than most Europeans! Let me mention a few facts of life that the Malthusian Right won’t like.

Americans earn, on average, more than Europeans do on average. The same is true is you compare Americans to individual European nations. The typical income is higher in the US.

Not only is income higher but taxes are lower. So you keep more of what you earn. And in addition prices are much, much lower in the United States. Your money goes further.

Britain has one of the “highest standards of living” in the developed world and it is rather sad compared to the US. Housing here is cramped and small for the most part. I know people in the US who have homes five times the size of what the same money could buy them in England. Food selection is fair in the UK but not great. But prices for food is absurd. A slice of roast beef for a sandwich (just one slice) can cost $1. An ear of corn can cost $2 per ear. I would estimate that many day to day items cost 50% to 100% more in the UK over prices in the United States.

In Germany it isn’t quite that bad but prices are still 25% to 50% higher. And the range of items are much lower than in the US. I honestly know of people who have flown to the US, when air tickets are on sale, just to shop for clothes to bring back to Europe. The savings on clothing alone pays for the air tickets and they still save money.

Of course Europeans have much higher rates of unemployment as well. So they have a harder time finding a job, earn less when they do find one, keep less of what they do earn, pay more for the items that can purchase, and have a smaller selection.

The US government may be an inept, infested with authoritarians and meddlesome, but the on a whole Americans are economically better off than Europeans. It is hard to see how these millions of immigrants have impoverished America.

In fact there are numerous ways they improve American competitiveness and increase wages for Americans. Consider a man who is middle-income at a company or perhaps self-employed. He does all right for himself. But if he takes 5 hours away from working his income could drop by $20 to $30 per hour. Illegal Immigrant Gardening Service comes along and offers a worker to clean his yard, cut his grass, and weed the garden each week. It is $50 per week for this service. (Having hired illegal immigrants in the US I can attest that most want $10 per hour for this sort of manual work.) The man pays out $50 to have his garden serviced and uses the time to earn $100 to $150.

He is better off financially and so is the gardener. And so are the man's customers who were able to prosper because he was available to do what they needed done. He could have done the yard work himself. He would have lost more money than he saved and the gardener would be worse off. The man’s clients would be worse off as well. And since both he and the gardener earned less money they each spent less money in other areas where their spending would have created jobs.

One of the basic principles of free markets, which neither the Right nor the Left understand, is that when people make voluntary exchanges all the parties to the trade benefit. State intervention can only increase the number of losers. It can never create more winners. If people benefit by the trade they will make it and they don’t need the state intervening to get them to do what they would do otherwise.

State intervention can only do the following:

1. It can force people to trade who otherwise would not trade. If the trade would not have taken place otherwise that is because at least one of the traders is either worse off from the exchange or had a better option elsewhere. In other words someone will lose something.

2. It can change the terms of the exchange by force. If the terms were favorable to all traders they would voluntarily impose such terms themselves. That they didn’t do so indicates that state has only made one or more of the participants worse off.

3. It can use force to prevent a trade that otherwise would happen voluntarily. When this happens all participants to the trade are worse off.

At no point can state intervention improve the economic conditions of the willing participants to a market transaction.

So why do people support state intervention in the market? Because the intervention does make someone worse off! The actual goal is to harm the economic well-being of one trader through the redistribution of wealth from that trader to another participant in the exchange. Now that doesn’t mean that these regulations actually make the other participant better off. Sometimes they make a small group better off while harming the majority. Sometimes they make everyone worse off.

People often promote redistribution based on false assumptions. The plan they propose doesn’t actually make anyone better off they just fantasize that it will. A lot of the immigrant bashing the racist Right engages in is an example of that.

Very, very few Americans are clamoring for the opportunity to be a bus boy in a restaurant, mow lawns, or pick vegetables in the fields. And if that is their ambition I can assure they wouldn’t have trouble finding the work. But what the work is worth is not a salary they want to earn. And all the regulations you can invent will never make a job worth more than it actually is. You may force the wages higher than the job is worth but then the work goes undone and the man who would have done is unemployed.

These immigrants come to America because doing so improves their lives. And they also improve our lives. They make the nation more productive. They do work that would often go undone otherwise. And they are slowly building capital for themselves and their children, capital which makes everyone wealthier in the long term. And what they spend for their daily living goes back into the economy creating more demand for goods and services and thus even more jobs.

The Right may play lip service to free markets. But they don’t understand them. Nor do they really support them.

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