Tuesday, May 16, 2006

Habla Derecha Cerca Immigracion

Tech Central Station nails the illegal immigration problem with two articles today. First, the reason Mexico is poor (and exporting its valuable natural resource, labor) is that Mexico is struggling with badly outdated political-economic institutions:

Spanish colonists arrived first in the Americas, installing their seigneurial (feudal) system in lands claimed for king and church. The state gained title to all mineral rights, upper classes acquired vast land holdings, and often corrupt bureaucrats regulated markets and businesses. The vast majority of families worked the land or did menial labor, with few opportunities to own property, become educated or improve their social status.

By the time the English began establishing colonies, their system of laws, democratic government, property rights, free enterprise and individual rights had evolved far beyond feudal concepts. Even poor entrepreneurs could and did acquire property, patent inventions, mine gold and silver, and build businesses, factories and industries. When wars and treaties added Texas, New Mexico, Arizona, Nevada and California to the expanding nation, those new states exchanged Spanish feudalism for the dynamic American system.

But even today in Mexico, key industries remain nationalized, and wealth is concentrated in the hands of elites. Prevalent ideologies view wealth as "a zero-sum game," in which what one person acquires can come only by taking money or property from someone else. These doctrines help foment class conflict, demand "more equitable" distribution of wealth, and condemn globalization and foreign investment, rather than seeing them as agents of improved opportunity, health and environmental quality.

....Low-skill wages today are less than 15 percent of what Mexican workers can earn in the US, and half of its 106 million people still live in poverty. Mexico is not poor because it lacks natural resources or bright, industrious citizens. It is blessed with both in abundance. Mexico is poor because it retains an antiquated legal and economic system.

If the southwestern United States had remained part of Mexico, this region would have been governed under Mexican laws -- and would probably be as impoverished and bereft of opportunity as Mexico is today.

All right, now we know why they flee Mexico. Here's what we can't do about it:

Around 1991, the State of Georgia passed a law that made it illegal to have window tint on your vehicle if the tint was too dark -- light tint was fine and legal, but the black tint was illegal. Unfortunately, many of the people who wish to have their cars tinted preferred to have the dark tint on them. Thus, window tinting companies were placed in a bind: They could either obey the new Georgia law and lose customers, or disobey the law and keep the customers who wanted the illegal tint.

Now had a state inspector been stationed at every one of the many window tinting shops in the state of Georgia, and if he personally examined every piece of tint put on every window, there is no question that the Georgia window-tinting law would have been a smashing success. But because the enforcement of the law was on a fairly hit-or-miss basis, and since it was aimed primarily at the drivers of the illegally tinted vehicles, the economic effect of the law on the window-tinting businesses themselves was utterly perverse. Those companies that obeyed the law to the letter were economically penalized by their very respect for the law, while those companies that flouted the law were economically rewarded by their lack of respect for the law.

....By the same logic, if all the customers of the hundreds of businesses who currently employed illegal immigrants were prepared to spend more money for the same service provided by American labor, then, once again, the current laws could be enforced -- or, more precisely, they would not need to be enforced, because the people themselves would be spontaneously obeying them.

....Herein lies the drawback to laws that are passed by legislative bodies solely to prove to their constituents that they, the legislators, are really doing something. "See," the legislators can tell the voters back home, "we are really cracking down on illegal immigrants by making tougher laws." But what is the point of tougher laws if these laws only penalize, economically, the few who obey them, while rewarding the many who do not?

....At least in the law against illegal tint, it was the final customer who was penalized by fines; but in the law against hiring illegal immigrants, the final customer is in no way punished if he decides to go with a landscape firm that uses illegal aliens, or decides to have his roof replaced by a company that employs them. In most cases, all the final customer will care about is the cost of the service, and if it is cheaper to go with a company that hired illegals, that is what he will do. And how do you solve this problem? By fining customers who eat at restaurants that employ illegal immigrants, or who have their bushes pruned by them?

As long as the final customers behave as economic actors, preferring to pay less than more for the same quality of service or product, there will be a market for those laborers who are willing to work for less, provided that they work as hard and as well as those who demand a higher wage. Pass all the laws you want; make as many examples as you please -- neither of these policies can hope to do more than to drive up the cost of those businesses that obey the law, while rewarding those that are willing to take the risk of disobeying it. In short, the end result will not be more Americans working at higher wages, but a flight of illegal immigrants from larger and more stable companies to smaller and less stable ones -- or, to put this another way, a flight from higher to lower wages.

Should this surprise us? Considering the history of legislative attempts to regulate trade and commerce, no it should not. There are some things that law can do; but it can never be able to make people act against their economic self-interest. And every time that the law has been used for this purpose, not only does it fail -- it does much worse, it backfires.

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