Let Them In_ The Case for Open Borders - Jason L. Riley [31]
FRENCH LESSONS
Living in a free-market society inevitably involves living with more economic risk. The effects of business cycles can be minimized but not eliminated. The disequilibrium that characterizes our economy is also what makes possible the innovation and productivity that facilitate our prosperity. The welfare states of continental Europe offer another model for managing an economy. Italy, Germany, and France feature highly protected labor markets, where the interest of the worker is placed above that of the consumer. Europe’s universal health care, thirty-five-hour work weeks, and six-week vacation mandates make America’s political left go gaga. But protectionism has a considerable downside; for decades, the Continent has had consistently higher unemployment and lower productivity than what’s found in the United States.
Take France, which sports the slowest-growing large economy in the European Union, the fastest-rising public debt in Western Europe, and entrenched high unemployment. In the early 1980s, French GDP per person was the seventh-highest in the world. By 2007 it had fallen to seventeenth place. “The most urgent cure for all these ills is to get the economy growing faster,” advises The Economist magazine. “That requires radical liberalisation of labour and product markets, more competition and less protection, lower taxes and cuts in public spending, plus a shake-up of the coddled public services.”
If you know you can’t fire unproductive employees, you become overly cautious in taking on new workers. There’s less risk-taking in general. That additional worker is less likely to be hired and the company expands at a slower pace, or not at all. The more regulated the marketplace, the higher the entry costs. Entrepreneurs and investment capital flee to friendlier places. Which means fewer new businesses, less competition for existing firms, higher costs for consumers, and slower overall economic growth. In France, the system is stacked against anyone who doesn’t already have a job. The beauty of flexible labor markets is that they fuel growth and job creation, so displaced workers can more easily rejoin the labor pool.
Restrictionists fret that the tanned influx from Latin America has the United States slouching toward Guatemala. But the bigger concern is that without those immigrants, and the job mobility they catalyze, the United States risks slouching toward France.
CHAPTER THREE
WELFARE: THE MEASURE OF A MANUEL
In the spring of 2007 the Council on Foreign Relations, long a font of center-left received wisdom, published a paper by Gordon Hanson titled “The Economic Logic of Illegal Immigration. ” Hanson is an economist at the University of California at San Diego, and the paper’s somewhat cheeky thesis is that, from a purely economic standpoint, undocumented immigrants do a much better job of responding to the demands of the U.S. labor market than their lawful counterparts. It is frequently said that legal immigrants are a net benefit for the economy and that illegal immigrants are a net drain. But Hanson turns that notion on its head.
Obviously, there are very good reasons to reduce the illegal alien population in the United States, and chief among them is national security. As of this writing, no terrorist attacks in the United States can be tied to anyone who illicitly forded the Rio Grande, but it’s only prudent to minimize that possibility. Human smuggling, document fraud, and corpses in the Arizona desert are other major problems associated with illegal border crossings, and a later chapter will address how U.S. immigration policy might best address those kinds of concerns.
Hanson’s paper, however, is narrowly focused on whether our economic welfare is helped or harmed by porous borders. He looks at the fiscal costs and benefits of illegal immigrants and how they compare with those newcomers who use the front door. “This analysis concludes that