Immigration, Capitalism, and Government

Immigration, Capitalism, and Government
Armstrong Williams
Tuesday, June 08, 2010

The problem with immigration is most definitely not capitalism. Capitalism depends upon the agreement of two or more parties upon a mutually agreeable exchange—whether it be of one’s labor for a wage or of one’s money for a product or service. Businesses seek to lower costs so that they can provide a product or service at the price at which supply and demand reach an equilibrium, which is the point—theoretically—at which their profits are maximized.

The problem with immigration is not that businesses follow this basic principle in seeking cheap immigrant labor, but is instead that the government has inadvertently, because politicians seem immune to understanding the “law of unintended consequences,” set the price of immigrant labor at an artificially low point. Illegal immigrants, are willing to work for less, in part, because they’re taxed less and business owners are all too willing to “exploit” (the anti-capitalist’s favorite word) the immigrant’s willingness to work for less, so this mutually beneficial exchange takes place at the expense of low-skilled American workers.

Of course businesses prefer cheap immigrant labor to more expensive legal labor, but only because cheap immigrant labor already existed in abundance, not because businesses sought a particular class of people to exploit and hold down. What is consistently lost in the politics of this issue is that it’s not about the immigrants themselves; it’s purely about cost. A century ago, it was the Italians and the Irish. By mid-century they’d moved up and out of the low-skilled sector and our economy had itself moved into a more prosperous period that saw high-school boys seeking summer and after-school work building homes and widgets. When it was high-school kids earning only a penny an hour, we called it character-building, but in our increasingly race-conscious and entitlement-driven culture, all of a sudden the businesses that for eons have been paying low-skilled labor as little as they can get away with are vilified as racist tyrants. The reality is, you couldn’t pay low-skilled labor nearly enough to satisfy those whose real problem is not wages or greedy CEOs, but the entire capitalist venture.

The problems with today’s system were created by the government, plain and simple; after all, it’s not the CEOs of companies writing immigration laws; well-meaning but stupid politicians do that just fine all on their own.

So, what if there was no such thing as an “illegal” immigrant? If, hypothetically, all who lived and came here were documented, legal workers, with legitimate Social Security or tax I.D. numbers, then illegal immigrants would be forced to compete in the labor force, and not outside (really, beneath) it.

But as it stands today, illegal immigrants drive down wages for low-skilled American workers—that is, if American workers are even able to obtain the work that illegal immigrants are all-too-eager to snatch up and for which there seems to be too much supply for American workers to compete against.

So it’s this third party, the government—yet again—that meddles inadvertently in the labor market and thereby screws both the illegal immigrant and the American worker and capitalism, the innocent bystander that always seems to be blamed for wrongheaded government policy.

What’s the solution, then?

Open the borders close up the government store.

In other words, let as many into this country as are willing to come here and work—after, of course, passing rigorous background checks that would deny criminals or potential national-security threats entry—but make damn sure the government coffers are closed to them. No documents in Spanish or Korean or Pig Latin. No ESL programs in the schools. No free health care. No collecting on Social Security or WIC benefits without having first paid for the right to them as a legitimate American citizen or otherwise legal resident.

See, the perception outside America (and people have studied this) is that not only is there opportunity for work here in the U.S., but there’s also—and this figures into their calculation that life is immeasurably better for them here—access to free health care, free education for their children, and the opportunity to defraud the government of Social Security and welfare benefits—and, to boot, they’ll be coddled in their native tongue at the DMV and welfare office with translators and forms in their own language. Without having to pay for any of these services, whether as direct out-of-pocket payments or through payroll taxes, they can afford to undercut Americans who do have to pay these costs by accepting a much lower wage.

My sense is that if America treated its immigrants like it used to—saying, in effect, “Come here, but eek out your own damn existence and learn the language, just like the rest of us!”—the perception that our nation is one huge free lunch would dry up, the wave of immigrants would slow not necessarily to a trickle, of course, but to a manageable level, and their wages would be forced up (which would do away with the ballyhooing over “exploited immigrant labor” and return low-skilled Americans to their competitive place in the labor force). Once would-be immigrants learn that, yes, they’ll get here quickly, but they’ll be expected to pay payroll taxes and FICA and to lose 7% of their income to pay into Social Security, only the most committed, only the best-educated, only those willing to assimilate, will end up immigrating and succeeding here in America. This great nation would once again be restored to its rightful moniker as “The Land of Opportunity” and will shed its image as “The Land for Opportunists.”

But the problem is, there’s no stomach for this kind of two-pronged approach (opening the border and closing the government store—something that would have to be done simultaneously and thoroughly); we live in a gimme-gimme-gimme world, now—that’s the simple reality, and clearly it’s one we need to thwart or beat back with a reminder of our lost virtues.