Archive for the 'Labor Market' Category

Feb 20 2017

Some thoughts on educating students for “success” and “happiness” in the 21st century

Today we returned to work after a relaxing week of holiday-making for a day of “professional development”. The day kicked off with our school’s director sharing some information about a recent audit of our school’s parent community, which revealed that there is great anxiety among the parents at our school about their children’s experiences in school today, mostly relating to how well they will achieve on their examinations and whether their levels of achievement will assure them entrance to the top universities to which they (both the parents and the students) aspire.

The ultimate source of this anxiety, it would seem, is not the immediate importance of exam scores or even college acceptances, rather the deeper concern among parents that their children may grow up to be less successful than they themselves have been in their careers. I am sure that this anxiety is one experienced by nearly every parent in the history of mankind: from our primitive ancestors who stressed over their children’s abilities (or lack thereof) with a bow and arrow to blue collar workers of the 20th century who worked 80 hours a week to be able to send their children to state colleges where they may learn a skill that would raise their lot in the future. The parents of my students today likewise fear that their own children may grow up to be less successful in the fields they believe to be worthy of their children: business, finance, law, technology, management, and so on.

In fact, the parents whom our school serves are some of the most successful people in the world in their respective fields. They have risen to the top levels of management in multi-national corporations. They sit at the pinnacles of global financial institutions. Many are successful entrepreneurs or investors who have proudly raised their children in a world of luxury. The very fact that they send their children to our school is evidence of their own career accomplishments (we are a very expensive private school in one of the richest countries in the world).

It is for this reason that I believe nearly all these parents’ should be very anxious about their children’s futures. It is natural for parents to want their children to achieve what they have achieved (or greater!). It is natural for parents to desire for their children to be able to enjoy the living standards they have been afforded thanks to their own accomplishments in business, finance or law. As I have said, every parent in history has wanted as much for their children.

But is it realistic for a major league pitcher to wish for his son to grow up to throw a ball 105 miles per hour? Certainly not.
I believe that today it is less likely than it has been for generations that a child growing up at the top of the socioeconomic ladder will, in fact, achieve the level of professional success and the resulting income and living standard that their parents achieved. These parents’ anxieties are 100% justified and they have very little reason to believe their children will someday earn the incomes they enjoy today.

Here’s why: The entire trajectory of the global economy has shifted since my students’ parents embarked on the career paths that led them to where they are today. Globalization and technological change have displaced (or replaced) many of the blue collar jobs that Europeans and American counted on for a decent living standard in the 20th century, and these same processes have already begun to affect the white collar careers on which many of my students imagine their future paths taking them. The knowledge and skills we teach in schools today will be increasingly devalued in the future.

Knowledge will become a free good as artificial intelligence and other information technologies reduce the barriers to acquiring knowledge to zero. Likewise, the gaps in global skill levels and productivity that allowed the growth of incomes in Europe and North America to exceed those in the rest of the world throughout the 20th century have already begun to narrow, evidenced by a decade of low or no growth in the rich world and nearly 5% growth in the rest of the world. This means the pool of skilled workers of which my students will eventually be a part will be vastly broader and deeper than that in which their parents competed.

The knowledge and the skills we teach our students in school today will only continue to be devalued in the future, meaning students whose future aspirations are based on the assumption that such learning objectives will assure them a high income and living standard will find themselves drowning in a labor pool in which they have less economic value than they ever have in history.

Stated simply, value is a function of scarcity, and as skilled and knowledgeable workers become less scarce, those whose only assets are what they “learned in school” will find themselves far less likely to achieve the levels of income that those of earlier generations did.

The implication of technological advancement and globalization (both the defining forces of our century) for education is that unless we begin teaching something NEW and DIFFERENT than what was taught in the last century, our students will almost certainly not achieve what their parents (educated in the last century) have been able to achieve with their educations.

So this begs the question: What can students learn in school today that WILL help them achieve the levels of success and happiness to which all parents aspire for their children?

I think the answer to this question also came up in this morning’s speech by my school’s director. He closed by sharing a quote from a student who recently graduated from my school in which the student reflected on what he learned on a school trip to Nepal during his last week before graduating (as part of our “classroom without walls” experience). After spending a week with the orphans of Kathmandu and in a Buddhist monastery in the Himalayan foothills, this student returned to Switzerland with a new understanding of what happiness meant. He realized for the first time in his life that happiness was not measured by how many material things we surround ourselves with, but by the relationships we have with others in our community and by our connection to both other human beings and the natural and spiritual worlds.

My question (and concern) is: Why did it take until this student’s last week of school before he came to this important understanding? Is this not the most important lesson he could possibly learn? Should only those students lucky enough to spend a week in the Nepalese slums come to such important understandings about life, happiness and success?

I wonder if it would relieve our parents’ anxieties if we shifted our focus in school today to place less emphasis on a pre-determined set of rapidly depreciating knowledge and skills and more emphasis on relationships, connections with the community and the environment and spiritual self-awareness.

I wonder what our parents would say if we told them that our school’s focus were shifting from providing their children with information and skills that will earn them the best examination results to instilling in them an awareness of and an understanding that happiness is measured not by what you have, but by what you are able to live without.

Will parents understand that their children’s pursuit of a high paying job based on the same knowledge and skills that they learned in school will prove fruitless in an era where knowledge and skills are no longer scarce?

Will they agree that what matters is not their children’s future success as measured by their income and material well-being, rather their future happiness?

I wonder whether my students’ parents realize how justified their anxieties are. And I hope they understand that if or when their children do not succeed on the paths they envision them pursuing, it won’t be their own faults; rather, it is the inexorable outcome in an era where knowledge and skills are continually devalued by technology and globalization.

Henry David Thoreau, who shed the burden of materialistic pursuits for a simple life in the forest, once said, “A man is rich in proportion to the number of things which he can afford to let alone.”

The happiness of being able to do without material things is that to which our education today must aspire. The path my students’ parents followed will become increasingly narrow and unattainable for the next generation. Therefore, a rethinking of what we teach and, in fact, value, is necessary to achieve happiness for our students in the future.

Many schools have embraced the alternative path to happiness envisioned by Thoreau and others throughout history. The awareness that true happiness is not attained by the pursuit of money and status, rather a connection with our community, the natural world and our spiritual selves and an embrace of simplicity over complexity is nothing new. The Buddha new it, Jesus knew it, Emerson and Thoreau knew it.

The question is, do our students know it? Do their parents know it? Heck, do I know it? And once we’re aware of this truth, how can we begin to redesign our schools’ learning objectives so that our students leave school with a truly attainable path to happiness and success, perhaps of a different kind from that imagined by their parents, but one that will certainly be more achievable and just as valuable in a future in which the spoils of global economic activity will be more evenly distributed between the world’s people than it has ever been in history.

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Feb 27 2012

A closer look at Apple’s iPad and iPhone – “made in America”?

I have two  interesting stories on Apple and the iPad to reflect on today.

First, ABC’s Nightline recently became the first Western journalists actually welcomed into an Apple assembly plant in China. The show recently aired a 15 minute feature on working conditions inside Apple’s Foxconn factory in Shenzhen, China last week. Watch the video and then scroll down for what may be some additional surprising news about Apple’s operations in China.

Next, the story that has gone unreported lately is a University of California study titled “Capturing Value in Global Networks: Apple’s iPad and iPhone”. The study’s most interesting finding, in my opinion, is the tiny percentage of the total value of Apple’s iPhone and iPad that actually goes to the Chinese manufacturers of the products. The charts below, from the study, show how the value is divided among the various groups involved it their production and sales:

The Economist provides the analysis:

The chart shows a geographical breakdown of the retail price of an iPad. The main rewards go to American shareholders and workers. Apple’s profit amounts to about 30% of the sales price. Product design, software development and marketing are based in America. Add in the profits and wages of American suppliers, and distribution and retail costs, and America retains about half the total value of an iPad sold there. The next biggest gainers are South Korean firms like Samsung and LG, which provide the display and memory chips, whose profits account for 7% of an iPad’s value. The main financial benefit to China is wages paid to workers for assembling the product and for manufacturing some inputs—equivalent to only 2% of the retail price.

A student today asked why Apple doesn’t produce its products in the United States, where an economic downturn has left 14 million American out of work for the last three or four years. If iPads and iPhones were just made in America, jobs could be created, households would have more income to spend on Apples products, and both the country and the economy would benefit.

The data in the UC study indicates that in fact, more than half the value of an iPad or iPhone does end up in the hands of Americans. But Apple could never achieve the low costs and high profits that it does by assembling its products in the US. After watching the Nightline video above, it should be clear that the type of production involved in Apple factories’ is very low-skilled and labor-intensive. Using American labor, with its unions, minimum wages and 40 hour work weeks, would require Apple to employ such large numbers of workers and raise the company’s variable cost to such a level that the firm’s profits would be reduced significantly and its sales would fall dramatically. Apple would lose out to foreign producers of smart phones and tablet computers, such as LG, Samsung, Sony and others, which would continue assembling their goods with Chinese labor.

Ultimately, any gain to the low-skilled American workers (presuming Apple could even find enough to do the work of the 400,000 Chinese employed in the production of Apple products in China), would be offset by a loss of profits enjoyed by the millions of Americans who hold shares in Apple Computer and the thousands of American who are employed engineering and designing its products, as the firm’s sales would slip in the face of lower-cost competitors.

So this student’s question identifies an interesting paradox: America, with its large pool of unemployed workers, will never be attractive as a place to produce labor-intensive products such as phones and tablet computers, due to the vast wage differential between the US and China. And even if one firm did decide to produce its products in America, the gains to low-skilled workers who may find minimum wage work in the new assembly plants would be off-set by losses to the firms’ shareholders and the high-skilled workers whose jobs would be lost as sales decline due to the lower prices offered by lower-cost competitors.

The lesson here is two-fold: First, Apple and other American technology companies should continue using Chinese labor to assemble their products, and second, America is better off for it: lower costs mean cheaper products and higher sales, thus greater employment in the high-skilled sectors of the US economy, and more profits and returns on the investments of shareholders in American corporations. Americans are richer and enjoy a higher standard of living thanks to the millions of Chinese working in factories assembling the goods we consume.

Keep in mind, this analysis did not even consider the effect on the Chinese economy and the millions of Chinese workers (whose lives are much harder than the typical American) should companies like Apple shut down their Chinese manufacturing plants. That’s a whole other blog post!

5 responses so far

Mar 29 2011

Resource market case study: New York’s manhole covers forged with human sweat and blood…

New York Manhole Covers, Forged Barefoot in India – New York Times

In the revealing story above, the NYT reports on the manufacture of the New York’s thousands of manhole covers, which it turns out come primarily from a foundry in the Indian state of West Bengal. An NYT photographer discovered the Indian factory, and his photos prompted the report here:

Eight thousand miles from Manhattan, barefoot, shirtless, whip-thin men rippled with muscle were forging prosaic pieces of the urban jigsaw puzzle: manhole covers.

Seemingly impervious to the heat from the metal, the workers at one of West Bengal’s many foundries relied on strength and bare hands rather than machinery. Safety precautions were barely in evidence; just a few pairs of eye goggles were seen in use on a recent visit.

In AP Economics, we have begun learning about resource markets, where firms hire the productive resources needed to produce their output. Land, labor, and capital are all needed to produce any output; the combination of these resources a firm will use depends on several factors, including the productivity and the prices of the resources. When the price of labor is low, firms tend to use more labor and less capital. In developing countries, especially those with a large, unskilled workforce (like India), firms are likely to specialize in the production of labor-intensive products, such as the manholes found in American cities like New York.

The scene at the Indian foundry sounds like something from the Middle Ages:

The temperature outside the factory yard was more than 100 degrees on a September visit. Several feet from where the metal was being poured, the area felt like an oven, and the workers were slick with sweat.

Often, sparks flew from pots of the molten metal. In one instance they ignited a worker’s lungi, a skirtlike cloth wrap that is common men’s wear in India. He quickly, reflexively, doused the flames by rubbing the burning part of the cloth against the rest of it with his hand, then continued to cart the metal to a nearby mold.

Once the metal solidified and cooled, workers removed the manhole cover casting from the mold and then, in the last step in the production process, ground and polished the rough edges. Finally, the men stacked the covers and bolted them together for shipping.

Why are New York’s manhole covers being made over 8,000 miles away, anyway? Wouldn’t it make more sense for American cities to buy such items from firms making them right here in the United States? To understand this question, we need to consider the principle of comparative advantage, which says that a nation should specialize in the production of the products for which it has the lowest opportunity costs.

Manhole covers manufactured in India can be anywhere from 20 to 60 percent cheaper than those made in the United States, said Alfred Spada, the editor and publisher of Modern Casting magazine and the spokesman for the American Foundry Society. Workers at foundries in India are paid the equivalent of a few dollars a day, while foundry workers in the United States earn about $25 an hour.

Bengali laborers working in India’s foundries most likely face the trade off of an agrarian existence or maybe another factory job in the pre-industrial economy of the impoverished region, alternatives presenting a much low opportunity cost than American workers whose alternatives include jobs offering much higher productivity. The productivity of a worker depends on the quality and quantity of capital available, the level of training and education of the worker himself. Clearly, Indian workers have less access to capital, lower quality capital, and much less training and education than their American counterparts.

The result is that jobs that require large inputs of low-skilled labor, such as the manufacture of manhole covers, end up being “off-shored” to remote corners of South Asia. The added cost of shipping thousands of ton of iron around the world is more than made up for by the lower resource prices (thus costs of production) in the West Bengali foundries.

Discussion Questions:

  1. Why do the Indian foundries use such large inputs of labor, and relatively little machinery?
  2. What factors might reduce the demand for labor in the Indian foundries?
  3. How does a firm know if it’s using the right combination of capital and labor in its production?

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12 responses so far

Sep 09 2010

Updated: Immigration – NOT and economic debate…

Because if it were, there would be no debate at all. Immigration, from an economic standpoint, is simply the flow of labor from one geographic region to another. I’m not talking about the kinds of immigrants who arrive in America or Switzerland or the UK as refugees fleeing political, religious, gender or racial persecution. Such asylum seekers have motives that are entirely non-economic for fleeing their homelands. I’m talking about the millions of people every year pack up their homes and seek a new life in a new country for economic reasons.

America has been called the “land of opportunity”, and for nearly five centuries now the opportunities the New World has had to offer have attracted immigrants from all corners of the globe. First it was the Spanish and the Portuguese who came in conquest in search of gold and silver. Later came the pilgrims seeking religious freedom, and after that the Irish, Italian, Germans, Russians and countless other Europeans seeking the economic opportunities offered by the construction of railroads, homesteads on the Great Plains and gold in the mountains of the West. Chinese arrived by the millions from the 1850’s through the turn of the 20th century, and over the past hundred years America’s racial, ethnic, religious, linguistic and cultural fabric has been enriched by the arrival of millions upon millions of people seeking the economic opportunities America has had to offer. The opportunities of the 21st century no longer involve the hope of striking gold or working on the railroad, rather they exist in industries such as software engineering, medicine, scientific research, finance and, yes, agriculture and construction.

It is interesting to me that in the United States today, American citizens and politicians seem to be as angry as ever about the seemingly endless flow of “illegals” flooding across the American border, bringing with them crime and contributing to unemployment among American workers already struggling to find jobs during the country’s deepest recession in decades. If you believe politicians like the governor of Arizona, Jan Brewer, this “invasion” of illegals from south of the US border is simply tearing apart the fabric of American society. Her state has even gone so far as to pass a law requiring police officers to require anyone who they suspect of being “illegal” to present proof of their legal status upon the officer’s request. Other attempts by states to crack down on illegal immigration include laws forbidding landlords from renting apartments to illegal immigrants and on a national level there is a major push to change the US constitution, in which the 14th Amendment states that any child born in the United States is automatically a US citizen. Imigration opponents claim that millions of Latinos enter the US illegally to have babies, which they call “anchor babies”, who become US citizens and then, supposedly, later in life, help their parents become legal US residents.

The protest against illegal immigration has dominated the right wing agenda in America lately, and has brought angry Americans to the street for rallies across the country aimed at sending illegals “back to where they came from”.

The irony of the whole situation is that today, in the midst of the Great Recession, immigration rates are falling rapidly. The number of immigrants entering the United States illegally has actually fallen by 67% in the last few years, from 850,000 per year between 2000 and 2005 to under 300,000 in 2009. Even more ironically, the number of illegals leaving the United States now actually exceeds the number entering the US, meaning that the total number of illegal immigrants (around 11 million in 2009) is decreasing and is lower now than it has been for much of the last decade. The Washington Post presents the facts:

From an economic perspective, the backlash against illegal immigration to the United Sates right now is perplexing and frustrating. Americans currently find themselves in a dire economic situation in which over 8 million people have lost their jobs, the unemployment rate is stuck at a historic high of nearly 10%, and discouraged workers have dropped out of the labor force at alarming rates, meaning that almost one in five Americans is either unable to find work or has given up the search. Clearly there is much to be upset about.

But all the facts above send a clear message to potential illegal immigrants to America, as well as to those who are already here! The message is, “DON’T COME!” (or for those who are already here, “maybe this is a good time to leave!”). Some of the decrease in the flow of illegal immigrants can probably be attributed to tougher border security and increased enforcement of the existing immigration law. But it’s more likely that the decrease in the illegal population is an economic phenomenon. Here’s why:

America purportedly practices a system of economics known as a free market. The fundamental characteristic of the free market system is that resources are allocated efficiently when they are allowed to flow from markets in which they are in low demand to markets in which they are in high demand. Price is the signal that tells resource owners where their resources are demanded the most. When we are talking about immigration, the resource that is flowing from market to market is labor. In a free market economy, there should be no government controls over the free flow of labor from one market to another. When the price of labor in one market (say the apple industry in Washington State or the construction sector in Arizona) is higher than in another market (say the corn industry in Mexico or the retail sector in Guatemala), the signal sent by this imbalance of wages is that more labor is demanded in Washington and Arizona and less is needed in Mexico and Guatemala.

The imbalance of wages between the US and its closest neighbors leads to a natural inflow of labor from low-wage countries to the higher wage industries in the United States. It’s a form of osmosis, which according to Wikipedia is “the movement of water across a partially permeable membrane from an area of high water concentration to an area of low water concentration… which tends to reduce the difference in concentrations”. Instead of water, immigration is osmosis of labor. Labor is more abundant in Mexico and Latin America than it is in the United States. The flow of labor across America’s “semi-permeable” border with Mexico simply “reduces the differences in concentration” of labor between the US and its southerly neighbors.

Making it harder for immigrants to come into the United States does little to protect American jobs. One thing I teach my students is that in a world where labor is not able to be imported (i.e. one where immigration is stemmed or slowed down), we should expect to see capital exported. A higher border fence with Mexico or more immigration police or a repeal of the 14th Amendment may reduce the number of people coming to the United States to find work, but these barriers to immigration will do nothing to stop the flow of capital to Mexico and the rest of the low-wage world. If Americans want more jobs to be done in America, then they should embrace those who are willing to do them, otherwise those jobs can be exported to where the wages are lower and people are willing to do them. If labor is immobile, capital will grow legs!

The immigration debate is not an economic debate. It is a political one. From a purely economic perspective, with the efficiency of free markets as a guiding principle, the free flow of labor across national borders improves overall efficiency of both the countries from which the immigrants come and the country in which they arrive. American workers are only marginally affected by the presence of illegal immigrants in the United States. Several studies have shown that while employment among certain Americans is affected slightly, there is no evidence that illegal immigration puts downward pressure on American wage rates. Jobs that might not even exist in America without immigrant workers willing to work for low wages do get done thanks to immigration, and the American economy is stronger and healthier because of this.  Without immigration, those jobs will still get done, just not in America! Or, if the jobs can’t be exported, they’ll get done but at a much higher cost, raising prices for American households and reducing the real income of the American people.

In economic terms, increased immigration allows the United States to have a comparative advantage in the production of a broader range of goods and services than it would have without immigration. Since in a global economy, what a nation’s economy produces is determined by what it can produce at the lowest opportunity cost, the more low-wage labor America has to employ, the larger it can expect its economy to be and the greater number of exports it can expect to sell to the rest of the world.  Immigration is overwhelmingly positive for the American economy, even illegal immigration. If it weren’t illegal, it would happen anyway, just more of it, which again would only make the US economy stronger and its output greater.

Again, these are all mute points in the current American debate over immigration, because the fact is that the net flow of illegal immigrants is actually negative right now. NPR reports,

Signs are pointing to stabilization on the border… as a still-sputtering U.S. economy and high unemployment continue to contribute to the over-the-border slowdown. Estimates suggest that the U.S. economy has lost 8 million jobs in the downturn, including 4 million manufacturing and construction jobs over the past three years.

The free market offers the perfect solution to the illegal immigration debate in the United States. Let it be! If America doesn’t need more labor, then labor will not come to America, and some of that which is already here will leave. But once the US economy begins to recover and the demand for labor begins to grow once more, let it be! Instead of building higher fences and hiring more border police, find ways to make it easier for workers to enter the country and fill the jobs for which they are demanded. America will be stronger for it! After all, if we don’t embrace the inflow of labor, we better be prepared for an outflow of capital. And as even my first year IB Econ students can tell you, a decrease in the labor force and the amount of capital in a nation is a recipe for economic contraction, recession and declining standard of living among that nation’s people.

Is that the America we want to see in the future? Would America be the land of freedom and opportunity today if it had kept out immigrants throughout its history instead of embracing them and incorporating them into American society and the US economy? I doubt it. So, America,  end the debate… because from an economist’s perspective, it was over before it even began!

Update:

Several people have left comments on my Facebook page about this post. Here are a couple of those comments:

From reader #1:

Good post! I’m curious since you didn’t specifically mention the main argument I’ve seen: Illegal immigration results in immigrants who consume more value in public services than they return to the public funds. What’s your take on that angle?

And from reader #2:

Very good and well thought out post. However, I disagree that it isnot an economic issue. In fact the major problem is that it IS an economic issue. Over 80 percent of their wages go back home – out of the country – and I’m not just talking about Mexicans. Additionally they go to the emergency room for most of their medical issues, even the common cold. They can have a $10,000 visit and never pay a penny – we have to pay for it. They get welfare, food stamps and much more – and we have to pay for it. Most of them have false IDs and Social Security cards so they pay no taxes.

Granted some of them do the jobs that most Americans won’t do – agriculture, sweat shops, etc. – but they cost us much more than they provide. 60 percent of the criminals in California jails are illegal and we have to support tham at an average cost of $30,000 per year each. Their families also collect welfare. Thousands of car accidents are caused by illegals each year who have no insurance – driving our insurance rates sky high.

Illegals are DEFINITELY an economical issue. By the way what is the first word in ILLEGAL alien – their very existance here is illegal. Also they are not illegal immigrants. An immigrant is one who goes through the proper channels and supports this country. The illegals do not do that. They protest that they are mistreated and insist that they be treated as citizens. Try to enter their home countries illegally and see how you are treated. America is heaven to ‘our’ illegals compared to virtually any other country in the world.

So, I felt obliged to reply to these comments, so here is my response!

Reader number #2, you have some fair concerns, but it should be pointed out that the industries immigrant workers support do pay taxes, and the revenues these businesses generate for the US economy using low wage immigrant labor is taxable income. Without the availability of cheap labor, many of these industries would fall to foreign competition or would simply pack up and move their operations to foreign countries. Without the income generated by these industries, the US tax base would shrink and there would be less to spend on all sorts of public goods for US citizens.

While you’re right that illegals do not pay income taxes and therefore are “free-riding” in a sense, it must be recognized that if they were here legally, they also would not pay income taxes, and in fact would be eligible for billions of dollars in federal tax subsidies and other transfer payments due to their low income (minimum wage?!) that they are not able to take advantage of due to their status as illegals. So couldn’t you argue that they’re costing American taxpayers LESS because they are here illegally?

And I don’t understand your argument that since they make up 60% of California’s prison population they are somehow taking advantage of the American taxpayer. If those spots were not occupied by “illegals”, are you suggesting there would be 60% fewer prisoners? Last I heard California was shortening sentences to make room for the long line of convicts who there is simply not room for in the state’s prison system! Wouldn’t taxpayers have to pay $30,000 a year for any prisoner, regardless of his nationality? I mean, if they were Americans they’d also cost $30,000 a year to support, right?

Reader #1, with regards to the lack of contribution to public funds, you must remember that most Americans earning below $40,000 per year effectively pay no income tax, and depending on the number of children they have and other factors may even be eligible for an earned income tax credit of thousands of dollars. Illegal immigrant workers earning minimum wage (or close to it), if they were to become legal taxpaying workers, would instantly add millions of low income workers to the tax system and thus add billions of dollars to government expenditures on EICs and other tranfer payments, as opposed to contributing positively to the country’s public funds like you suggest they might. I mean, sure, an immigrant working in Silicon Valley is a valuable contributor to the tax base, but one working for minimum wage on a farm will add nothing to the tax coffers, legal or not!

In addition to the earned income tax credit, as legal American workers they’d be eligible for welfare benefits, unemployment benefits, Medicaid, food stamps, subsidized school lunches and countless other transfer payments that would place a larger burden on the American middle and upper class tax payers.

Reader #2, illegal immigrants are not the only people in America who take advantage of the emergency room. Poor white Americans, not to mention the 49 million of us who are without health insurance, can walk into an emergency room just like the few million illegal immigrants can and walk out without ever paying a bill. Do you also want to kick the nearly 50 million uninsured Americans out of the country because they might take advantage of the Emergency room? Is a poor illegal immigrant any more likely to drive without car insurance than a poor American citizen? I don’t know, but I’d be interested to see some data on that.

Public schools are paid for by property taxes in most states. Immigrant workers supporting a family on minimum wage are never going to contribute much to property taxes, just as low income American households who rent their homes or own homes of low value will not pay much in property taxes. Yet their children still receive an education, don’t they? Should we deny all Americans who do not pay much in property tax access to public education? Besides, if a family or an individual pays rent, whether they’re citizens or illegal immigrants, their landlord is paying property taxes which go towards supporting public schools. Therefore anyone, legal or illegal, who pays rent is indirectly supporting public schools… so what difference does it make whether the renter is an American citizen or not?

Reader #2, one of the only reasons that 80% of illegal’s wages are sent home is because the US makes it so difficult for them to bring their families into the country with them. I think you misunderstood the whole point of my blog post. I did not intend to present an argument for more ILLEGAL immigration, rather I intended to present an economic argument for more LEGAL immigration. I think immigration reform that makes it easier for labor to flow across borders between the US and its immediate neighbors would alleviate much of the anti-immigration concerns of citizens like yourself. Yes, illegal immigration is ILLEGAL, so let’s make it easier for immigrants to come here legally, then we’ll have fewer criminals on our hands, and more valuable human capital to contribute to the strength of and increase the growth potential of the American economy.

I’m approaching this issue from a purely economic standpoint here, and from an economic perspective the benefits of more flexible international labor markets overwhelmingly outweigh the costs. Look at the EU and the 27 member countries which allow labor to move easily and efficiently across national borders. If immigrant labor was really as harmful as America claims it to be, then why has Europe embraced open borders and its economy has grown to exceed the size of the United States in the last decade? Sure, many Brits hate having Eastern Europeans in their cities “taking their jobs” and corrupting their culture. But the British economy (and those of Eastern Europe) are better off because of it.

Anyway, thanks for reading the article!

2 responses so far

Sep 24 2009

China, the land of opportunity, attracts America’s tired, poor, huddled masses

Young Americans Going To China For Jobs – the Huffington Post

I remember my 9th grade history class, when we learned about how so many thousands of Chinese immigrated to the American west to build the railroads. My textbook had a picture that looked like this:

Well, that was 130 years ago. Today, the world is a very different place. America, once the land of opportunity, has shed hundreds of thousands of jobs a month for 18 months straight. Unemployment, near 10%, has driven the economy into its deepest recession since the 1930s, trade is grossly imbalanced, as are federal budgets, and national debt has inched ever closer to 100% of GDP. All in all, things are pretty gloomy.

Someday, ninth grade history students may look in their textbooks and read a different story about the early 21st Century. In the future, they may see pictures like this in their history books:

That’s right, today the land of opportunity is China, and hundreds of thousands of foreigners, including thousands of Americans, are packing their bags for the “Middle Kingdom” in search of work.

Young foreigners… are coming to China to look for work in its unfamiliar but less bleak economy, driven by the worst job markets in decades in the United States, Europe and some Asian countries.

Many do basic work such as teaching English, a service in demand from Chinese businesspeople and students. But a growing number are arriving with skills and experience in computers, finance and other fields.

“China is really the land of opportunity now, compared to their home countries,” said Chris Watkins, manager for China and Hong Kong of MRI China Group, a headhunting firm. “This includes college graduates as well as maybe more established businesspeople, entrepreneurs and executives from companies around the world.”

Some 217,000 foreigners held work permits at the end of 2008, up from 210,000 a year earlier, according to the National Bureau of Statistics. Thousands more use temporary business visas and go abroad regularly to renew them.

Some foreigners see China not just as a refuge but as a source of opportunities they might not get at home.

Konstantin Schamber, a 27-year-old German, passed up possible jobs at home to become business manager for a Beijing law firm, where he is the only foreign employee.

“I believe China is the same place as the United States used to be in the 1930s that attracts a lot of people who’d like to have either money or career opportunities,” Schamber said.

There’s a lot of talk in America today, on the news, on the radio, in the papers, about whether the US economy will ever return to “normal”. Unemployment is nearly 10%, and some economists think it may take years for it to fall below 10% once more.

I guess the good news is, if Americans start heading to China in ever larger numbers to find work, the number of people looking for work in the US will fall, leading to lower unemployment. Of course, that’s not how the US wants to bring down unemployment, nor is it good for the nation’s long-run growth potential if high skilled workers go abroad to find jobs. But it does raise a very important question: Will America be the land of opportunity in the future? Or will its tired, huddled masses become the “boat people” of the 21st Century, seeking employment on distant shores.

Full disclosure here: I myself have only worked as a teacher abroad, including in China! And to be honest, it is because the demand for my skills is clearly greater overseas than it is at home! My income is far higher abroad than I could earn in an American public school, and my services and skills are valued much greater in the international setting, particularly in Asia!

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