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Something I've never been clear on is how this dynamic is controversial. Obviously if labor is scarce wages will go up, eating away at the 'income inequality' boogeyman.
But try to argue that flooding the country with cheap labor will (besides making housing much more expensive) drive down wages and people smirk and tell you that's the "lump of labor" fallacy.
I don't think it is though. Yes, having more people around also generates some economic demand, but surely this is in the same sense that broken windows will generate economic demand? Unless those people are actually providing more value than they cost -- and here we must consider healthcare, education, wear and tear on infrastructure, social friction, decline in cohesion, crime, and so on -- doesn't the argument come down to "Well we have more mouths to feed so that generates economic activity"? And isn't that rather the broken window fallacy?
What is going on here?
Part of the controversy is that Immigration can benefit several groups - such as Big Business(who now has access to cheaper labor), immigrants, who are now getting paid far in excess of what they would have received in thier home country - but it hurts American workers, who are, to quote the person whom wrote the article;
This is not a new article. This was written back in 2016, in response to a debate between Trump and Hillary. This has been going on for a very long time, and that we're still debating that immigration comes as an overall positive(for Shareholder-Americans, maybe) astounds me and shows how the narrative is controlled overall.
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When you move a supply curve with demand held constant, you change price by changing quantity. Less labor for higher prices. This is appealing to the (remaining) workforce. It’s not so great to the customers.
Same as cartelization. Same as tariffs. Like every form of protectionism, it’s the customers who get the bill.
Given that I am a customer, rather than a competing worker, for jobs like construction, I don’t expect to see any benefit from slashing the construction labor supply.
Making labor more expensive encourages development of means to make that labor more productive (and encourages non-productive people to join the workforce). These things are both good for you in the long run, though not directly in the short term.
On the other hand, if we (hypothetically) replaced all citizens with cheaper immigrants (or slaves), that would drive the price of labor way down, which would feel great for you for a moment! Right until your next paycheck doesn't come because you have also been replaced. This basically happened in Rome.
Does it encourage productivity? More than an existing background of competition, that is. I'm trying to think of toy scenarios.
Case 1: You make widgets for $6 labor and $6 materials. You invest in a technology which doubles the productivity of that labor. Now you can make your widgets for $3 labor and $6 materials. Going from $12 to $9 is a 25% savings in your total costs.
Case 2: You make widgets for $1 labor and $11 materials. You invest in the same technology. Going from $12 to $11.5 only improves your costs by like 4%, since labor costs were so small already.
Case 3: You make widgets for $6 + $6 until the government comes in and forces you to spend $12 on labor. Now the same technology cuts your cost from $18 to $12, or 33%! Therefore, by making labor more expensive, the government has increased the benefit of investing.
Except...Your final cost with the technology is still $12. You've invested just to get back to where you would otherwise have been. Even if the government relaxes its edict, that just snaps you back to the first case. This is fine if the government has some strategic interest in adopting that technology--like with onshoring, or green new deal, or even corn subsidies--but I'm not convinced on the economic case.
Yes, if I was afraid of losing my job, getting the cheapest widgets would be a poor consolation prize. But that doesn't mean subsidizing me makes my labor more productive. It means that I'm asking to trade off some efficiency for other values, like security.
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Yes, it will drive up wages, but those wages will buy less, because there are less workers to produce goods and provide services. As long as each person produces more than they consume, each additional worker makes us better off.
There are two big hiccups:
"As long as each person produces more than they consume"; is this true? Illegal immigrants are generally not eligible for welfare, but they drive on public roads, use public libraries, illegal immigrant children go to public schools, etc. There are also negative externalities, but Latinos are much less criminal than blacks, and Latinos get rid of blacks, so it's probably a net positive.
Housing. We have insane zoning policies that forbid us from simply building enough housing for everyone. Per pigeonhole principle, if you have 100,500 people but only space for only 100,000, then 500 people must be homeless and the remaining 100,000 will spend all their spare money bidding up the rent to avoid being homeless. If you deport 1000 people and get the population down to 99,500, that would make a huge difference.
(Of course, would be better to just build more housing, but there wasn't a build more housing candidate on the ballot; there was a deportation candidate)
Changing tacks here but I'm not a fan of 'build more housing' outside of already-established high-density areas. I've seen too many lovely towns get ruined by the government deciding to (only) approve large blocks of 'low-income' housing which totally destroys the character of the community. Not to mention the natural beauty that tends to get paved over. Over time everything seems to tend toward a concrete hellscape and nowhere is different from anywhere else.
Also I'm just horrified by the loss of the dignity of single-family dwellings. My gut says that living in dense cities is somehow injurious to the human spirit and generates a lot of sicknesses downstream. If someone lives in an entirely man-made environment, why wouldn't they believe that everything's a social construct? Whereas if they're raised in and around nature, they will also perforce have to contend with nature, which would seem to inculcate some common sense in addition to other virtues.
I guess it's just not clear to me why we need more people rather than getting our existing people to be more productive.
Rural resentment and envy again.
In my experience you have a tendency to project uncharitable motivations to your interlocutors' beliefs and then cattily state your guesses as fact. It hasn't been helpful in the past and it's not helpful now. Frankly I'm not sure why you're here.
I live in a much denser neighborhood than I'd like because it lets me make great money in the Bay Area (and my urbanite wife can't handle power outages or driving more than five minutes to amenities). If anything I'm envious of rural people. My hope is to make enough money that I can afford rural-ish property near a major urban center before my kids are too old to get the value out of that sort of upbringing.
This is offered as an opportunity for you to reflect upon your unwarranted and unwholesome pattern of behavior.
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Do you have any ideas about how to do that?
Reduce handouts and eject cheap foreign labor (especially of the illegal sort).
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Sounds like the kind of thinking that got us "banning abortion will strengthen the family." None of the people who said that admitted they were wrong when the experiment was carried out. We shouldn't base government policy on "gut feelings" of these people.
How many said that to begin with? Most arguments against abortion I've heard of boil down to "it's evil", not some utilitarian mumbo-jumbo.
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I don't think anyone was talking about either of those things, but your opinion is noted.
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Working-class neighborhood here. I've heard older people in my neighborhood talk about "neighborhood character". I don't know what they're talking about.
If someone knocks on my door, 95% of the time it's a salesman. If I get mail, 95% of the time it's ads for things that do not increase my quality of life. I've lived in my house for 7 years and I still haven't talked with everyone on my block yet. Not for lack of trying.
I don't see a "neighborhood character" that's worth preserving. How do you describe a "neighborhood character" that's worth defending?
Assume that you are a democrat and you have progressive inclinations, and you live in a community of similarly minded individuals.
What if I told you I was going to import a lot MAGA Republicans, and not the standard Republicans, but ones who compete amongst themselves to buy Trump-labeled kitsch. Who immediately demand that the public library be replaced with a church, and the lesbian cafes with titty bars. That the buses should be sold for scrap as they take too much space on the street for their hummers to pass. And not only are they so numerous as to immediately change the demography of the town, they also vote, so that your well-meaning local representative is replaced by a used car salesman who loots the public treasury at every opportunity.
This would approximate the reaction that many people have to having the city's least desirable renting underclass moved into their neighborhood.
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Adding several hundred low-income units to the immediate area will make it much worse, I assure you. Though it sounds like you live in a pretty crappy place already.
The breakdown of social cohesion and community bonds is well underway for other reasons, yes, but this only accelerates the process, and hard.
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The long run dynamics are less clear cut because immigrants also demand goods and services and also start businesses, and density + cluster effects produce economic efficiencies that lead to long-run economic growth and therefore employment. The even longer-run dynamics are even less clear cut... Sometimes thanos-snapping your workforce ends in the economic productivity growth after the black plague. Sometimes it ends in the permanent economic slump of eastern europe.
That is not true. Eastern Europe problems are 2 - communism and post communist corruption. And EU membership made the second one worse. It was never for lack or excess of labor. If you check the countries economies - all sectors that for one or other reason are left alone by the state are doing quite well.
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It's very easy to make wages go up: just print more dollars. What actually matters is productivity: how much those dollars can guy. You don't make an economy more productive by removing labor from it.
No, because people produce wealth.
Farming, shipping and few other sectors would beg to differ.
The economy is not a particular sector. Improvements in agricultural productivity freed up labor to do things besides subsistence farming; productivity was not improved by removing labor. Ceterus paribus it may be beneficial for a particular group to constrain access/production in their field, but that's just rent-seeking.
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Pretty sure this is begging the question I'm asking. People can produce wealth, but they must consume it as well. The former is potential; the latter is given. And if people are, on net, consuming more than they're producing, it's not at all clear to me how "just add more, it generates economic demand" isn't isomorphic to the broken window fallacy.
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