Economic Fallacies Surrounding The Issue of Immigration

by | May 6, 2016 | Immigration

There are many economic fallacies that surround the issue of freer or open immigration into the United States, and few of them can stand up to serious critical examination.

There are many economic fallacies that surround the issue of freer or open immigration into the United States, and few of them can stand up to serious critical examination.

The Fallacy that Immigrants “Steal” Jobs from Americans.

Opponents of more open immigration sometimes argue that the arrival of more immigrants means the threatened loss of jobs for those already living in the country.

The often-implicit assumption behind this argument is that there are a fixed number of jobs in the country, and if more workers enter the labor market, by definition any work gained by one of the new arrivals must mean lost employment for someone else already there.

As long as there are unsatisfied wants that more production could gratify, then there is always more work for more hands to do. An increased number of workers within a country means that there can occur what economists call both more extensive and more intensive use of labor. By more extensive use of labor is meant that things that could not be done before because there were not enough hands to do them can now be undertaken.

The available number of employable workers might have enabled the production and supplying of a certain amount of, say, shirts, pants, and shoes. But given the availability of labor, and the importance that consumers assigned to having desired goods, it may have been impossible to also produce and supply hats that people also wanted to wear.

The arrival of additional hands through immigration to do productive work would now allow this unsatisfied want for headwear to be partly fulfilled without having to withdraw hands for the production of any of those shirts, pants, or shoes.

By more intensive use of labor, economists mean the more refined development of the system of specialization. More hands to perform desired work means that employers can undertake a more developed division of labor that enables an increased productivity.

Suppose that within a factory there were enough available workers to divide possible tasks into four steps or stages of production, each of which enables the participants to more industriously and productively focus their efforts and attentions to one part of the production process.

The arrival of more workers, again possibly through immigration, to be employed within such enterprises enables the potential and possible tasks to be divided into more refined and detailed steps that, again, raises the productivity and output of all those who participate in the economy’s activities. The increased output per worker means that all in the society can have available through trade a greater supply of wanted goods and services that might not have been possible without the new hands to assist in the work to be done.

Adam Smith began his famous book, The Wealth of Nations (1776), precisely by emphasizing the benefits from division of labor. He also pointed out that the extent of the division of labor is limited by the extent of the market. It makes little sense to take greater advantage of specialization to expand output to, say, a quantity of 1,000 units of some useful good from 500 units if there are not enough people participating in the network of exchange to buy all that can be produced through that intensified division of labor.

But in a country as large as the United States with its more than 320 million people and a global economy within which America trades with billions of people, any opportunity to more intensively develop the division of labor through the use of more available hands made possible by immigration can be successfully and profitably absorbed into the national work force.

The Fallacy that Immigrants Lower the National Wage Level.

Another fear often expressed about the arrival of large numbers of immigrants is that their addition to the national labor force will tend to push wages in general down in the economy as they compete for jobs currently held by the existing workers.

It should be remembered that there is no such thing as a “national wage level.” This, like the general “price level” of goods and services, is a statistical creation by selecting, summing, and averaging a large number of individual wages, each of which reflects the supply and demand for the specific types, skills and qualities of labor in particular markets for hiring workers.

It is certainly the case that if, all other things the same and unchanged, a significant number of qualified immigrant economists, all with teaching and specialization skills similar to my own, were to enter the job market for professors’ positions, the salary for my labor services in my narrow segment of the university teaching market would likely be bid down.

But this is no different than if more college and university age students out of the domestic population were to decide to major in economics, then earn their advanced degrees in the subject, and proceed to try to land jobs with their newly acquired PhDs. The greater supply of such economists might result in my employable salary being competed down.

On the other hand, the consumers of economics teaching services might very well find themselves able to acquire their education at a lower price because the cost of hiring such qualified economics professors will have decreased.

Suppose this were to happen. With a decline in the cost of an economics education, both parents and students may now have more money left in their pockets after having paid the tuition and related expenses. With this “freed up” sum of money they would now have the financial ability to buy more of other things they previously could not afford when paying higher tuition fees.

This will result in an increased demand for other desired goods and services. The prices for these goods and services, other things held given, would tend to rise, increasing the profitability of increasing their supply. This would open up new and increased demands for other types of labor – those able and skilled to, perhaps, produce more flat-screen televisions, or more service jobs at restaurants as people can afford to eat out more frequently, or more employment in other avenues of education. This greater demand made possible by the lower cost of some labor services due to immigrant workers in certain sectors or parts of the market would raise the demand for more workers, and therefore their potential wages and incomes, in other parts of the market.

The Fallacy that Unskilled Immigrants Have No Niche to Fill.

But what about the unskilled or poorly educated immigrants at the lower end of the employment scale? Studies over the years have shown that often it is the unskilled immigrants who fill niches in the market that many in the existing labor pool in the nation are unwilling to perform.

In the middle decades of the nineteenth century it was not unusual to find that many of the domestic servants in not just wealthy but middle class households were young Irish girls who had come over to escape from the potato famine in their native country as well as the British rule that they disliked. Uneducated with only simple “country manners,” this became their entry into the American labor market. Over a generation or two, the wave of Irish immigrants and their children improved their education and employment skills and left behind such domestic work as their talents fetched higher wages in other corners of the market.

In the early decades of the twentieth century, hired gardeners were often of Japanese background in places like California, for instance. As the descendants of these Japanese immigrants entered the mainstream of American life, especially after the Second World War, the image of the hired gardener was no longer that of Japanese.

Over the last few decades those of Hispanic background have filled the niche of hired gardeners, certainly not exclusively but often, as has the role of domestic servant in various parts of the country. If immigrant integration into American society follows the same paths as in the past, two or three decades from now, the stereo-types of Hispanics will have changed as they integrated into the general labor market, moving on to other economic niches and roles, as it did f other immigrant groups in earlier times.

We have seen this with many ethnic groups that have settled and integrated themselves into the general and greater social and economic environment within the country. It is no longer a caricature or cliché to refer to the “Chinese” laundry, because those of Chinese ancestry in America are simply, now, “Americans” distributed and dispersed among many professions and occupations and callings fully integrated into American society in almost all instances.

As new waves of immigrants have entered the American economy, they have filled roles that earlier waves have transitioned out of, just as they are most likely to do in the future. Think of it as the “new guys” who start their careers with the “entry level” jobs. They often are paid less than other workers at first, and are assigned tasks and jobs that others in the firm or enterprise no longer do and do not want to do. But it is the starting point for learning skills, gaining experience, and demonstrating higher worth and value for themselves over time to earn the promotion and better salary in the future, either from their initial employer or some other who sees and values their acquired abilities and potentials.

Filling these roles and entry level positions for the unskilled or low skilled enables part of the immigrant population to have an avenue for starting on the path of improved opportunity in America compared to the old country they have left behind.

To statistically cover over all these real and distinct changes and improvements in employments, incomes, and availabilities of goods by reducing them to price and wage averages and aggregates hides from view not only the real nature of adaptation to change in general, but more specifically many of the positive affects and impacts of immigrants to the United States.

Reducing Government Regulations and Welfare Temptations

We should keep in mind that the problems that some immigrants face are the same problems that government has imposed as stumbling blocks to improvement on all in the society: minimum wage laws, business taxes that hinder investment and capital formation, and regulations that prevent growth and innovation through anti-competitive policies.

These are the roots of many of our social and economic difficulties that harm both native-born and immigrant looking for work and trying to materially advance, including, for some, finding ways to escape from poverty and poor living conditions.

But what about the attempts of political panderers and plunderers to try to buy the votes of new immigrants who obtain or may obtain in the future the right to vote by offering them access to the “benefits” of the welfare state?

Let us remember that those who use such means for gaining political power have had their success with the American-born and American citizen population. It is their votes that have established, maintained, and expanded the interventionist-welfare state that so dangerously burdens the country. It cannot be blamed on “foreigners” – whether legal or illegal. As the cartoon character, “Pogo,” once said, “We’ve met the enemy, and he is us.”

Rather than punish those who, like our ancestors, want to come to America for their “second chance” for a better life for themselves and their children by closing the door of immigration, the task should be to eliminate the controls and regulations that hinder improvement for all of us.

Ending Access to the Welfare State for Any Immigrants

But given that fact that this is not likely to happen in any immediate future, what might be a “second best”? Let me suggest that one answer is to say that anyone may come to America to work, investment, live, and enjoy a freer life.

But for a period of, say, the first fifteen years during which they reside in the United States they are ineligible for access to any welfare-redistributive programs for themselves and their family members.

If this seems harsh, it is worth recalling that before the modern welfare state that is how every generation of immigrants came to America and made their way – either through they own hard work or the voluntary assistance of private charity.

I wonder how many critics of open or freer immigration into the United States would be as negative as they are if the new arrivals were expected to make their own way rather than receive any tax-based handouts from the government?

Part of America’s greatness has precisely been as a haven, a port of last call, for those denied religious freedom, or suffering under brutal and corrupt governments, or locked out of economic opportunities due to political systems of favor and privilege in their own lands.

It has not always been an easy or straight path for the new comer to America’s shores. But the fact that for over two centuries millions have come shows that it has not just been a dream but a reality of a land of opportunity and prosperity.

It has also been the country’s life-blood of new and innovative risk-taking, entrepreneurially spirited enterprisers, and youthful hopefuls who want to breath freer than where they were born. It is a good part of what had made America a dynamic and vibrant country unlike so many others around the world.

To turn our backs on this American tradition and legacy is to betray the essence of what America has been since its beginnings.

35 Comments

  1. The cultural identity of a nation demands limited immigration. Economics is very much secondary. Will official objectivists ever recognise that western countries have the right to exist?

  2. What a bunch of nonsense.

    Using pejorative language, like “stealing jobs,” may shame some who oppose unlimited immigration into silence, but it will not change the fact that the more people there are competing for the jobs that are available means no jobs for some (as in some Americans) and lower wages for all (Americans and immigrants).

    It is a rhetorical trick to argue that there is no such thing as a national wage level and that, therefore, immigration cannot suppress it. Of course the wages for different occupations are generally different and wages differ according to geography but, given a particular job and a particular location, it is appropriate to speak of a wage level and a simple fact that more potential workers means lower wage levels. Interestingly, the author admits that an influx of economists would suppress economists’ wages. It is something of a mystery, therefore, why he does not understand that the same thing happens in other parts of the workforce when immigrants arrive.

    It is ridiculous to suggest that the solution of mass immigration it to limit immigrants’ access to welfare or other social services. In 21st century America, virtually all political forces, and all of those that have a significant say in the matter, are for expanded benefits for all (every administration since FDR’s — including that of Ronald Reagan — has expanded the welfare state). In fact, the more poor immigrants we admit (and the vast majority of today’s immigrants are very poor), the larger will be the government benefits future immigrants receive because the politics of this country will move inexorably to the left (and, ironically, the less “capitalist” the country will become as a result).

    Most importantly, the author does not even acknowledge that there is more to immigration that its affect on the economy. Does the author believe that the arrival of tens of millions of immigrants from countries that have no history of individual freedom will have no affect on the future political freedoms of this country? Does he believe that there is something magical about the air Americans breath or the water they drink that explains the amazing success this country as achieved, rather than that it is largely the result of the character of the people who created and shaped this country. Does he not understand that, if you undermine that character, you will harm the country’s future?

    History is replete with examples of nations that were destroyed by immigration. In the Middle East, the Israelites destroyed the Canaanites; in the British Isles, the Anglo-Saxons and the Norse destroyed the Celts; and, in North and South America, European immigrants destroyed the aboriginal peoples.

    There is nothing wrong with contemporary Americans wanting to avoid the destruction of their own country through unconstrained immigration.

  3. Well said. I have no doubt at all that Ayn Rand would disown these obleftivists right away. Immersed in academia, rubbing shoulders with tenured old school leftists, they’ve lost all connection to reality and are evasive to a fault.

  4. Professor Ebeling writes from a micro economic viewpoint that counts all persons as equally interchangeable economic players. That many of them subscribe to ideologies that seek to destroy the host culture is beyond his scope entirely.

  5. Sad, such dishonesty. The problem is ILLEGAL IMMIGRATION. Illegal immigrants sneak over our borders, take advantage of taxpayer funded giveaways then assume themselves citizen status to point where they demand more of Americans confiscated earnings as some right won out of having beaten the system like some game.
    Enough is enough.
    We’re are 21 trillion dollars in debt.
    If there was money for the foolishness seen in the last seven and half years, then there is certainly the money there to fund deportations of …. Wait for it … Illegal (criminal) immigrants.

  6. Is that the fault of the immigrants or our own government with it’s habit of redistribution of wealth and deficit spending? You’re mad at the wrong people.

  7. I don’t think your examples are of immigration but of conquest.

  8. What if the culture is one of open immigration?

  9. The problem is those new arrivals to the culture of open immigration who do not share those values. In other words a culture of open immigration is wide open to occupation to the first culture which consistently, and violently, asserts itself there.

  10. Just because a culture allows open immigration does not mean that it abandons self defense from violent action.

  11. Violence isn’t a good solution; if it commences the situation has been allowed to fester too long already. Exclusion from the outset is a more reasonable approach.

  12. So you have the superpower to look at a person and determine if they are going to be violent in the future or not? You should take that power to Chicago.

  13. No super power required: only common sense. Are you too PC to realise how islam deals with any other culture with which it comes into contact?

  14. Who is talking about Islam? Anyway you do know there are 1.5 billion Muslims and only about 30,000 hardcore ISIS fighters? That’s .00002 percent. Most murders in the US are committed by Christians should they not be allowed to emigrate either?

  15. From your response, yes you ARE too PC to realise what is happening. ISIS follows Al Queda, Boko Haram, the Mujahadeen and other groups that come and go. Their big incubator is islam that you are completely oblivious of. Are those murders by Christians done in the name of Christianity?

  16. So you’re fine with open immigration as long as they aren’t Muslim.

    Does it matter? Christians are violent. Isn’t that what you are worried about?

  17. My original comment reads “The cultural identity of a nation demands limited immigration.” So NO I’m not fine with open immigration. The new arrivals should display some compatibility and at least not harbour the desire to replace the host culture. As for violence, thanks for the straw man. I’ll put him up in the garden to scare off intruders.

  18. So no immigrants who want the US to be a pure capitalist culture. Got it.

  19. You seem eager to put words in the mouths of others. Got it.

  20. Just following the logical conclusion of your comments. The US is a mixed economy and you don’t want any immigrants who want to change that.

  21. Who are these prospective immigrants who would decline to participate in the mixed economy? How would that be done…would they sign a no-tax no-welfare pledge?

  22. No, they’d get all of the benefits of the welfare state. After all they can only immigrate if they aren’t going to try change anything.

  23. Well then the host culture gets screwed financially at least. Take a look around Germany and Sweden for a reality check.

  24. You evaded my question. Who exactly are the prospective immigrants?

  25. If millions of military age males just force their way into your country, that IS a conquest.

  26. 0.0002 percent?? Oops you forgot about Boko Haram active in Nigeria! Tell that to the thousands of girls violated by them!

  27. I think the author may agree with me, and may clear up some views, when I say that the entire immigration issue would not exist if we lived in a laissez-faire capitalist system. In a laissez-faire society, the biggest problem employers would likely have is the inability to find enough employees.

  28. Do a little googling or old school library work to take a look at the immigration numbers since 1800. Take a look at the process of those various groups melting into the pot, often remaining balkanized for quite some time. Often, law and order was even quite differentially applied in a local manner within the initially separated communities. Take a look at the time frame for these groups to melt into the pot. Take a look at the crime statistics in these communities, at organized crime. Consider the separating and dividing effect of today’s corporate and social welfare state in delaying or preventing the process of integration.
    Now do a review of arab immigration. Much of the early 1900s arab immigration was Christian, before legislation curtailed further influx. Take a look at the several legislative acts to limit arab immigration.
    Now look at the more recent immigration of arabs esp Islamic arabs into the European nations and whether those groups are in any way melting into those cultures or not.
    Is there a difference in what is currently going on with Islamic immigration? Are they seeking a better life and integration into a free society? or are they involved in an generally organized cultural war with the goal of implementing Sharia under Allah through the various democratic mechanisms of the targeted countries? If that is indeed planned and organized as it has always been commanded by the religion’s dogma, then it is anathema to the concept of right to life, liberty (esp religious liberty), and right to defend honestly acquired property. As just government is only rightly constructed and maintained as an organized means of accomplishing the individual’s just defense of life, liberty, and property, then it very much has a duty to engage to prevent such plans to deliberately violate the rights of its citizens through cultural warfare by means of the mechanisms of republican representative government. When government is made into a machinery that violates rights rather than protects it, then there is a ready made sword sitting ready to be wielded by whatever group can grasp it.
    “As long as it is admitted that the law may be diverted from its true purpose — that it may violate property instead of protecting it — then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing. There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious.”
    “Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on.”
    “But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

    Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.

    The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

    Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.”
    Bastiat
    When this system of forcible tyranny of a country’s people is set on a table like the cartoon golden brown roasted turkey, by the confused citizens of the country no less!, the people’s lives and freedoms are ripe for devouring by whomever is most vicious and conniving.
    When government is kept to its extremely limited scope of defending individual rights, there is far far far less concern for ill results of immigration, excepting the possibility that the electorate becomes so shifted as to dispense with the restriction of government.

  29. Given that the real unemployment rate is actually near 20%, it is remarkably silly to recommend that the US take in more immigrants, illegal or legal. The tax and regulatory requirements are stifling as is. The 20 million Mexicans who are here are in the process of transforming America into a bilingual society and fracturing it. The import of more Muslims could very well destroy our Judea-Christian-Humanist-Objectivist civilization.

  30. It is the fault of the US government since 1965. The new arrivals are along for the ride but are no legion of innocents, as you suggest.

  31. Objectivist author Ed Cline faces eviction for insulting islam. Look it up. Thank you cultural enrichers of all persuasions!

  32. There is a waiting period for immigrant access to welfare (but one must have authorities who enforce these laws):

    “LPRs [Legal Permanent Residents] entering after Aug. 22, 1996 are not
    eligible for food stamps or SSI [Social Security]. However, they can
    apply for Medicaid and TANF [Temporary Aid to Needy Families] benefits five years after entering the country legally … ” [emphasis added] (Sources: Richardson and Wassem 2002, National Conference of State Legislators).

    An economy isn’t a pie; it’s a bush that grows. And it grows best with increasing populations. (See Japan’s stagnant economy & where birth rates have fallen dramatically.)

    Has it occured to anyone that the reason for high unemployment is that gov’t is restricting commerce? See, for instance, the following:

    The largest U.S. coal company just filed for bankruptcy – CNN Money
    money.cnn.com/2016/…/companies/peabody-coal-bankruptc…
    CNNMoneyApr 13, 2016 – The largest U.S. coal company just filed for bankruptcy. … Peabody Energy, the world’s largest private-sector coal producer, filed for bankruptcy on Wednesday in a U.S. court, citing “unprecedented” industry pressures and a sharp decline in the price of coal. … Arch Coal (ACI), which …

    How coal titan Peabody, the world’s largest, fell into bankruptcy – The …
    https://www.washingtonpost.com/…/coal-titan-peabod…
    The Washington PostApr 13, 2016 – It was listed on the New York Stock Exchange in 1949 and became the world’s largest publicly held coal company amid the oil embargo of the …

    Have the inmates fight amongst themselves over there while over here the thieves steal their valuables.

    A well researched history of U.S. immigration is Thomas Sowell’s Ethnic America: A History.

    Finally, Islam (as was CPUSA)–based on it’s member’s actions and on it’s ideological leadership’s directives–is a criminal organization; those belonging to such orgs would be prohibited from entering the country, as would those with contagious diseases (zika, etc.).

    “Where would I be today if America closed its doors to immigrants?”-Ayn Rand

    Ayn Rand Was an Illegal Immigrant by Shikha Dalmia:
    http://reason.com/archives/2012/02/14/ayn-rand-was-an-illegal-immigrant

    Ayn Rand, Illegal Immigrant by Adam Reed:
    http://user-of-objectivism.blogspot.com/2011/02/ayn-rand-illegal-immigrant.html

    PS. Vituperative gotchas–whichever side of this debate one is on–are sure signs of an irrational mind.

  33. Reality. More immigrants will vote for more welfare state and bigger government. That is my big concern with open immigration. I far from convinced that more immigrants wont lead to bigger government.

  34. The good professor got many things, fallacies right, but he missed a couple too. I see his differences, not from a lack of education, but from a lack of commonsense. Commonsense appears to be all but extinct today, with most people now denying it even exists. This can go back to a quote, paraphrased, knowlege shall increase but people will not have the commonsense to use it.

    Michael -Deo Vindicabamur
    Classical Historian Western Civilization

  35. IceTrey, all societies has a cultural basis for their existence. If you have no culture, then you have no standards or morals to have Civilized Society. Anything goes and nothing is absolute. Morals would simply be replaced by arbitrary law, and subject to revision at any time for any reason.

    Society would break down simply due to the stress and bickering of each group claiming discrimination, special needs differences. We are seeing signs of this now.

    Not only do we have all the above as the ultimate consequences of a multicultural society, but all the original documents establishing U.S. law and the country would be voided.

    This is because the USA was established from the “cultures” that formed Western Civilization. These cultures has a common denominator of the Christian/Catholic religion. This is the basis for the original law that governed WC starting with Constantine, Rome and the Catholic Church, and it can be argued this came from the combined Christian Catholic churches before that.

    Your “Inalienable Rights”, the “Law’s of Nature and of Natures God” and all Common Law originates from this source. All philosophy except humanism and Marxism also originates from this source.

    In the case of the USA, the government itself, both the Articles of Confederation and the U.S. Constitution are based upon the Declaration of Independence which is based upon this combined moral culture. This is exactly why the USA was originally a Republic. (The Rule of Law being based upon common cultural morals.)

    There are powers and prinipalities people doesn’t understand that are committed to destroying the above. They want and need a One World Government, and multiculturalism is a gold key in accomplishing this. (Too much to explain here.)

    Michael — Deo Vindicabamur
    Classical Historian Western Civilization

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Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).

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