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Earlier this month, Dave Brat, an economics professor from Randolph-Macon College, shocked political observers by defeating House Majority Leader Eric Cantor in the race to become the Republican nominee for Virginia’s 7th Congressional District. Many conservatives and libertarians expressed excitement that a fiscal conservative and “free market economist” could topple a powerful establishment Republican.
While economists often disagree on the appropriate role of the government in regulating markets, members of the profession do tend to have at least a basic respect for the power of markets to improve people’s lives. That’s because a central principle in economics is that people can be made better off by trading voluntarily with one another. Markets can certainly fail, so it may sometimes be necessary to prevent voluntary trade from occurring, but it should not be done casually. Truth in advertising would require a self-described free market economist to be especially committed to this principle.
Some of Brat’s policy positions do indeed reflect such a commitment. For example, in response to a question about the minimum wage, Brat responded, “I’m a free market guy. Our labor markets right now are already distorted from too many regulations.” Indeed, on this issue, Brat is more supportive of free markets than the average academic economist: According to a recent survey, academic economists are divided on the desirability of raising the minimum wage.
But Brat appears to support a different, particularly heavy-handed, form of government intervention in labor markets: increased restrictions on immigration. He refers to immigration as “an economic threat” that “will force wages to fall and jobs to be lost.” This viewpoint is decidedly less pro-market than that of the average academic economist (see here and here), and it’s certainly not one that a free market economist ought to espouse.
The idea that people can engage in mutually beneficial trade to improve their well-being extends across international borders. For example, an employer in the U.S. who wishes to hire workers from Mexico does so because it creates value for consumers and shareholders (a group that includes not just the wealthiest individuals, but also ordinary people saving for retirement or college). A free market approach to labor mobility would not prevent this trade from occurring.
Brat is correct that immigration – just like international trade – may lower wages for some groups of American workers (though there is controversy over the extent to which this occurs). However, any costs to these workers are more than offset by benefits to other Americans. And this calculation does not even take into account the enormous benefits to the immigrants themselves in the form of higher wages and better working conditions.
Of course, policy makers may still be concerned about the impact of immigration on low-skilled American workers. And this concern may lead them to support restrictions on immigration despite its large benefits to others. But – as Brat’s comments on the minimum wage suggest – heavily regulating labor markets in order to raise wages for some workers cannot possibly be called a free market approach.
Beyond the effect of immigration on wages, Brat argues that granting amnesty to illegal immigrants “undermines the fundamental rule of law.” There is, indeed, a good case to be made for either enforcing the laws we have on our books, or changing them if they no longer serve us. But someone who is truly committed to free markets would emphasize the latter rather than the former. Our current immigration laws make it very difficult for low-skilled workers to enter the country. That’s a severe restriction on labor mobility that criminalizes a great deal of voluntary trade. Given the huge potential benefits of liberalizing this restriction, it’s not surprising that illegal immigration occurs, and that policy makers often look the other way when it does.
Reasonable people can certainly disagree on immigration policy, and more generally on the extent to which free markets serve society’s interest. But it’s very hard to be both anti-immigration and a principled supporter of free markets.
Dave Brat, an economics professor, claims to be committed to the principles of a free market, but also appears to support heavy-handed intervention in governmental labor markets. How can he claim to be both a “free market guy” and have such strong beliefs about preventing immigration?
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