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The public policy blog of the American Enterprise Institute

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Discussion: (20 comments)

  1. Che is dead

    NO, Say it isn’t so! The Oil Drum dead?? Where will Vange go for the “Truth”??

  2. Paul, #5 looks like the answer to your prayers. :)

    1. Ron,

      Interesting article. Notice the line: “Research into fresh produce mechanization was dormant for years because of an over-abundance of workers and pressures from farmworker labor unions.”

      And the big ag growers were shrieking about “crops rotting in the fields” the entire time they were passing the costs of those overabundant workers on to the rest of us.

      1. morganovich

        paul-

        there’s some bad logic in your argument.

        first off, you are accepting this “superabundant labor” argument on faith. that has not been the case of late since, specially in CA, illegal worker crackdowns intensified. the last few years have been different. crops did rot as a result.

        it also opened up this opportunity for robots. the whole point of what they were saying is that cutting off the cheap labor opened up this opportunity.

        but we still do not really know if this is good for farmers or for prices. cheap labor may have been cheaper. it depends on what these robots cost to buy, run, and maintain, and on how good a job they do.

        given that workers prevented this innovation, i suspect these robots may be more expensive, at least for now.

        but it’s high time this field saw some innovation. wheat is now harvested by gps guided unmanned combines that are controlled by satellite link.

        fruits and vegetables are picked like it’s the 1700′s.

        of course, this does mean that when the machines become self aware, skynet is going to control all the food…

        1. Hey Morg,

          I don’t think I missed anything. The big ag rent seekers have been pulling the “crop rot” tactic for years, bumper harvest or not. If it actually did happen rcently, too bad. They’ll have to adapt or die, like every other industry that doesn’t depend on illegal immigrant labor. Americans won’t starve from lack of fresh strawberries for a season.

          but we still do not really know if this is good for farmers or for prices. cheap labor may have been cheaper.

          Keep in mind, cheap labor is very expensive.

          1. Actually it would be american grown strawberries as ones from elsewhere in the world would come in. I don’t know if you recall a long time ago strawberrys were fresh only about 5 weeks a year as the US crop came in, otherwise back then you had frozen ones. Of course today they are flown from whereever so you can get your choice of fresh fruit any time of the year. So all it would do is to move the growing of more of them offshore.

          2. morganovich

            paul-

            you are still using some questionable premises here.

            first off, the whole “illegal labor” thing is a result of bad laws, not bad business practices.

            when CA farmers tried to hire locals recently, NO ONE APPLIED.

            blaming a mess caused artificially created by government on farmers seems like bad attribution of causality.

            so is pointing out welfare state issues. the problem lies with the welfare state. to try to correct it by inflicting more bad policy on labor markets is a step in the wrong direction.

            better to open the border and create a class of guest worker that pays taxes but does not have access to welfare programs.

            keep in mind that the US had open immigration for most of its history and it worked very well.

            it’s the welafre state (and that includes absurd farm subsidies) that’s causing the problem, and that could be easily fixed from an immigrant standpoint.

          3. morganovich

            “Americans won’t starve from lack of fresh strawberries for a season.”

            no, we’ll just pay more to import them, lose income here, and be able to consume less overall.

            just because we won’t starve does not make it a good thing.

            it wouldn’t kill us to have no beer for a year either, but it would suck.

          4. Morganovich,

            If nobody applied, then they need to raise wages, innovate, go out of business, or cry me a river. Each option is better than importing yet more of Latin America’s unskilled poverty. Big Ag groups like the Western Growers Association count on suckers like you and me to absorb the true costs of their employees (that endures for generations. ) while they keep the profits to themselves. It’s really no different than the ethanol scam that gives Benji nightmares.

            better to open the border and create a class of guest worker that pays taxes but does not have access to welfare programs.

            That is preferable to the status quo for sure. Now try running for office on that platform and prepare to be called a raaaaacist.

            Until we can roll back the welfare state, it’s best to keep out as many future recipients as realistically possible.

          5. morganovich

            paul-

            you seem to be assuming your premise here.

            if there are workers willing to do a job at a given wage, then what’s wrong with inviting them to do it?

            the costs you keep pointing to have nothing to do with labor markets.

            immigration is a good thing for the us economy. it always has been.

            since time out of mind, there has been resistance to immigration and claims that irish, germans, asians, and now latins would never fit in and were somehow stealing jobs.

            but that implies that locals were somehow entitled to them, that it’s better to import goods than labor, that once here, these laborers do not support other parts of the economy, and that assimilation does not happen.

            none of that is true.

            marginalizing people by making them illegal is the surest path to non assimilation.

            preventing the flow of labor is just like preventing the flow of trade. it imposes a deadweight loss on the society that does it.

            i’m also not so sure about the politics. i think a guest worker program where such people can live and work and pay taxes legally but do not get welfare nor automatic citizenship for their children, even if they are born here could get some real support.

            why would a guest worker program be subjected to claims of racism?

            it seems far less so than banning immigrants.

            farm subsidies and other assorted stupidity (including tariffs etc) are a separate issue. they should all be abolished, full stop.

          6. Morganovich,

            if there are workers willing to do a job at a given wage, then what’s wrong with inviting them to do it?

            It’s more complicated than that. For one, they drive down wages on low-skilled American citizens. Every notch down for them means you and I get to pay more in terms of welfare programs and disguised welfare programs like the EITC. Also, under the status quo you have situations where employers prefer illegals because they are far less likely to complain about intolerable working conditions than a US citizen. You have other situations where Americans who don’t speak Spanish are out of luck because the language barrier is too much of a hassle.

            “the costs you keep pointing to have nothing to do with labor markets.”

            Here’s what Thomas Sowell has to say about that argument: But the welfare state is already here– and, far from having a wall built around it, the welfare state is expanding in all directions by leaps and bounds. We do not have a choice between the welfare state and open borders. Anything we try to do as regards immigration laws has to be done in the context of a huge welfare state that is already a major, inescapable fact of life.

            “immigration is a good thing for the us economy. it always has been.”

            Some immigration is good. We have plenty of the legal kind already. I’ve pointed out a million times I fullly support skilled immigration. Would you support unfettered immigration from the ranks of the Taliban? Has illegal immigration been good for California?

            since time out of mind, there has been resistance to immigration and claims that irish, germans, asians, and now latins would never fit in and were somehow stealing jobs.

            I refer you again to the statistics on latino illegitimacy, crime, welfare usage, test scores, poverty, etc. Read the MacDonald piece I linked: “Nationally, the poverty rate of Hispanic adults drops from 25.5 percent in the first generation—the immigrant generation, that is—to 17 percent in the second but rises to 19 percent in the third, according to a Center for Immigration Studies analysis. (The poverty rate for white adults is 9 percent.) That frustrating third-generation economic stall repeats the pattern in high school graduation and college completion rates as well.”

            So it’s not like this all started Tuesday before last. As someone married to a Colombian immigrant and who has an adopted Colombian daughter, I assure you these stats give me no pleasure. But I’d rather deal with the ugly truth than take comfort in pretty little lies. The latino community would be thriving in America if we had adopted the Jason Richwine prescription, or had a quality immigration point system like Canada does.

            “marginalizing people by making them illegal is the surest path to non assimilation.”

            Does “making them illegal” cause the latino 53% illegitimacy rate also? And poor test scores? And why doesn’t the same phenomenon occur in the illegal Asian community?

            preventing the flow of labor is just like preventing the flow of trade. it imposes a deadweight loss on the society that does it.”

            Again, I quote Thomas Sowell: Buying cars or cameras from other countries is not the same as admitting people from those countries or any other countries. Unlike inanimate objects, people have cultures and not all cultures are compatible with the culture in this country that has produced such benefits for the American people for so long.

          7. morganovich

            paul-

            “It’s more complicated than that. For one, they drive down wages on low-skilled American citizens. Every notch down for them means you and I get to pay more in terms of welfare programs and disguised welfare programs like the EITC. Also, under the status quo you have situations where employers prefer illegals because they are far less likely to complain about intolerable working conditions than a US citizen. You have other situations where Americans who don’t speak Spanish are out of luck because the language barrier is too much of a hassle. ”

            it’s more complicated than that too.

            if farms have to pay higher wages, they will need to charge higher prices for food which will reduce the real income of ALL americans particularly the poorest. this is likely to have a more far reaching effect than the issues you cite, which, still, are welfare state issues, not labor market ones.

            go hit a san francisco farmers market of you’d like to see what food costs if you do not use cheap labor. an $8 half pint of blueberries may change your mind.

            further, there is no assurance that these purported high wage jobs will exist at all. countries that do have cheap labor will out compete the us farms and consumers will just switch to imports.

            that’s a big net destroyer of jobs, income, choice, and an increase in price.

            that would do far more harm and put far more pressure on welfare rolls than immigrants.

            sowells’s argument is flawed in that it focuses in the wrong direction.

            if you have a problem caused by welfare, fixing it by breaking the labor market too is counterproductive.

            besides, a guest worker program along the lines i laid out avoids that whole issue.

            your question about immigration in california is not really valid. the problem is that it’s illegal. you get people who use resources and do not pay taxes. but this is caused by the illegality. make it legal and get they to pay their way and it would be a big benefit.

            regarding the legitimacy issues and test scores, are they really that different from our home grown black community?

            these are markers of poverty, not some sign of a morally tainted race.

            “Buying cars or cameras from other countries is not the same as admitting people from those countries or any other countries. Unlike inanimate objects, people have cultures and not all cultures are compatible with the culture in this country that has produced such benefits for the American people for so long.”

            and this is 90% nonsense.

            ben franklin made the same argument the germans would never fit in in the US. this was said of the irish, the asians, the jews, and loads of other folks that wound up fitting in. mostly, you come here because you WANT to fit in.

            if you are ghettoized and marginalized by law, well, that makes it much harder.

            sowell also missed a very key distinction that makes his argument fail:

            let’s imagine a farm worker named george.

            he lives in mexico.

            he’d like to come work in california and there is a farmer in CA that would like to hire him at a wage both find attractive.

            now let’s image 2 states of the world.

            in state one, he is not allowed to come. he stays home and works on a farm there. the prices rise for labor and output at the us farm and it is out competed by the mexican one and so we import avocados instead of George.

            in state 2, george comes to the us to work. he keeps us prices lower and we consume CA avocados instead of mexican ones.

            now, it’s tempting to say that us wages are lower in state 2, but this is not necessarily the case.

            here’s why: the farming job will have lower wages. that is clearly true. but prices for food will also be lower and this may mean that while nominal wages are lower, real wages may not be or, at least, are less so. and keep in mind that higher prices do not george or the guy who might have wanted that job. they affect everyone who eats avocados. limiting immigration reduces the real wages of that entire population.

            but there is another reason that importing labor is different from importing goods, and it’s a reason that importing labor is BETTER.

            if we import avacados, that’s that. we pay more and it’s done.

            if we import george, we get something other than labor.

            we get spending too. george eats, he buys clothes and shoes and sees movies and whatever else people do.

            now he is doing it in the us, not mexico. that creates jobs in our stores, theaters, hollywood, etc etc.

            when we import george, we get not just a worker, but a customer. much of what people consume is always going to be local.

            you do not live in mexico and buy a us house or eat in us restaurants or shop at us stores.

            this increases demand, revenue, wages, and profits for us businesses.

            we do not get that if he stays home.

          8. Morg,

            if farms have to pay higher wages, they will need to charge higher prices for food which will reduce the real income of ALL americans particularly the poorest.

            I don’t know what the designer organic blueberries at the San Fran Farmer’s Market cost, but you are overstating the impact: If the influx of immigrant workers were slowed or stopped and farm wages rose, what would happen to expenditures on fresh fruits and vegetables? A case study from 1966 could give us some idea.

            That year, the United Farm Workers union won a 40 percent wage increase for some table grape harvesters, largely because the end of the Bracero program had cut off a supply of Mexican workers. The average earnings of U.S. field workers were $10.07 an hour in 2009, according to a U.S.D.A. survey of farm employers. If pressure to verify employees’ legal status resulted in a labor crisis similar to the one in 1966 and a similar 40 percent wage increase, average hourly earnings would rise to $14.10. If this were passed on to consumers, the 10 cent farm labor cost of a pound of apples would rise to 14 cents, and the $1 retail price would rise to $1.04.

            For a typical household, a 40 percent increase in farm labor costs translates into a 3.6 percent increase in retail prices. If farm wages rose 40 percent, and this wage increase were passed on to consumers, average spending on fresh fruits and vegetables would rise about $15 a year, the cost of two movie tickets. However, for a typical seasonal farm worker, a 40 percent wage increase could raise earnings from $10,000 for 1,000 hours of work to $14,000 — lifting the wage above the federal poverty line.

            I’ll take price disciplined higher wages on the front end with minimal impact on food prices- over the status quo welfare state on the back end.

            All day long.

            “further, there is no assurance that these purported high wage jobs will exist at all. countries that do have cheap labor will out compete the us farms and consumers will just switch to imports.”

            Oh well. If that unlikely scenario happens then score a victory for comparative advantage.

            your question about immigration in california is not really valid. the problem is that it’s illegal. you get people who use resources and do not pay taxes. but this is caused by the illegality. make it legal and get they to pay their way and it would be a big benefit.

            That’s just not true. The overwhelming majority of illegal immigrants do not even have a HS degree. Legalize them and the vast majority will end up on the bottom half of incomes, making them net tax consumers according to the current system. They would also be eligible for all sorts of welfare programs they currently don’t qualify for. Heritage estimates Rubio-Schumer amnesty would end up costing the taxpayer $6.3 trillion. It would be an even worse deal for California’s net taxpayers given the highly progressive tax system they have there.

            regarding the legitimacy issues and test scores, are they really that different from our home grown black community?

            So we should import more more of it???

            these are markers of poverty, not some sign of a morally tainted race.

            I think I’ve gone out of my way not to blame the problem on race. I would hope you would give me that much credit. The problem has to do with the quality of immigrant coming from Latin America, mostly Mexico. It’s a problem with culture and the avg intelligence level of people crossing the border from that region. There are millions of Mexicans(and individuals residing in countries from across the planet) with high human capital who have skills to offer us right now. We should be focusing on bringing them in rather than just allowing barely literate ditch diggers to wander across the border. The former make America stronger. The latter are creating a dysgenic nightmare.

            “ben franklin made the same argument the germans would never fit in in the US. this was said of the irish, the asians, the jews, and loads of other folks that wound up fitting in. mostly, you come here because you WANT to fit in.”

            Again, I ask you to look at the current generational statistics rather than appeal to the pre-welfare state America. Whatever Ben Franklin said in the 1700′s has no bearing on what is actually happening today. The Irish government, for example, wasn’t next door working actively to inculcate loyalty first to Ireland. The corrupt Mexican government, OTOH, has been working feverishly on this for decades. There wasn’t a grievance industry when Ben was around. Today it’s probably a billion dollar enterprise.

            “if we import george, we get something other than labor.”

            I’ll say. The facts: we get more illegitimacy, crime, welfare,school children to pay for, and unemployed/underemployed American citizens we get to pay for on the back end. George probably gets an EITC credit and eventually SS and Medicare. George also sends a sizeable chunk of his paycheck back to Mexico.

            It’s a net loss. George isn’t going to buy enough clothes and see enough movies to make up the diff.

            Also, the big growers get to pay cheaper wages that make a negligible diff in the end price of food at the market.

          9. Paul

            . Also, under the status quo you have situations where employers prefer illegals because they are far less likely to complain about intolerable working conditions than a US citizen.

            That’s not much of an argument. You realize, of course that this abuse is only possible *because* they are illegal.

            morganovich: ““further, there is no assurance that these purported high wage jobs will exist at all. countries that do have cheap labor will out compete the us farms and consumers will just switch to imports.”

            Paul: “Oh well. If that unlikely scenario happens then score a victory for comparative advantage.

            You may want to rethink that. Currently Mexico is the largest source
            of imported US fruits and vegetables, many of which directly compete with US grown produce.

            A look at any of the spreadsheets at this USDA site will show that “George” picking produce in Mexico may cost US citizen Humberto his produce picking job in the US.

            The average earnings of U.S. field workers were $10.07 an hour in 2009, according to a U.S.D.A. survey of farm employers. If pressure to verify employees’ legal status resulted in a labor crisis similar to the one in 1966 and a similar 40 percent wage increase, average hourly earnings would rise to $14.10. If this were passed on to consumers, the 10 cent farm labor cost of a pound of apples would rise to 14 cents, and the $1 retail price would rise to $1.04.

            This type of argument always misses the point. The total amount of the increase in pay for farm workers is exactly the total additional amount paid by consumers, and exactly the amount they won’t spend on something else. The fact that it is a small amount per consumer is irrelevant. The money must come from somewhere, and it comes from the the pockets of wait-persons, retail workers, and many others. the seen and the unseen.

            If you believe a guest worker program is politically unattainable, how likely is it that a total elimination of and ban on illegal immigrants will happen?

            The real answer., Paul, is…

            …you know what I’m going to say at this point.

          10. …And the REAL USDA link.

            Curse this non-previewable blog software!

        2. why would a guest worker program be subjected to claims of racism?M

          The end of birthright citizenship and banning of welfare benefits have routinely been declared racist by the left and even a significant % of Republicans. Paul Ryan and Jack Kemp even went out and campaigned against California prop 187 that banned illegal immigrants from getting welfare. This link is pretty good summary of the uproar over the prop. Read it and then let me know if you still think it wouldn’t be any bfd:

          http://migration.ucdavis.edu/mn/more.php?id=492_0_2_0

          “it seems far less so than banning immigrants.”

          And who is talking about doing that? We could use more immigrants like my wife, daughter, and Methinks.

          1. morganovich

            “And who is talking about doing that? We could use more immigrants like my wife, daughter, and Methinks.”

            it seems like you are speaking about banning immigrants.

            perhaps i am confused about what you are saying.

            what standard are you using to decide who gets to come?

            and it’s not always easy to spot which immigrants pay off over time.

            my great grandparents were unskilled and spoke no english. they certianly did not look like the kind of immigrants that get to go to the front of the line (though my great grandmother was VERY pretty, so you never know)

            my grandfather became a fireman then later ran a bar and worked in a bank.

            my parents were the first generation to go to college.

            my father was very successful and so to have i been.

            but it would be pretty impossible to look at my great grandparents and imagine me.

            the system that seems to work is one that provides little or no net. you need to want it badly and be willing to take risks and work hard for it.

            i suspect that if you hit those criteria, you’ll do OK as will your progeny.

            all we really need to fix is the welfare state and create the right kind of worker visa.

            people can call it racist if the like i guess, but the politico polarization machine seems to do that with anyhting and everyhting. it does not make it true and if we act as though they have a point instead of calling them out as muckracking liars, we just cede them the field.

          2. “it seems like you are speaking about banning immigrants.”

            That’s frustrating to me.

            “what standard are you using to decide who gets to come?”

            For adults, skilled over unskilled. We could also consider which demographic groups are paying off and which ones are not. The evidence is in on the latter.

            “and it’s not always easy to spot which immigrants pay off over time.”

            Sure, on the individual level. But as a group it’s quite easy to look at the statistics. You can’t do sensible immmigration policy based pn exceptions to the rule.

            Would you let the Taliban wander in here, willy nilly? You never know, there might be some enterprising young jihadist in that group who starts up the next Facebook.

          3. Paul

            Would you let the Taliban wander in here, willy nilly?

            We already do. I don’t think there are any restrictions based on religious beliefs or ideology.

            Paul, your suggestion that immigrants be admitted based on their skills has two problems as far as I can see.

            First, how does anyone know what skills are in demand? Isn’t the labor market best able to determine that?

            Then, while the argument that unskilled immigrant workers lower the pay for all unskilled workers has some merit, wouldn’t skilled immigrants increase the pool of workers with those skills and lower wages for that entire group also?

  3. hitssquad

    “11. Paul Krugman Is The ‘Mean Girl’ Of Economics”

    …But at least that means he gets to hang out with The Plastics.

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