I was listening to the radio the other day, and the topic was illegal immigration. The hosts were asking for a solution to the problem. Callers were mostly immigrants that pointed out the severity of the difficulties of coming to America legally. They're, of course, right. It is far too difficult to come here legally. We use to be a refuge for those seeking freedom. Not anymore...
Today's problem with illegal immigrants isn't so much a problem with the numbers of incoming immigrants. We have welcomed them in the past with no ill economic effects. It is folly to believe that they are economically detrimental to the nation. The problem is in legislation that causes those who are here illegally to receive services and benfits paid for by taxes to which they do not contribute. Thus, as far as national funding goes, they are leeches, dependants who pull funds from the donors.
There are two parts to my solution. The first is the obvious and logical easing of immigration restrictions. Green cards should be easy to obtain, and citizenship should not be overly expensive, nor tedious and prolonged. Many argue that giving foreign immigrants American jobs takes jobs away from American citizens, and causes money to be sent out of our national economy. These arguments seem logical, but in truth are unfounded and incorrect. I explained some of the folly in a previous post. A full explanation would be a topic for another post.
The second part of my solution is to get rid of minimum wage legislation. I know that seems to be unrelated, but let me spell out the effects of such action. Minimum wage has been proven over and over again to be directly related to higher employment by economists of all political backgrounds. It is feel-good legislation that makes uninformed people feel that their government is looking out for them. But it hurts them. Sure, it will give many people an undeserved raise. But it will unemploy many others.
Markets balance the wages of employees, employers trying to pay as little as possible to keep their costs managable, employees trying to make as much as they can. The freedom of each party causes competition to balance wages to where they ought to be. Employees will accept work that will pay them what they are worth. If the employee believes he or she is worth more, they may choose not to work for that employer and find other employment. Employers must compete for the best employees, keeping them from undercompensating them.
With that understood, there are some jobs that are worth less than the minimum wage. Forcing employers to pay more for that job than markets would dictate raises unduly the costs of that company. Thus the company must either suck it up and absorb the costs, or they must find other ways to accomplish the needed work. These alternative methods typically include getting rid of the employee.
If a person looking for a job is willing to work for $5/hour, who is the government to tell him he can't? Most of these minimum wage jobs are entry-level jobs that teens seek out, both for spending money and more importantly for work experience. People that start at entry level wages don't stay there. They get raises as their experience dictates. If we reduce the number of available entry-level jobs by forcing a minimum wage over the market level, unexperienced job seekers have no place to start, and thus they stay unemployed.
Now what does this have to do with illegal immigration? Illegal immigrants do not fall under minimum wage laws. Those companies that struggle to find alternatives to cut their costs may choose to employ illegals outside the minimum wage laws. Thus illegal immigrants help to keep market balance, but we leave American teenage unemployment at astronomical levels.
If we were to remove the minimim wage laws, employers would no longer have to find alternatives in order to get the job done. With the costs equal, most employers would much prefer to employ English speaking teenagers legally, rather than employ foreign workers illegally. Thus illegal immigrants begin to find competition in their market of cheap employment. The incentives to come to the U.S. for employment drop significantly, while the incentives to learn English and become legal workers increase.
The advantages to abolishing minimum wage legislation are so great that it is amazing that it is not even being considered in Washington. The feel-good benefits are just too great I guess.
Sunday, November 22, 2009
Monday, November 9, 2009
Self-Interest and Central Government
Karl Marx was a critical opponent of capitalist injustice, pointing to some of Great Britain’s immoral labor practices of the late 19th century as proof of the failure of capitalism. Instead, he proposed the formation of a centralized government to take care of the people. It was this philosophy that was the foundation of fascism and communism.
The philosophy focused on the call for a rise of the working class in social status. But who really gets helped by a central government?
Politicians, like everyone else, are looking to do what’s best for themselves. Self-interest is the driving force of all decisions. Even those who choose to put others above themselves do so because the satisfaction of sacrifice is greater than the sacrifice. Those of faith make decisions on the hope of future rewards. Those who act out of love do so because the emotional impact of not acting would be greater than the personal consequences of acting. All our decisions are founded in our understanding of how that decision will affect ourselves.
Politicians toot their own horn, make lovely speeches about how noble they are with their policies to help others, and scratch each other’s backs behind the scenes to get what they want. It’s getting hard to find a politician that isn’t getting benefits beyond the permissibility of law from those looking for a political favor. Everyone’s just trying to maximize their self-interests.
So I find it very interesting that so many would be willing to put all their eggs into the politicians’ basket. Who would a central government really help? Theoretically, it helps the working class, the proletariat. But Marx’s theory fails to account for politicians personal self-interest. If politicians could completely remove decisions based on self-interest from their politics, Marxist theory could potentially hold water. But the law of self-interest has proven itself over and over again throughout history. It is this law that has led to the well-know Lord Acton observation that power corrupts, and absolute power corrupts absolutely.
If central government planners, then, are in it for their own interests, who do their policies help? Obviously themselves, and those for whom they are providing the favors. It is akin to a market exchange. Companies or individuals exchange a service that a politician wants for a political service that that company or individual wants. It’s a favor for a political policy change. Each party is benefitted in the exchange. However, unlike a normal market exchange, these policy changes are at the expense of the third party, who is not a participant of the exchange. Giving one special interest group a political favor is always at the expense of another group (usually the general public).
The founders of this nation were well on the right track in understanding that government was a necessary evil, and must be designed with limited power. For when the power of the government exceeds the power of the people, that government always results in tyrannical rule, governing for the governor’s sake at the expense of the people. It’s the law of self-interest.
The philosophy focused on the call for a rise of the working class in social status. But who really gets helped by a central government?
Politicians, like everyone else, are looking to do what’s best for themselves. Self-interest is the driving force of all decisions. Even those who choose to put others above themselves do so because the satisfaction of sacrifice is greater than the sacrifice. Those of faith make decisions on the hope of future rewards. Those who act out of love do so because the emotional impact of not acting would be greater than the personal consequences of acting. All our decisions are founded in our understanding of how that decision will affect ourselves.
Politicians toot their own horn, make lovely speeches about how noble they are with their policies to help others, and scratch each other’s backs behind the scenes to get what they want. It’s getting hard to find a politician that isn’t getting benefits beyond the permissibility of law from those looking for a political favor. Everyone’s just trying to maximize their self-interests.
So I find it very interesting that so many would be willing to put all their eggs into the politicians’ basket. Who would a central government really help? Theoretically, it helps the working class, the proletariat. But Marx’s theory fails to account for politicians personal self-interest. If politicians could completely remove decisions based on self-interest from their politics, Marxist theory could potentially hold water. But the law of self-interest has proven itself over and over again throughout history. It is this law that has led to the well-know Lord Acton observation that power corrupts, and absolute power corrupts absolutely.
If central government planners, then, are in it for their own interests, who do their policies help? Obviously themselves, and those for whom they are providing the favors. It is akin to a market exchange. Companies or individuals exchange a service that a politician wants for a political service that that company or individual wants. It’s a favor for a political policy change. Each party is benefitted in the exchange. However, unlike a normal market exchange, these policy changes are at the expense of the third party, who is not a participant of the exchange. Giving one special interest group a political favor is always at the expense of another group (usually the general public).
The founders of this nation were well on the right track in understanding that government was a necessary evil, and must be designed with limited power. For when the power of the government exceeds the power of the people, that government always results in tyrannical rule, governing for the governor’s sake at the expense of the people. It’s the law of self-interest.
Subscribe to:
Posts (Atom)
