Saturday, January 23, 2016

Xenophobia: the One on the Right is on the Left?

An ad for Ted Cruz shows actors in suits running through fields and wading across a river, presumably representing the Rio Grande. The voiceover features the candidate from a November 2015 Republican presidential candidates' debate:
"I can tell you, for millions of Americans at home watching this, it is a very personal economic issue. And, I will say the politics of it will be very, very different if a bunch of lawyers or bankers were crossing the Rio Grande. Or if a bunch of people with journalism degrees were coming over and driving down the wages in the press.
"Then, we would see stories about the economic calamity that is befalling our nation. And, I will say -- for those of us who believe people ought to come to this country legally, and we should enforce the law -- we're tired of being told it's anti-immigrant. It's offensive."
Cruz is undoubtedly correct that if the jobs of lawyers, bankers and journalists were disappearing, we would hear much more about it. As to how many jobs of "ordinary Americans" are being stolen by immigrants -- probably not a lot in the larger scheme of things, compared to austerity policies, trade deficits and the fallout from reckless financial speculation.

But how many jobs is beside the point. People have expectations about their future prosperity. They save money to buy homes, to start a business or to retire. They put in overtime hours to try to "get ahead." If after ten, fifteen or twenty years in the work force they are "another day older and deeper in debt," they are prone to feel that something about the system is holding them back.

Maybe they are wrong. Maybe it is their own damn fault. Maybe they're right about the system holding them back but wrong in detail. In some cases, maybe they are right about the near term effects of immigration on their job security.

Economists have soothing words for these anxious people: "don't worry," they assure the common folk, "in the long run everything will be fine. The number of jobs will adjust automatically to accommodate the increase in the work force." This is, of course precisely the attitude Keynes lampooned with his remark about everyone being dead in the long run. Alan Manning, for example, explains in his lecture on the economics of migration:
"The important point is that in the... in the long run, increases in labor force -- and I'll try to explain why in a minute -- cause changes... bring about changes in employment more or less one to one."
Supply of labor, that is to "Say," creates its own demand for labor. Say's Law or the purported version of Say's Law, which reputedly sank without trace after Keynes criticized it. It comes as no surprise that people deny it when I point out that the lump-of-labor fallacy claim is the negative projection of Say's Law. But "increases in labor force... bring about changes in employment" is clearly a paraphrase of "supply creates its own demand."

Again, I'm not saying this is either what Say wrote or any kind of a law. "Say's Law" is simply the name attached to that particular idea.

So, the progressive "wonks" -- Oxford educated London School of Economics professors are combatting virulent right-wing xenophobia with... stale truisms that were discredited 80 years ago and sank without trace? ARE YOU KIDDING ME? I mean, am I kidding you? No. It's as if the quack physicians in Moliere's L'Amour Médecin had come back to life to prescribe leeches and emetics as panaceas.

See also my earlier post on Doctor Krugman and Mister Trump.

4 comments:

  1. Re: "...They save money to buy homes, to start a business or to retire. They put in overtime hours to try to "get ahead." If after ten, fifteen or twenty years in the work force they are "another day older and deeper in debt," they are prone to feel that something about the system is holding them back...."

    Clearly the design of 'they system' precludes the direct enjoyment of the product of one's labour. I can't think of a better way for a system to 'hold them back'.

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  2. Sandwichman,

    Could this be a situation where supply does create demand because the increased "supply" (the workers) literally create demand in that they need to buy stuff? That seems to be part of my understanding of the argument (I'm not an economist) for an increase in immigration does not bring down the price of labor or take jobs from current residents. I don't understand how a large number of relatively poor people create a burst of demand that can in part cushion their impact on the labor market as additional workers.

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  3. Ted Cruz is a champion of the flat tax. If he gets to become the champion of the average worker - the rest of the field is doing something seriously wrong in their campaigns.

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  4. "I don't understand how a large number of relatively poor people create a burst of demand that can in part cushion their impact on the labor market as additional workers."

    bbk, I don't think there is any question that additional demand from additional workers does in part cushion their impact on the labor market. The question is, though, how much does it cushion their impact and in what specific ways.

    An influx of relatively poor people may increase the demand for low-cost housing without necessarily leading to a boom in the construction of low-cost housing, thus leading to inflation of the rents for existing housing. The higher rents charged by landlords may enable them to afford more luxury housing that then gets built on sites where low-cost housing has been demolished. So there is added construction employment, possibly even rising wages nominal for the construction workers. But what is the net outcome?

    Immigration is not the only factor at play. But it is a visible one that can be isolated because immigrants may look different and speak with an accent.

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