Immigration Reform Will Ease Economic Decline
Whether youíre for or against immigration or international trade, here are some facts to deal with. We trim, blend, and append two articles, (1) one from 2009 in The Financial Times, December 18, on free trade and (2) one from 2010 in New America Media, posted January 13 at AlterNet on free travel (quota-less) by Esther M. Gentile.
by The Financial Times and by Esther M. GentileIt is a shame that the banana conflict had dragged on for half a century before peace broke out. The system of quotas and elevated prices has done little to its supposed end of alleviating poverty. Its main effect has been to divert demand for bananas from one set of middle-income developing countries to another, based largely on the historical accident of having been a French or a British colony.
The banana had already become a symbol of returning European prosperity at the end of Second World War food rationing. It also acquired that status for east Germans in 1989 when the Berlin wall came down. The banana wars gave it still more totemic importance.
It is tempting to write off the banana wars, along with a similar dispute over the EUís sugar regime, as an isolated case Ė a final tying-up of the loose ends of European colonialism. Unfortunately, that too looks like complacency.
One of the lessons of the episode is that preferential trade schemes, particularly those where privileges are handed out on the basis of geographical or historical accident rather than need, create lobbies that will often argue powerfully against wider trade liberalization.
The proliferation of bilateral and regional trade deals around the world risks creating new generations of rent-seeking producer lobbies. Few developing countries with privileged access to rich world markets want to share it with others. The lessons of the banana wars are being forgotten.
JJS: Turning from free trade (sans tariffs etc) to free travel (sans quotas etc) Ö
Immigration Reform Will Ease Economic Decline
A new study contends that legalizing undocumented workers would yield $1.5 trillion to the U.S. Gross Domestic Product (GDP) over a 10-year period, generate billions of dollars in additional tax revenue, increase wages and consumer spending, and create hundreds of thousands of jobs.
The study, "Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform," was conducted by Dr. Raul Hinojosa-Ojeda, associate professor at the University of California, Los Angeles.
The report analyzed the economic impact of legislation passed in 1986. Even in an economic downturn, the legalization of undocumented immigrants caused them to move on to better-paying jobs, resulting in more spending and higher tax revenue.
"Undocumented immigrants Ö are in a sense a hidden economic engine that we have kept repressed in this country" to the extent, Hinojosa said, that when "we allow them to join the economic mainstream we see an immediate impact in terms of wages and on productivity."
"When we allow more low-skilled immigrants to come in, it expands the overall economic pie, and creates jobs up the ladder, like managers, accountants, and salespeople," said Daniel Griswold, director of the center for trade policy studies at the Cato Institute.
The study also found that enforcement-only policies have a quantifiable negative impact on the U.S. economy beyond the cost of deportations. Unauthorized workers have lower wages, which hurts the wages of American workers and drags down economic growth, according to Heather Boushey, senior economist at the Center for American Progress.
"The movement toward full deportation in this country produces close to $2.6 trillion in economic decline," according to Hinojosa. "It really accelerates the movement toward recession and depression, like we saw, by the way, in the 1930s."
"I think there are two very important things about this report," noted Benjamin Johnson, executive director of the American Immigration Council. "One certainly is that it shines a spotlight on the potential for a very large impact on our economy in a time when we need it. Even in Washington, D.C., $1.5 trillion is a lot of money. But the report also reminds us how to provide benefits to the American economy and to the American worker."
Legalizing undocumented workers, the panelists said, would neither take jobs away from American workers nor increase the number of unemployed.
"It cannot be in any way justified to try to oppose immigration reform on the basis of an economic argument," Hinojosa concluded.
Rather, a policy to do something like create a temporary worker program to allow for future flows of immigrants -- something left out of the 1986 legislation -- would have a magnified effect on the economy.
JJS: What these findings also suggest is that we should move toward even more economic freedom, to using alternatives to counterproductive taxes and addictive subsides. Replace such taxes with fees and dues, etc, to recover the socially-generated values of sites and resources. If you donít gather up the value of nature, then you leave land as an object of speculation. Pretty soon, any gain from free trade and free travel would be lost to onerous mortgages and a bipolar business cycle. And replace misguided subsidies with a dividend to the citizenry in general. If you donít share the value of nature but leave the spending decisions up to politicians, even well meaning ones, then you must accept some degree of waste and heavy-handedness and favoritism -- which run counter to freedom and prosperity. Better to rely on the total geonomic paradigm.
Jeffery J. Smith runs the Forum on Geonomics.
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