Baristas should make $45 an hour and have gold package health care, 4 months of PTO, 401k matching, free childcare, and free meals. But Starbucks needs to stop greedily gouging everyone so much on the price of coffee. Coffee should be $1. Is that so much to ask?
Well Richard the issue isn’t cheap or expensive in the absolute terms you describe, the issue is the relative price of labor between markets. To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil. To build that plant in Mexico to supply the product to the Mexicans in Mexico is smart. And using legal immigrants in The US to staff the plant in the US because you currently can not find/hire needed workers for the output planned for the plant is smart too. The Number of workers available within a given Market ( US or Mexico ) for the number of jobs available will determine the market wage within each market. Supply and Demand. Paying market wages to produce products for that market is smart. But to mix market wages between markets is evil. There is plenty of wrong in “Cheap Labor” when you are not paying a market wage for the market you are selling your product in!!
Arbitrage is fine if you are talking only about money. It is evil if you are dealing with Human Beings, and you were talking about the wages of Human Beings. People are not inanimate things, and they should not be treated as a variable cost of production. They are members of the corporate TEAM working for the group’s common purpose. There is plenty of “Wrong” in looking for Cheap Labor!!!!!!!!!
"The Number of workers available within a given Market ( US or Mexico ) for the number of jobs available will determine the market wage within each market"
I would understand why you'd believe that was the case but actually the market wage is mostly determined by the marginal productivity. Technology, efficiency, regulatory and tax advantages, those are what determines wages.
"To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil."
If you attempt this, you can immediately be undercut by a competitor who imports that, or a similar, product for a lower price (while still having a decent profit margin). So the fruits of your "evil" will be very limited in time.
"But to mix market wages between markets is evil."
Over time, wages in Mexico will be forced to increase, assuming there's competition. So that "evil" will also be time-limited.
> To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil.
Though in that case, since anyone else can do the same, the price of the product in the US will soon decline to reflect the lower labor cost. At that point, evilness depends the balance between "the product is something I buy" and "the product I'm paid to make".
If you give consumers the choice between a cheap foreign import and an expensive domestic product, watch how quickly their regard for the jobs of their fellow countrymen vanishes. I wouldn’t blame the businesses.
To close a lumber company in Arizona to open one in Washington only because it’s cheaper to cut trees in Washington and then import that wood to Arizona at the same price is evil.
Comparative advantage applies to labor just as much as it does for goods.
Making markets bigger isn’t evil, deciding that men with guns must stop consenting adults from engaging in mutually beneficial economic transactions for the benefits of an uninvolved third party absolutely is evil.
Everything you’re calling evil is a situation where people are more free from men with guns dictating how they can live their lives than the alternatives you prefer. I tend to think “men with guns stop people from doing things they want” is a lot worse than “somebody can’t do what they want because they’re out competed”
I think that your argument proves too much. By the same logic, under the open borders regime if 1 billion migrants come to America and find employment, the natives would only benefit from the cheap labour. However, it's clear that the such a change would change the country profoundly. It's a legitimate desire not to have one's country transformed this way.
Well, Singapore is a pretty unique place and they are a high-immigration but definitely not "open-borders". Another alternative is the Gulf Arab states some of which are 90% migrant. One thing the natives DON'T do there is competing with subcontinental migrants for jobs.
You can get much of the benefits to both the local economy and migrants even if you only let migrant workers come in for a few years at a time.
About the gulf states: don't they basically have a comprehensive welfare state for locals? Locals mostly don't compete because locals don't work.
In Singapore locals compete with both low skills and high skilled immigrants. (I came via the high skill pathway and now have permanent residence. My kids have local passports.)
Your comment is, lots of immigrants will "change the country profoundly". At some point the US will be so changed that the immigrants wont' be coming to the US, they'll be coming to this profoundly changed country. If that is a great place to live, wonderful, US will be even better than it is now, so of course more immigrants will want to go to the US. Alternatively, the immigrants will have changed the US into an awful place that nobody wants to be in, so immigrants won't keep coming to the US. In that case immigration will stop and never get anywhere near 1 billion.
Just one correction: rather than a "great place to live" it should be a "great place to live compared to the migrants' country of origin" for immigration to take place. This is consistent with it being a worse place for natives, compared to the status quo or some counterfactual.
Interesting point. He doesn't say open bordesr in this piece, but I do think he is for easy and legal migration, and a lot of it. But you're right that there is a number, maybe in the ten million range, where it would profoundly change the country and certain communities for sure. How do you specifically see that changing American culture or society?
I only lived in the US briefly so I'm not really qualified to opine. If it's tens of millions (so 10-15% of the population) the most likely scenario is probably muddling through. If we go higher, other scenarios include the Gulf-style society, becoming a third-world shithole and the Late Western Roman Empire collapse.
So both from experience and other people’s arguments the argument goes that the U.S. is uniquely good at assimilating people for a variety of reasons, so these examples are unlikely. Where are you from if you don’t mind me asking?
I agree that "the U.S. is uniquely good at assimilating people for a variety of reasons" and "these examples are unlikely" given the assumptions you're making. I don't see how it's relevant to the point I was making.
I was born in Europe but I lived in a few different places.
You should name your newsletter “Richard Hanania’s Strawman of the Week.” Sure, there are people ignorant of economics on every side of the debate. Can’t wait to see how Mamdani’s city-owned grocery stores work out. Yet the issue of “cheap” labor isn’t simply hiring person A because they are cheaper than person B to do the same job. It’s how businesses use rent-seeking to socialize costs while privatizing profits. The whole immigrant labor scam (whether it’s farm workers or tech workers or anyone in between) relies on socializing elements like crime, health care, education, welfare for the rest of the family (especially if there’s a consequent anchor baby), and suppressing wages by locking in to a single employer so the good worker can’t go across the street and demand more. Rent-seeking employers using immigrant labor are the opposite side of the same coin as unions. Unions restrict employment and drive up wages beyond the market price (usually through threats of violence). Immigrant employers restrict employment and drive down wages (usually through the threat of deportation).
The tech industry (of which I am a member and thus fairly familiar) is an excellent example. There is no need to fly software engineers halfway around the world from India to San Francisco because there’s a “shortage of skilled workers” (always a lie when rent-seeking businesses mention it. First week, freshman Econ 101: There are never any shortages except those caused by price controls). You could just employ them in India, doing the same work at a fraction of the cost as the exact same people in America. So why do so many tech companies do it? It’s not to “save money” — paying them in rupees would be phenomenally cheaper than paying them in dollars in California. It’s a specific policy of the Indian government, and it’s friends in the United States, who prop up the Indian state through remittances. Ditto Mexico and Central America. American businessmen get indentured servants. Foreign countries get remittances and control (through diaspora politics) of a part of the American polity.
When H-1Bs, almost always young single men, get to America, they don't want to live an American life. They live as they do in India, cramming 12 men into a 2-bedroom apartment in violation of the law, engage in ethnic nepotism for their co-ethnic, co-caste countrymen, and brutally discriminate against all non-Indians (and non-Brahmins) when put in hiring positions and positions of authority. Medical care is either absent (Medicaid or Obamacare) or extremely limited. Plenty of skilled American tech graduates and workers are available. However, they want to save for a wife, kids, a home, and a car. In other words, they want to have an American life, not live crammed into an illegal apartment, terrified that they could be deported at any moment to some third-world shithole.
Finally, what would, in fact, happen if we allowed 300 million Indians or Chinese people to come to the United States — that's how many claim to want to come in surveys? Would it still be the United States? Or would it be Western India and China? Why would any American want that? In fact, almost all Americans DO NOT want that. One of my most fervent pro-immigration acquaintances lives on a 50-acre farm in upstate New York in a county that’s 98.6% white. Of course, she feels sorry for the poor immigrants, bless their little hearts. I suggested she move to El Paso, where she could live among her neglected and abused "refugees," but weirdly, she didn't take me up on that. Another one of my liberal friends, who thinks Trump's anti-immigration stance is "inhumane," lives in an all-white area whose home value is close to $2M. She can afford her pro-immigration stance. The rest of us cannot.
‘There is no need to fly software engineers halfway around the world from India to San Francisco because there’s a “shortage of skilled workers”…you could just employ them in India, doing the same work at a fraction of the cost as the exact same people in America.’
This is absolutely laughable to anyone who has talked to an actual business owner.
Of course there will always be low wage labor. It’s the market in action. But even the low wage laborer needs democratic protections through legal representation. This is done through processes of documentation and citizenship. As a contractor wanting to grow into their business, working under the table encourages both the undocumented and the tax evader to bid low, undercutting the competitive worker who adds whatever percentage of federal and state taxes to their bids. I feel like you know all this but you disingenuously conflated “immigrant” worker as de facto low wage. When the actual problem with low wage labor is with undocumented labor and that doesn’t necessarily mean “immigrant.” My biggest qualm with the Right’s approach to this problem is that politicians don’t advocate for harsher sentences on American employers who accept under the table labor. Second, they make the same mistake that you make: rhetorically using “immigrant” worker as a term they must mean “illegal”. We all know this is a slight of hand to signal somekind of sick morality that treats all immigrants with sweeping stereotypes. Both the left and right are guilty of this.
Employers accept under the table labor because it has been made illegal to hire those workers legally. Minimum wage laws, employment laws, etc., that prevent employers and employees from mutually agreeing on their desired set of wages and conditions.
When you create contraband, you create black markets.
Note this is distinct from systems of law and contract - we can have voluntary mutual agreement on wages and conditions that are enforceable by ordinary courts and law - prohibitions on force and fraud, enforcement of agreed terms, etc. That's not a black market.
Your argument is that the law de-facto creates contraband. If human nature is to only cut corners, we might as live in an anarcho-capitalist borderless state. I disagree.
Huh? You know what I mean. Citizenship or non-citizen, they need working status visa. Either way, functionally, documenting labor both protects the rights of the worker and creates a fair market for contract bidding.
"There is no rational basis to get upset about employers hiring immigrants who earn lower wages"
Are you referring to documented or undocumented immigrants? The distinction matters. In fact it is crucial to the argument but you don't make it. Sheer laziness.
Even documented immigrants lower the pay floor, as well as incur social costs. Only documented imigrants that earn above 3x average salary probably offset social costs, due to their tax revenue.
I've really enjoy your redemption arc when it comes to racism, Richard, but I think your market fundamentalism should also be tempered...
For example, in the late 18C and 19C, bosses always fought back against demands for higher wages on the basis that these couldn't possibly be met and, amongst the many arguments deployed, market conditions and competition couldn't possibly allow for more than subsitence wages. Indeed, economists came up with the name 'Iron Law of Wages'.
Yet, with blood spilled, unions were created, salaries were raise and, lo and behold, the economy boomed as capitalism discovered that workers are also consumers.
I would also add that, if you insist on pure supply and demand dictating labor prices, you should look at the impact of the Black Death and how many believe it triggered the Renaissance, thus the Enlightment thus the Industrial Revolution. A clear solution then, for existing workers, would be to mass murder every working age beings in countries with strong emigration pattern. That would not be parasitism but optimisation! Free Markets! Yay.
Look - I'm pro immigration as well. And importing workers in areas where your economy is experiencing shortages or simply importing high quality workers and trusting they'll be additive is fine. But let's not get religious about this shit.
This insightful column reminds me of when clueless U.S. Commerce Secretary Howard Lutnick, trying to defend Trump’s stupid tariffs, said that they would bring back an "army of millions and millions of human beings screwing in little screws to make iPhones" to the United States.
Lutnick and his family has an estimated net worth of $7.4 BILLION. Gleaned from financial services sector via long-standing ownership and leadership stake in Cantor Fitzgerald. He has never worked a day in his life in jobs like almost all American workers, as well for pretty much everyone surrounding Trump, including the 8 billionaires in his cabinet.
He is totally ignorant of labor, manufacturing and how “cheap labor” is a benefit to America and Americans both via “cheap labor” from immigrant workers and through imports dependent on “cheap labor”. Jobs that Americans don’t want to do.
No, Mr. Lutnick, not only will the failed tariff debacle (including all failed Trumponomics) NOT bring back an "army of millions and millions of human beings screwing in little screws to make iPhones" to the United States, that is not a desirable outcome that will help American workers one iota.
Mr Hanania say that he has “no patience for nativists who say “immigrants are not better workers, they’re just cheaper.””.
I have no patience for the Trump maladministration that have no idea what they are doing.
There is another argument against artificial boosting of wages: it is the most inflationary policy that we know of. If salaries are artificially increased, but productivity remains the same, then more people can afford the same amount of production, which means a growth in demand with a stagnant supply. That is what every economics text book tells that will generate price increase. These price increases will destroy the increase in salary and, in the end, the new increased salary will buy the same as the low salary before that.
That was exactly what happened in Brazil during the 80's and early 90's, when workers were protected from inflation through automatic wage increases, that actually would feed inflation even further. It used to be called the "salary trigger" policy.
Then I assume it should work the other way too. As productivity goes up, salaries for ALL EMPLOYEES go up ?
AND how do you justify the extreme discrepancy between salary increases. Literally hundreds of percentage higher for top executives compared with % points for lower level positions.
And just remember Who were considered the ESSENTIAL workers during the Pandemic.
Yes, this. Artificially boosting wages is really just doing redistribution through the backdoor. Unless you increase *supply* then prices will rise such that some people will be able to afford less of that thing. You're just shifting around who has the most relative buying power, not getting any net economic gains. It's zero-sum.
It is worth than zero-sum! Overtime, prices tend to anticipate wage increases and accentuate the real salary reduction. Hyperinflation and the adaptation done in law and in financial markets to aviod it actually accentuated income inequality in most Latin American countries between the 70s and the 90s.
Worst than that, workers who fell outside the formal labor market, like gig-economy people, suffered the most. They were priced out of the financial system and the services they offered were not protected by salary increases and dependend on these same salary-dependent workers to exist. So, they were pushed even further for the loss of purchasing power.
Inflation, in the end, is a tax that is collected from the poorest of the poor.
Indeed. I was being too generous. It's actually negative-sum because every reduction in efficiency is negative sum.
What's amazing is I still run into leftists who seriously think that if you improve efficiency such that demand for labor falls, then labor will just be too poor to afford to buy the stuff. They really think things like "if we automate car factories then people will be out of work so they won't be able to afford the cars". I'm not shitting you. They will persist in thinking this even if you point out that people didn't stop being able to afford food when farms were mechanized, instead they went to work doing something else that improved living standards. It appears to be some sort of basic Marxist concept that they believe as a matter of faith and cannot unbelieve. If they disbelieved it they would have to give up their entire economic worldview.
As someone who employs hundreds of low wage workers, here’s my basic take:
1. It’s perfectly rational for people to oppose low wage immigration for various reasons. People in low skilled occupations face competition. The general public can be opposed to the behavior of the sorts of people who are only capable of earning low wages. Budget hawks can oppose the net government costs of bringing in immigrants whose taxes don’t cover the cost of schools/medicaid/etc.
2. People should be clear about what the tradeoffs are: higher prices, lower availability of services. Especially in fields where automation is less possible (looking at you, services). The thing with immigrants too is that they are more likely to be good employees at the low end of the wage scale. You might get a nurse from Africa working as a CNA, for example.
3. You end up with some funny equilibria. In my state for example, rules mandating EVerify for in-home caregivers results in a world in which most are black rather than Hispanic. The patients are often upset about this, but they almost certainly vote for the rules that caused it.
4. My own 2c - I think we’re close enough to advanced robotics to create the conditions in which we may no longer need low skilled migration at all. This is assuming people are comfortable with robots doing things like elder care and food service, and AI taking over call centers.
I applaud you for injecting information into this discussion. But you're sort-of-wrong with
> we may no longer need low skilled migration at all
Consider when I eat dinner at my local bar and grill. Maybe 1/3 of the money I pay goes to the waitress who takes my order and puts the plate in front of me. Clearly, that can be automated in a number of ways, but I am paying for a *human* to do those tasks, not for having those tasks done per se.
Which I suspect will become more relevant in the age of AI -- a lot of jobs will pay not just to get the ostensible work done but to have a *human* do it.
Depends on what you are paying for here. Are you paying for meal prep, ambiance, or just the feeling of being waited upon? I'm paying for this first thing. I've taken to buying these prepped meals using fresh ingredients from my local somewhat fancy grocery store that I can just take home and stick in the oven. They are much cheaper than restaurants but as good or better than most restaurants in the ~$15-25 price range. And like, yes, some human is assembling these for now - but I'm cutting out the waitress, the cook, and the dishwasher with this. The meals are pretty standardized (seafood stuffed salmon as one example I buy all the time) so it seems like given decent robotics this last human part could mostly be automated away as well.
I think most people go to restaurants to get better food than they could make themselves prepared for them. You don't actually need humans for this. You don't really need humans for ambiance either. There does seem to be a bizarre subset of people who go out mostly for the sensation of having other humans cater to their whims, but if you go in for this part, you are probably frequenting some establishment that is well above a McDonalds or TGI Friday's price range and which pays staff more because they want quality and not just cheapness of labor. I can't say depriving the sort of person who enjoys lording over McDonalds workers of their entertainment by automating McDonalds sounds very sad.
It’s very possible! Even now we see a certain premium paid for things being “hand-made” or having a humanly quality to them. But those things are typically in the world of luxury goods and don’t drive the national discussion on labor availability because the customer is not price sensitive.
For example, you don’t see Patek Philippe or Rolls Royce complaining about the availability of workers. They just pass on price.
But for commodities, revealed preference is usually for a lower price within reason. Enough to where I don’t think it will be optimal soon to bring in more than a small amount of low skilled labor. For now weirdly enough as AI focuses on white collar work, low skilled labor is doing comparatively well. But with robotics I see that changing fast.
You’d be surprised - there are around 3m call center employees in the US! Almost as many as there are truck drivers. Lots of more regulated industries like healthcare and banking have them.
The problem with cheap labor is hidden cost. Without the humongous social welfare cheap labor would be simply cheap labor. Yet USA already closed down emigration in the early 1920s, before the onset of expanding social welfare. So there were "hidden costs" already then, and most people were aware of them.
If you want to speed run malignant populism, go and build an economy where most people are paid and treated like shit because you can just dip into an infinite labor market of 8 billion people.
We’ll have a hammer and sickle on the white house by a months top.
How do you figure? Billionaires tend strongly to be the most productive people on the planet - that's how one gets to be a billionaire. (Yes there are other ways - those are a small minority.) What does donating have to do with it?
Most billionaires ‘get’ that way by sliding out of the right birth canal. They corrupt liberal capitalist democracy by their ability to purchase politicians and parties outright. The economic interests of billionaires are not synonymous with those of ordinary people which is another thing.
>When it comes to business, is a company that pays 100 people $10K a year better or worse for society than one that pays 10 people $100K a year? This has no answer!
While I get your general point, I think the variance here actually does have an answer. 10k a year isn't a survivable wage - a person making that much requires government assistance to survive and while work that pays that much is obviously part time, there is a inefficiency with regards to resilience towards working multiple jobs. Compress this to 30 workers at 100k and 40 workers at 75k and it's actually nonanswerable.
Regarding immigration, how do you weigh the presence of the job lock with H1Bs specifically? They are paid ~16% less than typical workers, though this gap is not present in our top companies (Apple, Google, Meta, etc.). It surfaces in outsourcing firms. There is an argument to be made on whether the savings are better paid on the company's margin or the the worker's wage, but job lock does allow for nonmeritocratic competition between H1Bs and natives. I don't think this changes the cost-benefit of increased immigration, but addressing it would help perception costs that nativists oft bring up.
Baristas should make $45 an hour and have gold package health care, 4 months of PTO, 401k matching, free childcare, and free meals. But Starbucks needs to stop greedily gouging everyone so much on the price of coffee. Coffee should be $1. Is that so much to ask?
Well Richard the issue isn’t cheap or expensive in the absolute terms you describe, the issue is the relative price of labor between markets. To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil. To build that plant in Mexico to supply the product to the Mexicans in Mexico is smart. And using legal immigrants in The US to staff the plant in the US because you currently can not find/hire needed workers for the output planned for the plant is smart too. The Number of workers available within a given Market ( US or Mexico ) for the number of jobs available will determine the market wage within each market. Supply and Demand. Paying market wages to produce products for that market is smart. But to mix market wages between markets is evil. There is plenty of wrong in “Cheap Labor” when you are not paying a market wage for the market you are selling your product in!!
This is nonsense. Arbitrage is a completely normal and healthy kind of economic activity that makes society better off.
Arbitrage is fine if you are talking only about money. It is evil if you are dealing with Human Beings, and you were talking about the wages of Human Beings. People are not inanimate things, and they should not be treated as a variable cost of production. They are members of the corporate TEAM working for the group’s common purpose. There is plenty of “Wrong” in looking for Cheap Labor!!!!!!!!!
"The Number of workers available within a given Market ( US or Mexico ) for the number of jobs available will determine the market wage within each market"
I would understand why you'd believe that was the case but actually the market wage is mostly determined by the marginal productivity. Technology, efficiency, regulatory and tax advantages, those are what determines wages.
"To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil."
If you attempt this, you can immediately be undercut by a competitor who imports that, or a similar, product for a lower price (while still having a decent profit margin). So the fruits of your "evil" will be very limited in time.
"But to mix market wages between markets is evil."
Over time, wages in Mexico will be forced to increase, assuming there's competition. So that "evil" will also be time-limited.
> To Close a plant in the US to open the same plant in Mexico only because the labor is cheaper in Mexico, and then import that product back into the US for sale at the same price, is evil.
Though in that case, since anyone else can do the same, the price of the product in the US will soon decline to reflect the lower labor cost. At that point, evilness depends the balance between "the product is something I buy" and "the product I'm paid to make".
If you give consumers the choice between a cheap foreign import and an expensive domestic product, watch how quickly their regard for the jobs of their fellow countrymen vanishes. I wouldn’t blame the businesses.
To close a lumber company in Arizona to open one in Washington only because it’s cheaper to cut trees in Washington and then import that wood to Arizona at the same price is evil.
Comparative advantage applies to labor just as much as it does for goods.
Making markets bigger isn’t evil, deciding that men with guns must stop consenting adults from engaging in mutually beneficial economic transactions for the benefits of an uninvolved third party absolutely is evil.
Everything you’re calling evil is a situation where people are more free from men with guns dictating how they can live their lives than the alternatives you prefer. I tend to think “men with guns stop people from doing things they want” is a lot worse than “somebody can’t do what they want because they’re out competed”
I think that your argument proves too much. By the same logic, under the open borders regime if 1 billion migrants come to America and find employment, the natives would only benefit from the cheap labour. However, it's clear that the such a change would change the country profoundly. It's a legitimate desire not to have one's country transformed this way.
Your argument is cultural. His argument is economic. He can be right about the economics while you're right about culture.
Foreigners are also people. You can learn from high immigration societies like Singapore. Or past America.
>past America
The foreign-born share in the US currently appears to be at an all-time high:
https://cis.org/sites/default/files/2025-03/jan-pop-f3.jpg
If we're learning from US history, one lesson is that xenophobia towards immigrants is very common.
Well, Singapore is a pretty unique place and they are a high-immigration but definitely not "open-borders". Another alternative is the Gulf Arab states some of which are 90% migrant. One thing the natives DON'T do there is competing with subcontinental migrants for jobs.
Past America is the example I like the most btw
You can get much of the benefits to both the local economy and migrants even if you only let migrant workers come in for a few years at a time.
About the gulf states: don't they basically have a comprehensive welfare state for locals? Locals mostly don't compete because locals don't work.
In Singapore locals compete with both low skills and high skilled immigrants. (I came via the high skill pathway and now have permanent residence. My kids have local passports.)
"You can get much of the benefits to both the local economy and migrants even if you only let migrant workers come in for a few years at a time."
I agree
"About the gulf states: don't they basically have a comprehensive welfare state for locals? Locals mostly don't compete because locals don't work."
That's right. If it's not parasitism, I don't know what is.
"In Singapore locals compete with both low skills and high skilled immigrants."
Yes, and the immigration is strictly controlled, including enforcing ethnic quotas. https://www.mom.gov.sg/passes-and-permits/work-permit-for-foreign-worker/foreign-worker-levy/what-is-the-foreign-worker-levy
https://www.eh-immigration.com/articles/is-there-an-ethnic-quota-for-pr-and-citizenship-in-singapore
After the first many millions, why would the next 950million come to the US?
Why not? There is a lot of ruin in the nation,. And maybe not necessarily ruin, see the % of migrants in Qatar or the UAE
Your comment is, lots of immigrants will "change the country profoundly". At some point the US will be so changed that the immigrants wont' be coming to the US, they'll be coming to this profoundly changed country. If that is a great place to live, wonderful, US will be even better than it is now, so of course more immigrants will want to go to the US. Alternatively, the immigrants will have changed the US into an awful place that nobody wants to be in, so immigrants won't keep coming to the US. In that case immigration will stop and never get anywhere near 1 billion.
Just one correction: rather than a "great place to live" it should be a "great place to live compared to the migrants' country of origin" for immigration to take place. This is consistent with it being a worse place for natives, compared to the status quo or some counterfactual.
So the de facto suggestion is something like "keep allowing immigrants until the US is no longer an attractive destination".
Can you see why some US citizens might not be thrilled with this idea?
I don't see the ruin.
Interesting point. He doesn't say open bordesr in this piece, but I do think he is for easy and legal migration, and a lot of it. But you're right that there is a number, maybe in the ten million range, where it would profoundly change the country and certain communities for sure. How do you specifically see that changing American culture or society?
I only lived in the US briefly so I'm not really qualified to opine. If it's tens of millions (so 10-15% of the population) the most likely scenario is probably muddling through. If we go higher, other scenarios include the Gulf-style society, becoming a third-world shithole and the Late Western Roman Empire collapse.
So both from experience and other people’s arguments the argument goes that the U.S. is uniquely good at assimilating people for a variety of reasons, so these examples are unlikely. Where are you from if you don’t mind me asking?
I agree that "the U.S. is uniquely good at assimilating people for a variety of reasons" and "these examples are unlikely" given the assumptions you're making. I don't see how it's relevant to the point I was making.
I was born in Europe but I lived in a few different places.
Rightoids who do this are banned.
You should name your newsletter “Richard Hanania’s Strawman of the Week.” Sure, there are people ignorant of economics on every side of the debate. Can’t wait to see how Mamdani’s city-owned grocery stores work out. Yet the issue of “cheap” labor isn’t simply hiring person A because they are cheaper than person B to do the same job. It’s how businesses use rent-seeking to socialize costs while privatizing profits. The whole immigrant labor scam (whether it’s farm workers or tech workers or anyone in between) relies on socializing elements like crime, health care, education, welfare for the rest of the family (especially if there’s a consequent anchor baby), and suppressing wages by locking in to a single employer so the good worker can’t go across the street and demand more. Rent-seeking employers using immigrant labor are the opposite side of the same coin as unions. Unions restrict employment and drive up wages beyond the market price (usually through threats of violence). Immigrant employers restrict employment and drive down wages (usually through the threat of deportation).
The tech industry (of which I am a member and thus fairly familiar) is an excellent example. There is no need to fly software engineers halfway around the world from India to San Francisco because there’s a “shortage of skilled workers” (always a lie when rent-seeking businesses mention it. First week, freshman Econ 101: There are never any shortages except those caused by price controls). You could just employ them in India, doing the same work at a fraction of the cost as the exact same people in America. So why do so many tech companies do it? It’s not to “save money” — paying them in rupees would be phenomenally cheaper than paying them in dollars in California. It’s a specific policy of the Indian government, and it’s friends in the United States, who prop up the Indian state through remittances. Ditto Mexico and Central America. American businessmen get indentured servants. Foreign countries get remittances and control (through diaspora politics) of a part of the American polity.
When H-1Bs, almost always young single men, get to America, they don't want to live an American life. They live as they do in India, cramming 12 men into a 2-bedroom apartment in violation of the law, engage in ethnic nepotism for their co-ethnic, co-caste countrymen, and brutally discriminate against all non-Indians (and non-Brahmins) when put in hiring positions and positions of authority. Medical care is either absent (Medicaid or Obamacare) or extremely limited. Plenty of skilled American tech graduates and workers are available. However, they want to save for a wife, kids, a home, and a car. In other words, they want to have an American life, not live crammed into an illegal apartment, terrified that they could be deported at any moment to some third-world shithole.
Finally, what would, in fact, happen if we allowed 300 million Indians or Chinese people to come to the United States — that's how many claim to want to come in surveys? Would it still be the United States? Or would it be Western India and China? Why would any American want that? In fact, almost all Americans DO NOT want that. One of my most fervent pro-immigration acquaintances lives on a 50-acre farm in upstate New York in a county that’s 98.6% white. Of course, she feels sorry for the poor immigrants, bless their little hearts. I suggested she move to El Paso, where she could live among her neglected and abused "refugees," but weirdly, she didn't take me up on that. Another one of my liberal friends, who thinks Trump's anti-immigration stance is "inhumane," lives in an all-white area whose home value is close to $2M. She can afford her pro-immigration stance. The rest of us cannot.
‘There is no need to fly software engineers halfway around the world from India to San Francisco because there’s a “shortage of skilled workers”…you could just employ them in India, doing the same work at a fraction of the cost as the exact same people in America.’
This is absolutely laughable to anyone who has talked to an actual business owner.
Of course there will always be low wage labor. It’s the market in action. But even the low wage laborer needs democratic protections through legal representation. This is done through processes of documentation and citizenship. As a contractor wanting to grow into their business, working under the table encourages both the undocumented and the tax evader to bid low, undercutting the competitive worker who adds whatever percentage of federal and state taxes to their bids. I feel like you know all this but you disingenuously conflated “immigrant” worker as de facto low wage. When the actual problem with low wage labor is with undocumented labor and that doesn’t necessarily mean “immigrant.” My biggest qualm with the Right’s approach to this problem is that politicians don’t advocate for harsher sentences on American employers who accept under the table labor. Second, they make the same mistake that you make: rhetorically using “immigrant” worker as a term they must mean “illegal”. We all know this is a slight of hand to signal somekind of sick morality that treats all immigrants with sweeping stereotypes. Both the left and right are guilty of this.
Employers accept under the table labor because it has been made illegal to hire those workers legally. Minimum wage laws, employment laws, etc., that prevent employers and employees from mutually agreeing on their desired set of wages and conditions.
When you create contraband, you create black markets.
Note this is distinct from systems of law and contract - we can have voluntary mutual agreement on wages and conditions that are enforceable by ordinary courts and law - prohibitions on force and fraud, enforcement of agreed terms, etc. That's not a black market.
Your argument is that the law de-facto creates contraband. If human nature is to only cut corners, we might as live in an anarcho-capitalist borderless state. I disagree.
I don't think I follow you. Of course law creates contraband - what else could?
What do you mean by "if human nature is to only cut corners"? Clearly humans sometimes want to cut corners and other times don't. Can you elaborate?
Huh? Why should low wage labour require citizenship? That's silly.
Huh? You know what I mean. Citizenship or non-citizen, they need working status visa. Either way, functionally, documenting labor both protects the rights of the worker and creates a fair market for contract bidding.
Getting a working visa is very, very different from citizenship. See eg the gulf states.
I can believe that getting documented is often associated with better protection. But it's neither necessary nor sufficient.
What is this fair market you are talking about? What does it mean?
"There is no rational basis to get upset about employers hiring immigrants who earn lower wages"
Are you referring to documented or undocumented immigrants? The distinction matters. In fact it is crucial to the argument but you don't make it. Sheer laziness.
Even documented immigrants lower the pay floor, as well as incur social costs. Only documented imigrants that earn above 3x average salary probably offset social costs, due to their tax revenue.
The distinction between documented and undocumented immigrants matters for an argument, morally or philosophically, against the author's premise.
Documented immigrants lowering the pay floor, accurate or not, is irrelevant.
sure, sure, sure.
I've really enjoy your redemption arc when it comes to racism, Richard, but I think your market fundamentalism should also be tempered...
For example, in the late 18C and 19C, bosses always fought back against demands for higher wages on the basis that these couldn't possibly be met and, amongst the many arguments deployed, market conditions and competition couldn't possibly allow for more than subsitence wages. Indeed, economists came up with the name 'Iron Law of Wages'.
Yet, with blood spilled, unions were created, salaries were raise and, lo and behold, the economy boomed as capitalism discovered that workers are also consumers.
I would also add that, if you insist on pure supply and demand dictating labor prices, you should look at the impact of the Black Death and how many believe it triggered the Renaissance, thus the Enlightment thus the Industrial Revolution. A clear solution then, for existing workers, would be to mass murder every working age beings in countries with strong emigration pattern. That would not be parasitism but optimisation! Free Markets! Yay.
Look - I'm pro immigration as well. And importing workers in areas where your economy is experiencing shortages or simply importing high quality workers and trusting they'll be additive is fine. But let's not get religious about this shit.
This insightful column reminds me of when clueless U.S. Commerce Secretary Howard Lutnick, trying to defend Trump’s stupid tariffs, said that they would bring back an "army of millions and millions of human beings screwing in little screws to make iPhones" to the United States.
Lutnick and his family has an estimated net worth of $7.4 BILLION. Gleaned from financial services sector via long-standing ownership and leadership stake in Cantor Fitzgerald. He has never worked a day in his life in jobs like almost all American workers, as well for pretty much everyone surrounding Trump, including the 8 billionaires in his cabinet.
He is totally ignorant of labor, manufacturing and how “cheap labor” is a benefit to America and Americans both via “cheap labor” from immigrant workers and through imports dependent on “cheap labor”. Jobs that Americans don’t want to do.
No, Mr. Lutnick, not only will the failed tariff debacle (including all failed Trumponomics) NOT bring back an "army of millions and millions of human beings screwing in little screws to make iPhones" to the United States, that is not a desirable outcome that will help American workers one iota.
Mr Hanania say that he has “no patience for nativists who say “immigrants are not better workers, they’re just cheaper.””.
I have no patience for the Trump maladministration that have no idea what they are doing.
There is another argument against artificial boosting of wages: it is the most inflationary policy that we know of. If salaries are artificially increased, but productivity remains the same, then more people can afford the same amount of production, which means a growth in demand with a stagnant supply. That is what every economics text book tells that will generate price increase. These price increases will destroy the increase in salary and, in the end, the new increased salary will buy the same as the low salary before that.
That was exactly what happened in Brazil during the 80's and early 90's, when workers were protected from inflation through automatic wage increases, that actually would feed inflation even further. It used to be called the "salary trigger" policy.
Then I assume it should work the other way too. As productivity goes up, salaries for ALL EMPLOYEES go up ?
AND how do you justify the extreme discrepancy between salary increases. Literally hundreds of percentage higher for top executives compared with % points for lower level positions.
And just remember Who were considered the ESSENTIAL workers during the Pandemic.
That is exactly why workers in the developed world earn more than in developing countries.
And yes, top executives have higher productivity than lower rank workers since they are responsible for a more added value than lower rank workers.
NO
That seems like a very thorough rebutal.
It's actually quite simple, those top executives usually both have market power due to stakes and very high marginal productivity
Yes, this. Artificially boosting wages is really just doing redistribution through the backdoor. Unless you increase *supply* then prices will rise such that some people will be able to afford less of that thing. You're just shifting around who has the most relative buying power, not getting any net economic gains. It's zero-sum.
It is worth than zero-sum! Overtime, prices tend to anticipate wage increases and accentuate the real salary reduction. Hyperinflation and the adaptation done in law and in financial markets to aviod it actually accentuated income inequality in most Latin American countries between the 70s and the 90s.
Worst than that, workers who fell outside the formal labor market, like gig-economy people, suffered the most. They were priced out of the financial system and the services they offered were not protected by salary increases and dependend on these same salary-dependent workers to exist. So, they were pushed even further for the loss of purchasing power.
Inflation, in the end, is a tax that is collected from the poorest of the poor.
Less than zero-sum, hah.
Indeed. I was being too generous. It's actually negative-sum because every reduction in efficiency is negative sum.
What's amazing is I still run into leftists who seriously think that if you improve efficiency such that demand for labor falls, then labor will just be too poor to afford to buy the stuff. They really think things like "if we automate car factories then people will be out of work so they won't be able to afford the cars". I'm not shitting you. They will persist in thinking this even if you point out that people didn't stop being able to afford food when farms were mechanized, instead they went to work doing something else that improved living standards. It appears to be some sort of basic Marxist concept that they believe as a matter of faith and cannot unbelieve. If they disbelieved it they would have to give up their entire economic worldview.
We take says law for granted
As someone who employs hundreds of low wage workers, here’s my basic take:
1. It’s perfectly rational for people to oppose low wage immigration for various reasons. People in low skilled occupations face competition. The general public can be opposed to the behavior of the sorts of people who are only capable of earning low wages. Budget hawks can oppose the net government costs of bringing in immigrants whose taxes don’t cover the cost of schools/medicaid/etc.
2. People should be clear about what the tradeoffs are: higher prices, lower availability of services. Especially in fields where automation is less possible (looking at you, services). The thing with immigrants too is that they are more likely to be good employees at the low end of the wage scale. You might get a nurse from Africa working as a CNA, for example.
3. You end up with some funny equilibria. In my state for example, rules mandating EVerify for in-home caregivers results in a world in which most are black rather than Hispanic. The patients are often upset about this, but they almost certainly vote for the rules that caused it.
4. My own 2c - I think we’re close enough to advanced robotics to create the conditions in which we may no longer need low skilled migration at all. This is assuming people are comfortable with robots doing things like elder care and food service, and AI taking over call centers.
I applaud you for injecting information into this discussion. But you're sort-of-wrong with
> we may no longer need low skilled migration at all
Consider when I eat dinner at my local bar and grill. Maybe 1/3 of the money I pay goes to the waitress who takes my order and puts the plate in front of me. Clearly, that can be automated in a number of ways, but I am paying for a *human* to do those tasks, not for having those tasks done per se.
Which I suspect will become more relevant in the age of AI -- a lot of jobs will pay not just to get the ostensible work done but to have a *human* do it.
Depends on what you are paying for here. Are you paying for meal prep, ambiance, or just the feeling of being waited upon? I'm paying for this first thing. I've taken to buying these prepped meals using fresh ingredients from my local somewhat fancy grocery store that I can just take home and stick in the oven. They are much cheaper than restaurants but as good or better than most restaurants in the ~$15-25 price range. And like, yes, some human is assembling these for now - but I'm cutting out the waitress, the cook, and the dishwasher with this. The meals are pretty standardized (seafood stuffed salmon as one example I buy all the time) so it seems like given decent robotics this last human part could mostly be automated away as well.
I think most people go to restaurants to get better food than they could make themselves prepared for them. You don't actually need humans for this. You don't really need humans for ambiance either. There does seem to be a bizarre subset of people who go out mostly for the sensation of having other humans cater to their whims, but if you go in for this part, you are probably frequenting some establishment that is well above a McDonalds or TGI Friday's price range and which pays staff more because they want quality and not just cheapness of labor. I can't say depriving the sort of person who enjoys lording over McDonalds workers of their entertainment by automating McDonalds sounds very sad.
It’s very possible! Even now we see a certain premium paid for things being “hand-made” or having a humanly quality to them. But those things are typically in the world of luxury goods and don’t drive the national discussion on labor availability because the customer is not price sensitive.
For example, you don’t see Patek Philippe or Rolls Royce complaining about the availability of workers. They just pass on price.
But for commodities, revealed preference is usually for a lower price within reason. Enough to where I don’t think it will be optimal soon to bring in more than a small amount of low skilled labor. For now weirdly enough as AI focuses on white collar work, low skilled labor is doing comparatively well. But with robotics I see that changing fast.
Call centres need no immigration. Sownone physically sitting in the Philippines or India can do US call centre work.
You’d be surprised - there are around 3m call center employees in the US! Almost as many as there are truck drivers. Lots of more regulated industries like healthcare and banking have them.
Thanks, I hadn't taken weird regulations like that into account.
The problem with cheap labor is hidden cost. Without the humongous social welfare cheap labor would be simply cheap labor. Yet USA already closed down emigration in the early 1920s, before the onset of expanding social welfare. So there were "hidden costs" already then, and most people were aware of them.
If you want to speed run malignant populism, go and build an economy where most people are paid and treated like shit because you can just dip into an infinite labor market of 8 billion people.
We’ll have a hammer and sickle on the white house by a months top.
We need to replace Palestinian neoliberal polemicists with cheaper labor.
Yeah. Parasitism is a form of theft. Closely related to forced socialism, another form of theft. (Voluntary socialism is fine.)
The worst parasitism
Is the billionaire donor class kind.
How do you figure? Billionaires tend strongly to be the most productive people on the planet - that's how one gets to be a billionaire. (Yes there are other ways - those are a small minority.) What does donating have to do with it?
Most billionaires ‘get’ that way by sliding out of the right birth canal. They corrupt liberal capitalist democracy by their ability to purchase politicians and parties outright. The economic interests of billionaires are not synonymous with those of ordinary people which is another thing.
No, not in the US.
>When it comes to business, is a company that pays 100 people $10K a year better or worse for society than one that pays 10 people $100K a year? This has no answer!
While I get your general point, I think the variance here actually does have an answer. 10k a year isn't a survivable wage - a person making that much requires government assistance to survive and while work that pays that much is obviously part time, there is a inefficiency with regards to resilience towards working multiple jobs. Compress this to 30 workers at 100k and 40 workers at 75k and it's actually nonanswerable.
Regarding immigration, how do you weigh the presence of the job lock with H1Bs specifically? They are paid ~16% less than typical workers, though this gap is not present in our top companies (Apple, Google, Meta, etc.). It surfaces in outsourcing firms. There is an argument to be made on whether the savings are better paid on the company's margin or the the worker's wage, but job lock does allow for nonmeritocratic competition between H1Bs and natives. I don't think this changes the cost-benefit of increased immigration, but addressing it would help perception costs that nativists oft bring up.