Charles Whelan, The Naked Economist, writes the following about liberalizing labor markets,
Should we liberalize labor markets, so that workers can more freely cross international boundaries?
My answer: Yes. I find it hard to justify criminalizing anything that I would do myself. If I were poor and trying to raise a family in Mexico, I would do anything to get to the U.S. — legally or otherwise. Capitalism is all about rewarding those who are willing to work harder or cheaper. Why is labor that crosses an international border any different?
When we buy a cheap stereo from China, that’s globalization. When we give the kitchen remodeling job to the lowest bidder, that’s competition. When some guy from El Salvador offers to cut the lawn cheaply, that’s illegal. To an economist, it’s just another voluntary transaction that makes both parties better off.
Yes, we need to police the borders — for terrorists, not cheap poultry workers. You can reasonably disagree with me, but you must concede that I’m the one advocating the “free market” outcome in this case and you’re not.
Which is exactly right. No matter how much you spin it, the idea that we have to keep out illegal immigrants to protect American workers is not a market based solution. In fact, it is exactly the opposite. We can bring in Treasury Secretary Paulson’s comments to underscore what is going on,
When special interests seek protection in the name of low-wage workers, we should acknowledge that limitations on imports do not benefit the vast majority of Americans. They deny people the freedom to choose from a broader array of goods and services, and impose a cruel tax on people who rely on low prices to stretch their family budgets. The cost of protectionism falls most heavily on those who are least able to afford it — the poor and the elderly.
When you buy a stero made in China or some other country you are in effect purchasing some of the labor from that country. Why should illegal immigration be different at least as far as labor markets are concerned? We could make the exact same arguments for prohibiting the purchase of foreign made goods as is often made for purchasing labor from illegal immigrants. The problems with social services while valid, is another issue. Personally, my view is that if we didn’t offer these social services at all that would solve most of this objection. Of course, the problem is that most Americans love these subsidies/forms of welfare, so they aren’t going anywhere any time soon.
