Thursday, June 12, 2014

Do you truly believe what you believe you believe?

I have a number of friends and colleagues, and readers as well, who believe they believe in free markets---some who espouse their believed belief with great passion---who yet reject the arguments for a free market for labor. This was confirmed for me yesterday in a conversation with a friend, and a little pushback from readers of yesterday's blog post.

Before proceeding, I have to say that I make myself cringe every time I use that cold market term, "labor", in this context. I am in fact talking about fellow human beings who---seeking only to better their conditions (as was my Spanish Grandfather, and some heroic figure(s) on your family tree)---would cross untold miles of land or sea to offer all their minds and bodies can muster to willing employers. 

The thing is, folks, you're either against government intrusion into the marketplace or you're not. That is, you're either for free markets or you're not. And since "labor" is such a huge component of the market, if you believe you believe in free markets, and yet resist the importation of "labor", well, let's just say you don't truly believe what you believe you believe.

So I ask you---if you happen to sympathize with my aforementioned friends, colleagues and readers---to please rethink how you think about freedom and free markets. The good news is, if your concerns are economic, freer immigration---as counterintuitive as this is for you and so many others---could do absolute wonders for "our" economy. Here's a snippet from the December 2013 Adam Smith Institute article titled Immigration controls are the New Corn Laws. Why don’t more free marketeers care?:
In 2011 Michael Clemens looked at the economic estimates of the global GDP growth that would come if every country in the world abolished restrictions on the movement of goods, capital and labour across national borders. According to the papers Clemens looked at, removing all barriers to trade would increase global GDP by between 0.3% and 4.1%; removing all barriers to capital flows by between 0.1% and 1.7%. Those are big gains that would make the world a substantially richer place.

Completely removing barriers to migration, though, could increase global GDP by between 67% and 147.3%. Think about that: simply letting anyone work anywhere could more than double global GDP. And that would be a long-term boost to economic growth, not a one-off. Even the bottom end of that, 67%, is an astonishingly huge figure.

It’s not as far-fetched as it might sound. As Clemens points out, workers can often create wildly different amounts of value by doing the same thing in different places (or doing them with different people). A taxi driver who might expect to make $1,500/year in a city in (say) Benin might be able to make $31,000/year in New York City by doing exactly the same thing. That shouldn’t be a surprise: bringing someone like Sergey Brin to work quickly, saving him an hour, is much more valuable in terms of his opportunity cost than, say, saving me an hour.

Phelippe Legrain, in his enlightening 2007 book Immigrants: Your Country Needs Them wrote:
Sober-minded economists reckon that the potential gains from freer global migration are huge, and greatly exceed the benefits from freer world trade. As I explained in my first book, Open World: The Truth about Globalisation, the freeing up of global trade in manufactured goods in the second half of the twentieth century led to a quintupling of the world economy and an unprecedented rise in living standards in both rich countries and poor. So just think how opening our borders to migrants could transform our world for the better in the twenty-first century.

Historical experience certainly suggests it would do a lot of good: the United States' stunning economic growth between 1870 and 1920 coincided with the migration of tens of millions of Europeans to America. A study of fifteen European countries finds that a 1 percent increase in the population through migration is associated with a boost to the economy of between 1.25 percent and 1.5 percent. The World Bank reckons that if rich countries allowed their workforce to swell by a mere 3 percent by letting in an extra 14 million workers from developing countries between 2001 and 2025, the world would be $356 billion a year better off, with the new immigrants themselves gaining $162 billion a year, people who remain in poor countries $143 billion, and natives in rich countries $139 billion. And those figures grossly underestimate the likely economic gains from the added diversity and dynamism immigrants bring.

And, to my main point, here's Steve Landsburg (be sure to read his entire article, it's excellent [HT Don Boudreaux]):
I see my preference for freedom as an end in itself as being similar to my preference for well done meat — you either share that preference or you don’t, and if you don’t, we’ll just have to agree to disagree — there’s no right or wrong here. One exception: If your preferences strike me as inconsistent — if, that is, you seem to make a lot of choices that indicate a strong preference for freedom while denying that freedom is terribly important to you — then I’m apt to point to that inconsistency and suggest that you might want to think a little harder about what your true preferences really are. That was the thrust of what I once tried to do in a book called Fair Play, where I suggested that the choices we make as parents often reveal values contrary to those we express in the voting booth — and that by reflecting on those choices, we might become more thoughtful voters.

On the other hand, if you doubt that freedom is an effective means toward prosperity, then I’m pretty sure you’re just wrong, and that if you thought about it harder you’d change your mind. A lot of my other writing has tried to explain how to think about it harder, and to demonstrate that this is a subject where hard thinking can be fun.

Now I’m not sure in which sense our congressional candidate considers himself a free marketeer, but surely if you’re a free marketeer in either sense, you’ll tend to endorse statements like these:

I, and not the government, should get to decide who will be a guest in my home.

I, and not the government, should get to decide who I’ll hire to mow my lawn.

I, and not the government, should get to decide who I’ll go running with this evening.

I, and not the government, should get to decide whose businesses I’ll patronize, who I’ll serve as customers in my own business, and who I can sell my house to.

And, lastly, here's Jason Riley, followed by Bryan Caplan, making perfect sense:

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