Efficient or artificial? Restrictionists versus open borders advocates

After reading books by both Krikorian and Riley, I am struck by the contrast in what they consider the natural/efficient state of labor markets to be.

Restrictionists like Krikorian view the “natural” state of the labor market as one with no immigrants. Thus, if large scale immigration increases the supply of labor in a particular labor market, Krikorian refers to this as an “artificially loose labor market” which he in turn blames for the suppression of wages of natives and slowdown in technological progress. This isn’t to suggest that Krikorian isn’t open to allowing immigration when it is helpful, but rather, he views any immigration as a distortion of labor markets that needs justification. Quotes are included below the fold.

On the other hand, moderate open borders advocates such as Riley, as well as more radical open borders advocates like Lant Pritchett, view local labor markets as inherently embedded in global labor markets, and the “efficient” state as one with relatively unrestricted labor mobility. To Riley, then, it is immigration restrictions that constitute a distortion of the labor market. Again, this is not to suggest that Riley would not be open to immigration restrictions under any circumstances, but rather, he would view them as a distortion of the labor markets that would need to be justified on other grounds. Quotes are included below the fold.

Is there a way of resolving the issue? Some might argue that this is just an issue of semantics, and we can ignore it and just look at the factual claims made. This is partly true, but I think the choice of natural versus artificial reflects an underlying moral theory that cannot easily be dismissed. Consider three claims:

  • Immigrants from Arkansas are “artificially” lowering wages in New York (Arkansas and New York are both US states): Many are likely to dismiss the claim, regardless of whether, in fact, immigration from Arkansas is reducing wages in New York. The reason is that for many people, intra-national mobility of labor is a natural part of the structure of labor markets. See also: Save Fairfax.
  • Low-skilled white workers are “artificially” lowering the wages of black workers who tend to be more disproportionately low-skilled: Many are likely to dismiss that claim regardless of the factual merits of the arguments about wage suppression. The reason, I suspect, is that they would assume that labor markets operate across racial lines, and no racial group has a moral claim on a particular labor market, even if a particular labor market at a given time is dominated by a particular racial group.
  • Bloggers are “artificially” lowering the wages and employment opportunities of journalists: Regardless of the effects of blogging on journalism as a profession, many would be uncomfortable calling this “artificial” because (I suspect) the labor market for information/entertainment should be open to all people and all types of products, whether conventional news journalism or blogging or something different.

For these reasons, I believe that restrictionists’ use of the term “artificial” is, at least prima facie, mistaken. What moral theory or worldview leads restrictionists to a different conclusion on this matter? I think that the use of the word “natural” to describe a state of zero international labor mobility is a symptom of either citizenism or territorialism. I consider both these philosophies to be profoundly mistaken, but these are widely accepted philosophies in modern political debate.

Quotes from Krikorian (bold emphasis added):

… by artificially keeping wages lower than they would be otherwise, mass immigration reduces the incentives for more-efficient use of labor, slowing the natural progress of mechanization and other productivity increases in the low-wage industries where immigrants are concentrated.

Krikorian, Mark (2008-07-03). The New Case Against Immigration: Both Legal and Illegal (p. 133). Penguin Group. Kindle Edition.

Later (bold emphasis added):

What’s more, while immigrants account for about 15 percent of all workers, they make up nearly 40 percent of workers lacking a high-school degree, resulting in an artificially bloated low-skilled labor force.

Krikorian, Mark (2008-07-03). The New Case Against Immigration: Both Legal and Illegal (p. 136). Penguin Group. Kindle Edition.

Later (bold emphasis added):

Although much of the economic analysis of immigration rightly looks at its effects on Americans with relatively little schooling, it’s important to note that those at the margins of the economy include more than just high-school dropouts. Those harmed by artificially loose labor markets include a disproportionate share of blacks and Hispanics and American Indians, as well as the young and the old seeking part-time work, mothers of young children looking for flexible jobs, the physically and mentally handicapped, ex-convicts attempting to build new lives, recovering addicts, and even earlier immigrants.

Krikorian, Mark (2008-07-03). The New Case Against Immigration: Both Legal and Illegal (p. 137). Penguin Group. Kindle Edition.

Later (bold emphasis added):

But the ability of government to effect change in many of the areas of concern is limited; huge expenditures have not halted the decline of urban schools, for instance, while other problems are the bailiwick of society rather than government. Immigration, however, is one important area where government can make a difference, increasing incentives for constructive work by preventing mass immigration from artificially flooding the job market with low-skilled workers.

Krikorian, Mark (2008-07-03). The New Case Against Immigration: Both Legal and Illegal (p. 142). Penguin Group. Kindle Edition.

Later (bold emphasis added):

The preceding discussion focused on the impact of mass immigration on workers—how it reduces their wages and crowds them out of the job market, and causes increased inequality. But is an artificially bloated low-wage labor market at least good for business? Spokesmen for the U.S. Chamber of Commerce, the National Restaurant Association, the California Farm Bureau, and others would have you believe the answer is yes, and in the short term, that’s likely to be the case. Employer organizations spend enormous resources lobbying the government to import a “reserve army of labor,” to use Marx’s phrase, so that they can hold down their labor costs and avoid unionization.

Krikorian, Mark (2008-07-03). The New Case Against Immigration: Both Legal and Illegal (p. 149). Penguin Group. Kindle Edition.

Quotes from Riley (bold emphasis added):

Peri found that since workers with different levels of education perform different tasks, the majority of native-born workers—high school graduates with some college— experience benefits, more than competition, from the foreign-born workers who are concentrated in high and low educational groups. The result is a more efficient domestic labor market, which leads to more capital investment, higher overall economic growth, and, ultimately, more choices for consumers.

Riley, Jason L. (2008-05-15). Let Them In: The Case for Open Borders (pp. 60-61). Penguin Group. Kindle Edition.

Later (bold emphasis added):

Yes, there are Americans with low skills to fill these jobs. The problem is that the number of such Americans is steadily shrinking, which is a good thing. Orrenius’s point is that we don’t want people doing jobs that they’re overqualified for. That leads to inefficiencies in the labor market. The fear is that if low-skill foreigners aren’t available to fill certain jobs and perform certain services, those jobs and services will either go away or be filled by overqualified individuals who will demand high salaries to fill them. (In much of Europe, for example, dry-cleaning is a luxury, and inflexible labor markets are the reason.)

Riley, Jason L. (2008-05-15). Let Them In: The Case for Open Borders (p. 74). Penguin Group. Kindle Edition.

In his book Let Their People Come (available free), Lant Pritchett goes even further than Riley, using the term “artificial” in the opposite sense to Krikorian. In a lengthy passage from Chapter 1 (PDF) quoted on the cheap labor leading to technological slowdown page, Pritchett writes (bold emphasis added):

But the distortion in the research and development induced by restrictions on labor mobility gets almost no attention and almost certainly has an impact that is orders of magnitude larger. The current configuration of the “everything but labor” global economy produces incentives for the invention of more and more unskilled labor saving devices in a world in which the key price for poverty alleviation is the wage of unskilled labor. Because of the artificially inflated price of labor in rich countries, the rich world is full of highly educated innovators dedicated, indirectly, to lowering the one price on which progress in poverty reduction depends.

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