The Triangle of Immigration
Mike Curtis
[
GroundSwell, September-October 2007]
It is illegal to enter the United States without permission, yet
there are an estimated 12 million people who have entered the
country this way and remain. Why has the U.S. government allocated
so few resources to enforcing the law? I suspect it is harder to
sneak into a major league baseball game then to cross the U.S.
Mexican border, once you get there. Are illegal immigrants more
profitable than the very same people would be if they entered the
country with a green card? Do illegal, low paid immigrants have any
effect on the general level of wages throughout the country?
Time and again we are told that illegal workers only take the
jobs that no one else wants. They are needed. Without them the
economy would fail. Restaurants would go out of business. Small
farmers would go broke, and large farmers will move their operations
to other countries. There is little doubt, if all illegal immigrants
were deported, many small employers would shut down. The Gross
Domestic Product would fall, and so would the general level of
productivity per worker. Illegal immigrants are strong, healthy,
hard working, and they make up more than 5 % of the U.S. workforce.
But, from the perspective of the U.S. citizen who has to compete
in the work force, how do you actually keep your job and get a
raise? It's by limiting the competition. Labor unions that have
actually gotten their members a higher wage have kept out the
competition. Doctors and lawyers, who have a reputation for high
wages, have limited the competition with laws that require degrees,
exams, and a license to practice their profession. Highly paid
craftsman teach only the apprentice. Supply and demand is how the
world works. And allowing workers across the border is one sure way
to increase the competition for America's jobs. Some people think
that wages are equal to everything that can be attributed to
individual production. It's a common belief that there is a level of
skill and knowledge that, once attained, will put anyone and
everyone to work; that 12 million young, ambitious Latinos working
for less than the going rate will reduce prices and add jobs to the
economy. They don't take jobs or reduce wages for anyone else.
Employers think they should have a right to hire the best and
cheapest person who is willing to work for them -- not only because
the workers are free and un-coerced, but because it is good for the
economy as well.
At the same time the American worker knows that if citizenship is
to offer any real advantage, it must, at the very least, grant him
exclusive rights to the already limited number of jobs within the
country. Our least healthy, intelligent, skilled, and motivated
workers are not expected to compete with the least productive people
in Mexico. They are expected to compete with the most productive
people who are leaving that country because Mexico is in a chronic
recession. Moreover, those superior workers are willing to accept
far less than the prevailing wage. These are people who would
quickly have worked their way up the U.S. pay scale, if they were
afforded the rights of a citizen.
If this struggle were only between employers and U.S. workers, it
would be dynamic, but there is a third factor -- that otherwise
honest and law abiding people feel no obligation to honor the U.S.
border and the laws on immigration. With this in mind, the border
becomes an obstacle like a mountain or an ocean, but few people feel
morally restrained from entering the United States. They are simply
driven by that inherent urge to develop their fullest potential and
get the greatest reward for their efforts.
Many Americans have taken the moral high ground. They have
pointed out that their parents and grandparents came into the
country by following the rules and waiting in line. The more who
come in illegally, the fewer who will get a chance to come in
legally. We should not reward those who break the law. This seems
like a simple and reasonable position until you talk to the illegal
immigrants from Mexico. They know full well the history of Texas and
the 6 southwestern states. They were stolen by the United States who
provoked the secession of Texas and then the war with Mexico. It is
true that Spain stole the land from the various Indian tribes, and
the descendents of those conquering Spanish seceded from Spain and
established Mexico. However, the majority of illegal immigrants from
Mexico are not the descendents of the Spanish, but the native
Americans who crossed the Bering Straits from Asia between 10 and 20
thousand years ago. Do we Anglos have a greater right to be in the
middle of North America than those who were on this continent for
more than 10,000 years? The illegal Mexicans say: if the U.S. would
give back a million square miles of land they stole, most of us
would still be in Mexico. The laws of immigration are ultimately
based on the right of a country to exist as a country and secure its
borders. And that right is the right of conquest. Virtually every
country that exists today came about by force.
As surely as motion seeks the path of the least resistance, labor
is drawn to the employer offering the highest wage. And without
moral restraints, millions of Mexicans are doing their best to get
across the border and get a U.S. job. Not only is a large portion of
the Mexican population underemployed, but most Mexican workers would
enjoy a higher standard of living if they lived and worked in the
United States. If they work in the United States and support a
family that lives in Mexico, the difference in the cost of living
between the two countries makes a profound difference in their
ability to accumulate wealth. There is a great incentive for young,
strong, healthy, and ambitious Latino's to sneak across the border,
work for a few years, and save up money. They often buy materials
for a new house or start a little business when they get home.
So, as long as America is the land of opportunity, high fences
simply mean that the guy who shows up for an illegal job can not
only walk across the desert with nothing but a bottle of water and
some dried beef, but he can climb a 50 foot fence or tunnel under
it. And he is willing to work for a whole lot less than anyone else
who seems remotely comparable in his level of strength and skill.
The better the workers and the less you have to pay them, the more
tempted you are to hire them. Not only are 12 million highly
productive illegal workers extremely profitable, but because wages
are so low in their own country, there is a seemingly endless
supply. Without a serious commitment to seal the border or prosecute
employers, the U.S. will likely end up with many more illegal
immigrants than we have now. The U.S. could seal the border if it
were willing to spend the money building and guarding the barrier.
The cost could not be more than a small fraction of what it cost to
build the interstate highway system. We could send millions of
Mexicans back to Mexico but instead of increasing the gross domestic
product, like the highways that lowered the cost of transportation,
it would diminish the average level of productivity within the
country. Many of those who had been unable to win employment in the
competition with illegal immigrants might then be employed at higher
wages, but their output would be less efficient. Ten or twelve
million fewer workers would mean fewer divisions and specializations
of labor, and that too would diminish productivity. And the
increased cost of production would tend to increase the price of
everything that had previously been made or done by those who left
the country.
Most Americans are consumers, in varying degrees, of the products
or services of illegal workers. Whether you buy hand picked beans, a
meal in a restaurant, house cleaning, child-care, or yard work,
illegal workers are often involved. At the same time, the vast
majority of Americans do not consciously think of themselves as
competing for work with illegal immigrants. The people that do
compete against illegal immigrants don't eat hand picked vegetables,
eat in restaurants, hire baby sitters, or pay someone else to cut
their grass. They don't make up a majority of the voters either.
Therefore, unless those who think of themselves as competing with
illegal immigrants become the tie breakers in the next election,
those illegal immigrants who are here, are likely to stay, and a lot
more will probably trickle in. The U.S. population is probably not
increasing as fast as the number of all immigrants would suggest;
our own birth rate has declined. However, there is a much bigger
consolation than that. As the population of the United States has
increased, so has the general level of productivity. Not only have
more workers produced more goods and services, but with new
technologies, increased infrastructure and greater divisions of
labor, every worker has produced more goods or services than before.
Computers, nail guns, and optical scanners have grossly increased
the productivity of low wage workers as well.
During the last 20 years, the U.S. population increased by about
20 percent, but the average productivity of our workers (discounted
for inflation) has increased by nearly 50 percent. That is not to
say that there isn't a point at which an increase in population
would not diminish productivity (The law of diminishing returns),
but only to show that we are not near it yet.
How many people the U.S. economy can economically absorb under
the present conditions is not clear, but if we look at some other
prosperous countries, we get a clue. The number of people per square
mile of arable land in France is about 850; Germany: 1800; The
United Kingdom: 2500; The Netherlands 3500; and Japan: 8,000. The
United States still has less than 400 people per square mile of
arable land. According to the USDA, over 97 % of the land we are
using is for crops, forests and grasses, etc. Less than 3% is
labeled Urban Areas.
While American workers now produce almost 50% more than they did
two decades ago, wages, in terms of what they can buy, or a standard
of living, remain pretty much the same. The problem is that our
free-land-frontier is gone. The nineteenth century and the Homestead
Act are over. There is no alternative way for people to employ
themselves. This may seem axiomatic to those who understand
Ricardo's law of rent, and the law of wages. It is not so obvious to
everyone else. Human energy is applied to natural resources. They
are combined, separated, and changed in form and in place. First we
produce the tools, buildings, and inventories that give our labor a
greater efficiency in making and trading food, clothing, shelter,
and all the products that satisfy our desires. Without access to
land, people have no place to live or to work, and you can't make
something out of nothing.
America was the safety valve for Europe in the 19th Century. And,
as long as there was land in America on which people could build
their own house and grow their own food -- land that offered an
independent livelihood for free or any price that workers could
afford, America had the potential for full employment. The cheaper
the price of land, the more employers would have to offer in wages.
While the U.S. was not nearly as productive as Britain and Western
Europe, wages were much higher. Between 1803 and 1853 the United
States acquired the Louisiana Territory, Florida, Texas, and the 6
other western states -- a total of about 1 million 800 thousand
square miles. That gave the U.S. mountains, deserts, and a total of
700 thousand square miles of arable land on which to live and grow
things. With 25 million people, that was only 36 people per square
mile. (That statistic probably doesn't count most of the native
people who were eventually driven off or eliminated.)
There were half a dozen occasions when land was given for
homesteading. In the famous act of 1862, one and a half million
people were given 80 million acres. Much of the rest was sold to
investors, and they in turn, resold it for family farms. As long as
the amount of land that was being offered for sale was greater then
the amount of land being demanded by those who wanted to buy it, the
price was exceptionally low. Employers offered high wages, because
too many workers had the option of buying cheap land and working for
themselves. Although wages remained much higher in the United States
than they were throughout Britain and Europe, wages were falling and
poverty was increasing as the 19th Century drew to a close.
Land Speculation
By 1890, virtually all the good arable
land was gone - already owned. How could so much land have been needed
in such a short time. There were many waves of immigration and a high
birth rate, but as recently as 1930 there were only 176 people per
square mile of arable land, and well over half the population was then
living in cities where each family lived on a small fraction of one
acre. The answer is Land Speculation -- owning and hoarding land for
the increase in its selling price. Not only could our cities then, as
now, hold many more people in a much higher standard of living, but
the suburbs sprawl inefficiently and leap frog past potentially
productive areas that could be used for urban and suburban
communities. These areas are held as farmland that grow mostly in
value. Now the intermittent subdivisions are connected by highways.
Before we all had cars, they were connected by the suburban rail
lines.
At the end of the 1920s, a decade in which the world experienced
a greater technological advance than ever before in history, when
the American worker was more productive than ever before -- the
general level of wages fell, and unemployment rose. As inventions
replaced workers, those unemployed workers had to find someplace
else to work. More land had to come into production. You can't put
two things in the same place at the same time. However, every
invention not only increased productivity, it increased the rental
value and the selling price of land, especially urban land. In the
expectation of future increases in the price of land, too much of it
was held back for future sales. Without enough land available for
production, many of those displaced workers remained unemployed.
Without any way for workers to employ themselves -- no free land
alternative, wages for those with the least intelligence, skills,
and education tend to a bare subsistence. Without intervention in
the market place, workers get hungry and accept the wages of a slave
-- food, clothing and shelter, the amount below which they get weak
and sick, produce less, and yield less income to their employer.
That is why in 1935, in the middle of the Depression, with mass
unemployment, Congress enacted the Legal Minimum Wage. We have had
many periods with a relatively small percentage of unemployment, but
we have never had a time since, when there were not people who would
have been paid less, if the Legal Minimum Wage had not been
retained.
Those workers with superior skills and knowledge were and are in
short supply. Employers compete against each other to hire them. The
greater the profits to be made, the more those workers are offered,
and the higher their wages. The higher their wages, the greater the
incentive to learn that special skill or knowledge, and the greater
the supply of those superior workers, which in turn, prevents their
wages from going any higher.
During the last quarter of the century we have seen a myriad of
new tools and machines that increase the results of the least paid
workers. But wages are not determined by the amount you produce.
Wages are determined by how much you could alternately produce
working on your own land for your self. And since there really is no
more free, or even cheap land worth talking about, wages tend to
remain constant.
The amount of arable land remains about the same. The population
and the work force increase. Every day land is sold, houses and
facilities are built, jobs are created and people go to work on land
that no one lived or worked on before. The problem is the people who
hold land for its increases in value (Land Speculation never sells
enough at any given time to put everyone to work.) As population
increases, as the infrastructure is extended and improved, as new
technologies increase the results of labor, the selling value of
land increases. While the land is held in anticipation of the
increase in value, it is either unused or grossly underused, and
this contributes to the shortage of jobs and housing. In addition,
every time a machine replaces a worker, that worker has to work some
place else. How many of the jobs taken by illegal immigrants would
have been given to our own citizens in their absence, is hard to
know. Cheaper labor increases the price of land and may have
encouraged people to sell. That would create jobs. But rapidly
increasing land prices often result in people not selling land in
anticipation of higher prices in the future. Restaurants and other
operations may have been able to hire more people in the same space
at lower wages without exceeding the point of diminishing returns.
Homeowners may have hired illegal immigrants to cut their grass
instead of cutting it themselves, but some other previously idle
land might have employed someone to bring forth a good or service
that they would have bought with the money. However, in the total,
the number of people employed at any given moment will depend on how
much land is put into production and the intensity to which it is
used.
To recapitulate: wages for those with the least skills and
education tend to a bare subsistence. They rely on the legal Minimum
Wage laws, because land speculation gives them no free land
alternative to employ themselves. The United States has less than
half as many people per acre of arable land as France and one sixth
as many as Britain. Yet, it has millions of people who are willing
and able to work, but unable to find employment because of land
speculation -- not enough places are available for everyone to work.
The solution
So what do we do? Before we consider a stopgap proposal that
shares the economic benefits of immigration with the workers, let's
consider what is possible. One look at Singapore, and we get a
glimpse. They have 14,000 people per square mile, and they are one
of the most productive countries in the world. This is in spite of
the fact that only 2 percent of their land is capable of growing
anything. Who knows how many people the United States could support
in a just and prosperous society, but each of our major cities
could, and once did, support many more people than they do now. We
could rejuvenate our urban slums, provide healthy and comfortable
housing, and create many more jobs. In the suburbs we could create
an orderly development that provided open space and park land
without the sprawl that now consumes much of our natural environment
Shifting Taxes To the Rental Value of Land.
Taxes now total
about a third of the nation's output. By shifting all taxes to the
rental value of land, we would encourage people and business to hold
the smallest amount of land they could use, and produce as much as
possible on it. Large numbers of people would save by living in
apartment buildings and sharing a view. Business would build the
highest buildings that were profitable. There would be no more low
rise buildings in Midtown Manhattan. No penalties would be levied for
the erection of buildings, but there would be a great expense for
those who held on to valuable land and did not put it to use. The tax
on the rental value of land would have to be paid even if the land
were vacant or idle and there was no income out of which to pay it.
There would simply be no reward for holding unused and underused land
for future use or sale.
Under these incentives the most valuable land would be developed
to its greatest potential. People would migrate toward the cities
and suburbs. They would not be crowded like the slums of Harlem,
where families often share a unit, but in what is the standard of
Park Avenue where large high-rise apartment buildings offer spacious
living and a view. Although each apartment is spacious, the density
per acre is even greater than Harlem. With modern technology high
rise buildings give us the potential to house more people per acre
in spacious living than even the phenomenal crowding of Chinatown,
San Francisco.
By the same incentives, the best commercial, industrial, and
mineral lands will be put to their most productive uses. As labor
and capital migrate in the process of maximizing their efforts on
the best land, the demand and the value of the least productive land
will fall. Soon, within 50 or a 100 miles of every city, there would
be land without value. It would be good for building houses or
growing crops. It would be capable of supporting a small business,
but other land would be so superior, so much more in demand, that it
would have no rental value at all. It could be used without the
payment of rent. Having free land available to everyone to live and
work on would deliver high wages for everyone -- just like it did in
past centuries when America had a free land economic frontier. Not
that everyone would become a yeoman farmer, but no one would work
for someone else, unless they were offered more than they could have
produced working for themselves where the land was free.
Those who held the superior land would fund the costs of
government by paying rent for the land they held. Every increase in
productivity would, as it does now, increase the rental value of
superior lands and provide more revenue for the increasing needs of
society. Every increase in productivity would increase the amount
that could be produced where the land was free -- just beyond the
land that was economically demanded and valuable. Therefore wages
would go up. Every increase in productivity would increase the
returns to capital -- buildings, machinery and inventories. No one
would lend their capital to some one else unless they were offered
more than their capital would yield where the land was free.
Under these conditions, every increase in the population would
permit greater divisions of labor and greater economies of scale. It
would increase wages and the return on productive investment. And,
it would increase the rental value of land, which funds our
infrastructure, police, defense, education, healthcare, welfare, and
the future needs of society. Under this arrangement, every increase
in the population will increase the quality of life for every person
in the country. And it will continue until we reach the point of
diminishing returns. In short, labor and capital will enjoy whatever
they produce by making use of the natural opportunities that are
freely available to everyone. And that value which represents the
advantage of superior opportunities will be collected, used, and
shared for social purpose. ) With this system in place, we could
probably open the border and declare "The more the merrier".
As each and every person left Mexico and Central America, the value
of the land in those countries would fall. How long would their
ruling families stand by and watch the rental value of their land go
down? In self defense, they would implement some competitive measure
to draw their workers back. Hopefully they would raise wages rather
than shoot those who tried to leave.
A stopgap measure
That is what is possible, but we know that a serious tax shift
that encourages the most efficient use of our resources will take
time. In the meanwhile, we can simply peg the Minimum Wage to
increase at the same percentage rate as the increase in the Per
Capita Gross Domestic Product. That way, workers too, will share in
the benefits of increased population and technology.
Second, let's have the government provide low level Min Wage,
W.P.A. type jobs for everyone who's willing and able to work. They
can clean up the highways, fix up the parks and replant the forests.
By that requirement, the government will have a vested interest in
not letting more people into the country than can be economically
employed.
And without a serious tax reform, there will be a shortage of
affordable housing. Let's have the government provide enough public
housing so that everyone on the Minimum Wage can get decent shelter
at an affordable price. If we do those three things, we will have
eliminated the ill effects of legal and illegal immigration on our
own citizens for now.
However, in a few years, we will have another recession. What are
we going to do with our non-citizen workers then? In the nineteen
thirties, they were sent back to Mexico, where there weren't enough
jobs and the Mexican government had far less resources then the
United States. If we welcome people into the country to work, we
require them to fulfill all the obligations of a citizen -- they
play by the rules, pay their taxes and generate profits for their
employers, shouldn't they become one of us? Shouldn't they be worthy
of our support when there's a hurricane or an earthquake or the next
depression? If they're good enough to contribute to our economy,
ought they not have a vote and our mutual support when disaster
falls upon us?
What is humanly possible
True, the United States stole the best half of Mexico. However,
not only Mexico, but virtually every impoverished country in the
world still has ample resources to provide for their people. With an
equitable distribution of wealth and opportunity each nation could
have full employment. They could accumulate capital, develop the
infrastructure, maximize productivity and enjoy a level of wages
that are as high as the most prosperous nation's are today. Except
for that place in Africa where humans first appeared, we are all
descended from immigrants. Certainly a democratic system of local
self determination is humanly possible with free migration and open
borders for each and every citizen of the world.