Liber(al)tarian Labor Myths

Open border libertarians like to pretend that the supply of immigrant laborers has no effect on the welfare of existing United States workers. But this is not the case.

Broadly speaking, the welfare of an average Joe who trades his labor for a living depends on two factors. The first is labor productivity which determines how much employers are willing to bid for workers. The second is the supply of labor of similar quality. Increasing the supply of labor with a particular skill set will bid down the wages of workers with substitutable skills.

If we were to follow proposed libertarian policy to throw open the borders and offer amnesty to illegal immigrants, then broad swaths of the lower-middle class dependent on low-skilled jobs will see their incomes decline. At the same time libertarians also propose to cut down government transfer payments, sharpening the blow. And we wonder why we have a hard time proselytizing such an attractive policy package! I doubt the most impassioned and rigorous moral arguments from first principles will ever convince vast hordes of the lower-middle class to support policies against their economic interest.

There is no a priori reason to think that labor markets are immune to economic incentives. Since I have been engrossed by the excellent History of Rome podcast, let's take an example from Roman history. The Republican period of Rome was marked by the era of the freeholding citizen farmer. Most Romans had their own land and lived a good life. But by the time the empire got settled in around 100 A.D., population growth and an influx of slave laborers from the wars of empire had decimated the labor market. Less than 10% of the free citizens of the city of Rome were able to survive without some form of handout, either public welfare or private charity. The average citizen was a squalid beggar and the Gini coefficient approached 1.

So yes, bad things can happen. Conditions can get worse. And bad conditions can last a long time.

The modern world is a very different place than ancient Rome. Capital accumulation and technological progress are much faster and these two forces drive labor productivity ever upwards. Also, globalization of the economy has made capital more mobile. This means the declining wages suffered by workers in a particular country because of an increase in the labor supply will be mitigated by capital moving to take advantage of the lower wages which in turn bids wages back up.

But we are foolish if we believe the price of labor is immune to supply and demand. Open border libertarians preach policies that will worsen the lives of large numbers of people that aren't well off to begin with. In any political system, but especially democracy, large groups command power, and the 74% of poll respondents that support Arizona's aggressive approach to stemming the flow of illegal immigration command a lot of power. This is why neither party is particularly friendly to immigration right now including, unfortunately, the highly-skilled immigration which is most likely to create and attract international capital investment.

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The situation will get worse

When the middle class is destroyed Americans will again be happy to get jobs thinning apples.

Open border libertarians like

Open border libertarians like to pretend that the supply of immigrant laborers has no effect on the welfare of existing United States workers.

Which open border libertarians believe this? Not this one, and not any of the economically informed left-libertarians. As I recall, from the last time I researched this subject, the effect of immigration on low-skilled labor is small, but negative, as you would expect. The argument open border economists make is that this is a huge Pareto/Kaldor-Hicks/Marshallian improvement, for the immigrants are much, much poorer than the native low-skilled workers they replace and/or lower their wages.

Unless you treat the utility of Americans as inherently more important than the utility of non-Americans (in which case I would trot out the bigotry argument, which inevitably arises whenever anyone makes any sort of nationalistic claims), immigration is the greatest possible poverty reduction program. This is an argument that should work on the left, who care about reducing poverty and inequality. It is not an argument designed to appeal to the right, who do not care about these things.

As usual, whenever you trot out the same tired immigration restrictionist arguments, which you seem to do every few months, I trot out the same tired references to Lant Pritchett, and his money shot:

If the 30 affluent countries making up the Organization for Economic Cooperation and Development (OECD) were to allow just a 3 percent rise in the size of the their labor forces through loosened immigration restrictions, claims a 2005 World Bank report, the gains to citizens of poor countries would amount to $300 billion. That’s $230 billion more than the developed world currently allocates to foreign aid for poor countries. And foreign aid is a transfer: The $70 billion that rich countries give leaves those countries $70 billion poorer. According to the World Bank study, wealthy nations that let in 3 percent more workers would gain $51 billion by boosting returns to capital and reducing the cost of production.

Back to your post:

But we are foolish if we believe the price of labor is immune to supply and demand.

Agreed. No libertarians I know believe this. But labor as a commodity is complicated by a number of factors. See, for example, the backward bending supply curve of labor, sticky wages, and, most importantly in any discussion of immigration, the lump of labor fallacy, which you seem to be committing in this post. Via Wikipedia:

The term has also been used to describe the commonly held beliefs that increasing labour productivity and immigration cause unemployment. Whereas some argue that immigrants displace domestic workers, others believe this to be a fallacy, arguing that such a view relies on a belief that the number of jobs in the economy is fixed, whereas in reality immigration increases the size of the economy, thus creating more jobs.

So while no one except your imaginary straw-man open borders libertarian believes the price of labor is immune to supply and demand, labor is an unusual commodity (for obvious reasons), and does not behave in the same way other commodities do.

Open border libertarians preach policies that will worsen the lives of large numbers of people that aren't well off to begin with.

Again, in order to vastly improve the lives of an even larger number of people who are much worse off. This trade-off is a welfare improvement (in the economic sense of the term), and egalitarian, unless you subscribe to nationalist bigotry.

As to your final two sentences, voters are irrational, ignorant, yadda, yadda, democracy is fundamentally flawed, yadda yadda yadda, and public opinion polling data tells us very little about the best economic policies, and very much about widespread tribalistic bigotry and economic ignorance.

I eagerly await a repetition of this exact same discussion six months from now. See you then!

We are talking about bigotry,

We are talking about bigotry, the ultimate bigotry: ego. When we convince lower-middle class Americans to adopt Christ's golden rule and treat third world workers as themselves then we will have open borders.

I suppose a pragmatic humanist could offer to pay off the Americans who would be hurt by changing immigration policy with public funds in order to reap the large benefits to third-world citizens of a more open immigration policy. But a libertarian humanist cannot make such a grand bargain, because it would be wrong even if it made lots of very poor people much better off.

lower-middle class

lower-middle class Americans

I do not think that term means what you think it means.

But a libertarian humanist cannot make such a grand bargain, because it would be wrong even if it made lots of very poor people much better off.

This libertarian humanist can. Not all libertarians--and not even all libertarian anarchists--are NAP compliant. NAP compliancy is a sufficient, but not necessary condition for one to be a libertarian. Incidentally, I was extremely NAP uncompliant in pre-school.

Yes it is

NAP compliancy is a sufficient, but not necessary condition for one to be a libertarian.

By definition, libertarian ideology derives from the Non-Aggression Principle.

You can find people who call themselves libertarian who do not adhere to the NAP, but this does not mean they are correct.

I see you and Constant make arguments with each other of this form often:

  1. X claims he belongs to class A.
  2. X is an a-hole.
  3. Therefore, members of class A are a-holes.

I think it would be more fruitful to define an ideology as an objective set of beliefs. Then you could argue about what derives from the ideology.

You could also examine whether X really does, in fact, belong to class A, despite his or her claims to membership.

To define an ideology by the actions of all those individuals who claim to belong to it--particularly when some of those individuals are politicians--is like trying to nail jello to a wall.

By definition, libertarian

By definition, libertarian ideology derives from the Non-Aggression Principle.

By whose definition? I've found the best definition of libertarianism (like conservativism, modern liberalism, or any other political ideology) to be a family resemblance concept, following Wittgenstein.

I think it would be more fruitful to define an ideology as an objective set of beliefs.

But that's not how language and definitions work. Language follows use, and use is not always objective or self-consistent. And, in fact, Gödel proved that an entirely self-consistent and complete language is impossible.

To define an ideology by the actions of all those individuals who claim to belong to it--particularly when some of those individuals are politicians--is like trying to nail jello to a wall.

Agreed. This is also true when it comes to religion. And probably lots of other areas. Ambiguity in language can be frustrating! Alas, that is our lot in life. I've learned to stop worrying and embrace it.

Sure, complete consistency is

Sure, complete consistency is very likely an unobtainable goal. That's why I use phrases like "fruitful".

Ultimately people will make their choices and act in the world subjectively. If they use an ideology like adherence to the NAP to clarify their choices and the consequences of them, that is also a subjective choice they make. It doesn't mean that we can't assume we are discussing an objective ideology and examine it until we find its boundaries.

I was introduced to the idea in college that all language is meaningless and we should act without reflection or communication, but this seemed at odds with a lot of useful knowledge about medicine, engineering, and relationships (to only begin the list). I find that it helps me make better decisions to assume consistency and look for clarity until I run up against an apparent contradiction.

You, of course, may enjoy embracing fruitless jello, and are free to do so. It might even be fun for me to watch a while.

By the way, I hear that

By the way, I hear that Butler Shaffer's next book is on Subjectivity and Objectivity. I'm looking forward to it, since I don't feel like I understand the topic completely yet.

GEB was a great book

And, in fact, Gödel proved that an entirely self-consistent and complete language is impossible.

Remember that Gödel proved this not for natural language discussions about ethics, but about systems to do simple arithmetic calculations. So if you are going to avoid any discussions of objective systems, you can't stop at "libertarianism". You can't say anything sensible about medicine, economics, or geometry either.

It's not that you can't say

It's not that you can't say anything sensible at all; It's that you can't appeal to language beyond widespread public usage as a source for anything.

So I can't use Fourier

So I can't use Fourier transforms? They aren't really in widespread public usage.

And they are based on a pretty strict definition of "imaginary number" that may be very different from, say, Newt Gingrich's definition.

Please delete me, let me go...

How do I delete a double comment? All I could do was edit it.

And it is true that I raised

And it is true that I raised a bit of a straw man in opposition. I am sure that open borders libertarians believe that such policy will negatively affect some citizens. But they give little attention to the costs of immigration and act as if asking low-wage Americans to take a hit to their standard of living for the greater good of all mankind were no big deal. Of course, opponents of free immigrations are often painted with the "bigot" brush as if that could be their only motivation.

Voting against self-interest?

I doubt the most impassioned and rigorous moral arguments from first principles will ever convince vast hordes of the lower-middle class to support policies against their economic interest.

Perhaps principled argument won't get people to vote against self-interest. Yet it must be noted that US states with the highest median income tend to support greater social spending, while states with the lowest median income tend to vote for cutting back on social spending. In short, voting against interest seems to be remarkably common.

Have you made an assumption

Have you made an assumption that social spending goes to lower income States? It would be interesting to see if that is actually the case.

I wouldn't be surprised if urbanized States have high average income, but are more effective at securing social spending than rural States. It might be too soon to conclude that people are "voting against interest".

It's not too soon; It's well

It's not too soon; It's well documented in Political Science literature that people do not vote for their own self-interest (in the economic sense), but vote sociotropically (what they believe would benefit the country as a whole). Or at least this is my impression from speaking to Jeffrey Friedman and reading selected Political Science journal articles selected by him. So I could be wrong, but I don't think so.

They vote irrationally

They vote irrationally because there is no benefit to voting rationally.

You're right.

You're right. I'm conflating "voting" and "supporting".

It could even be that rational actors in high median income States support greater social spending because that spending ends up with them rather than with low median income States.

Jacob Lyles (essentially)

Jacob Lyles (essentially) wrote:

"And it is true that I raised a bit of a straw man in opposition. I am sure that [anti-apartheid] libertarians believe that such policy will negatively affect some [whites]. But they give little attention to the costs of [ending apartheid] and act as if asking low-wage [whites] to take a hit to their standard of living for the greater good of all mankind were no big deal. Of course, [supporters of apartheid] are often painted with the "bigot" brush as if that could be their only motivation."

So the Apartheid practiced by

So the Apartheid practiced by South Africa was no worse than the border control practiced by every single member of the UN (if there are exceptions, they must be very few in number). I have never been anywhere outside the US without having to show my passport, demonstrating that all the countries I have visited control who comes in.

Looking back, we should call every single anti-apartheid activist who failed to point out that South Africa is no more guilty of doing something wrong than any other country a damned liar - because that's a very important lie by omission. That probably makes about 99% of supporters of South Africa either damned liars or moral cretins.

Or maybe - maybe you want to retract the point. Because I'm basing this only on the equivalence you asserted.

That probably makes about 99%

That probably makes about 99% of supporters of South Africa either damned liars or moral cretins.

I mean of course 99% of supporters of ending Apartheid are liars or cretins, which is where the logic leads.

"So the Apartheid practiced

"So the Apartheid practiced by South Africa was no worse than the border control practiced by every single member of the UN (if there are exceptions, they must be very few in number)."

Probably worse, but no different in its essential nature. Much the same way I consider jury duty and the draft to both be involuntary servitude mandated by the state, although the latter is clearly a much greater imposition than the former.

"I have never been anywhere outside the US without having to show my passport, demonstrating that all the countries I have visited control who comes in."

I have never been to, or even heard of, a country where there are no income taxes, all drugs are legal, and the currency is backed by gold. Clearly rights-violating statism is the predominant political system at this point in history; its prevalence is irrelevant to the issue of its correctness.

"Looking back, we should call every single anti-apartheid activist who failed to point out that South Africa is no more guilty of doing something wrong than any other country a damned liar - because that's a very important lie by omission. That probably makes about 99% of supporters of South Africa either damned liars or moral cretins."

Not liars, simply wrong about certain issues. A fair number of people in the U.S. want to legalize marijuana. Something I never thought was possible ten years ago might be a reality within the next few decades. Nonetheless, polls show that support for legalizing other drugs is usually in the single digits. It seems unlikely that I'll be able to buy heroin at a liquor store any time soon. As a libertarian, I consider the issue of what I put in my body one of basic moral rights and self ownership. Are the millions of people who support legalizing marijuana but not heroin or cocaine "damned liars or moral cretins"? What about libertarians who want to end a bunch of government regulations, but keep some? Reduce, but not eliminate taxes? I consider these positions incorrect, but I would hardly call someone a liar or a cretin simply for supporting a certain change in the direction of freedom while opposing other such changes, even if I see them as analogous.

What business is it of your's...

...if a Mexican agrees to mow my lawn?

Ending apartheid was a great

Ending apartheid was a great success. South Africa is thriving.

I think it was a great success.

I think ending apartheid was a great success.

Unfortunately, creating a one-party State on its ashes a few years later (as soon as politically possible) was a tragedy.

How is "convinc(ing) vast

How is "convinc(ing) vast hordes of the lower-middle class" relevant to anything ?

The vast hordes

How is "convinc(ing) vast hordes of the lower-middle class" relevant to anything?

They vote in US elections. Undocumented aliens generally don’t.

That distinction may not seem relevant to you, but it likely seems relevant to the people who make immigration policy.

"Lower-middle class" is a red

"Lower-middle class" is a red herring. The people Jacob is talking about here--unskilled labor in direct competition with poor immigrants--are not lower-middle class, as middle class is defined by skilled labor. And the unskilled tend to have very low voter turnout, so their self-interest on immigration policy is not very relevant politically.

The same people are strongly

The same people are strongly anti free trade, probably much more than the current level of protectionism, yet they vote. I think any link between policy and public opinion is tenuous. It probably goes the other way actually, people favor conservation of institutions and status quo, so policy shape opinions more than the opposite.