Monday, August 24, 2015

Barriers, Impediments, and Entitlements

Government benefits aren't always monetary

I'm back from a guys' weekend of minor league baseball and stock car racing. (Envious, aren't you?) We hit MLB's rookie league Pulaski (Virginia) Yankees on Friday night and NASCAR's Food City 500 at Bristol Motor Speedway on Saturday night. The baseball was good and cheap ($7 front row seats) and the race was part Woodstock, part carnival, part circus. Outside the race track there were rides, driver interviews, and lots of merchants selling the usual hats and clothes.

One seller offered tee-shirts exhorting Donald Trump to "Build the Wall", referring to the candidate's proposal for a rigid border between the United States and Mexico. The typical economic argument for doing so is that immigrants – I'm assuming both legal and illegal immigrants – "take American jobs". However most studies (summarized in a Ruth Marcus column) show that immigration is beneficial for everyone, so much so that George Mason University economics professor Bryan Caplan argues for open borders.

I started thinking about it from a different angle: entitlement. As I posted a few weeks ago barriers to entry in business and employment are a continuous and growing problem, where incumbents petition the government to erect impediments to newcomers; economist Mancur Olson wrote about this at the macro level in The Rise and Decline of Nations. For this tee shirt merchant and his customers the barrier to entry is physical, one that bestows favoritism and economic benefit to current residents of the United States – whether they're here legally as citizens and documented aliens or here illegally having arrived before construction of the border wall. (Most "wallers" also want deportation of the 11-plus million illegals already here.)

The fertility rate in the United States is about 1.9 births per woman; that's below the population replacement rate of 2.1. So erecting a wall and sealing the borders means an ever-declining American population and reduced competition for jobs – in a sense, a government-conferred entitlement. However most illegals crossing the border don't compete for white collar or most blue collar jobs. Instead they take low-skilled jobs that require little documentation and something less than a high school education. By performing tasks that don't require a high school education, educated citizens are then free to take more skilled, better paying jobs or pursue college degrees.

I guess wallers would argue that it's their birthright (as long as their parents were born here, too) to have a less competitive job market. I argue that strong demand for low-skill, low-wage jobs is the sign of a vibrant and growing economy that's short staffed because American citizens are climbing the ladder of success, leaving a gap at the bottom of the ladder that's filled by immigrants. I'd also argue that we shouldn't be looking at the bottom of the ladder for expanded opportunities for citizens, but at the middle of the ladder and up.

If you believe in a free market, you also have to believe that competition makes businesses and employees better. For a country that loves competition in everything from auto racing to cooking shows, there's something sad about any action that reduces competition, seals our borders, and seals the fate of a perpetual American underclass.

So erecting walls opens up low-wage jobs and reduces the American standard of living – all in the name of border control, entitlement, and saving American jobs. When government confers benefits it's not always with money, but it's always about the money – even if it's less money.