Saturday, July 9, 2011

Free markets and illegal immigration 

Slightly more than two thirds of Americans believe that a free market benefits everyone. They also believe that illegal immigration damages us, especially with respect to employment. They support more stringent law enforcement against persons suspected of being in the country illegally.

There are no survey figures on how many people are aware of the inconsistency of those two beliefs.

Our economy consists of many different markets -- markets for food or cars; markets for capital such as mortgages, stocks and bonds, derivatives; markets for labor whether for day laborers, who pick the lettuce in the Imperial Valley in California, or the CEO for a major global corporation.

In each market, sellers offer what they want to sell and compete with each other for customers by lowering the asking prices. In each market buyers come in to purchase what they want and compete with each other by raising the price they are offering. The current level of prices for any commodity depends on the size of the supply relative to demand. If a given commodity sells at a given price, a significant increase in supply of a commodity will lead to lower prices. A much larger supply can be sold only at lower prices than before the supply increased.

That applies to food. During the summer strawberries are more plentiful and therefore cheaper than they are in the winter. After a bountiful harvest of oranges the price goes down. If a part of the crop freezes during a cold winter, the price for orange juice goes up.

The same is true of labor. If we opened our borders to the South and allowed people from all over Latin America to enter the country freely, wages would drop precipitously because of the large additional supply of workers. Employers could pick and choose and pay a fraction of what they pay today. (I will ignore, for the present, the fact that American corporations as well as the US government bear much of the responsibility for unemployment in Latin America)

We maintain current wage levels by restricting the supply of labor. We maintain current wage levels by restricting immigration. Whatever many people say they believe about free markets, when it comes to labor they do not believe in a free market. 
This inconsistency conceals a profound moral insight: Labor markets are immoral. Every person is entitled to a good job. A good job is one that supports you and your family. A good job is one you'll not hate going to every day. Your getting a good job should not depend on the uncertainties of a labor market. No one should be able to take your job and ship it off to China. No one should be able to force you to take a lower wage because someone else is also looking for a job and is depressing the price of yours.

Markets are not always in balance. At the end of the day, sellers may be left over with some goods which no one wanted to buy from them. That incurs a loss but is not a tragedy. But if at the end of the day not all the sellers of the ability to work have found a job, that is a tragedy. Sometimes goods sell in markets only if the price is lowered drastically. That is not a tragedy when we are selling fruit at the end of the day. But it is a tragedy when it forces people to work two and three jobs just to get by.

Labor markets are profoundly unjust. They treat people as if their strength and intelligence were no different from eggs or potatoes. They treat people as if they were things.

We are right to believe that there should be no markets in labor. As fellow citizens we owe each other a good job for everyone. 
Demanding a good job for everyone does not condone police persecution of people with darker skin. It does not condone depriving anyone of health care or of educational opportunities. It does not support anti-immigrant laws passed in Arizona or Georgia.