Immigration Policy Should Strive For The “City On The Hill,” Not The “Deserted Town”

by David Bier on October 25, 2012

in Features, Immigration, International

Opponents of human movement, also known as “immigration,” argue that if the U.S. government stops forcibly preventing foreign-born people from relocating to the United States, the wages of American workers will suffer dramatically. By appealing to economic terms — prices, wages, supply and demand — this argument maintains the illusion of intellectual credibility that merely shouting “they’re-taking-our-jobs” lacks.

The reality is the restrictionist argument — that more workers will mean lower wages — never makes it past Econ 101, class 1. This is because the argument ignores the “ceteris paribus” disclaimer, which says if all other things were held constant, wages should fall. But things are never held constant in real life, least of all when dealing with people.  The economy is more dynamic than that — people create, innovate, buy and sell.

To take one example, consider Say’s Law. In his 1803 Treatise on Political Economy, Jean-Baptiste Say, a French economist and businessman, wrote that “a product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.” In other words, when a worker creates something of value, he can sell it (or the company for which he works can sell it and pay him). The money he receives for his efforts, either directly or in wages, creates a market for other goods and services. “Thus, the mere circumstance of the creation of one product immediately opens a vent for other products,” Say concludes.

The implication of “Say’s Law” is among the most important in all economics, and it implies immigrant workers are a positive force in the economy. Say notes that “in every community the more numerous are the producers, and the more various their productions, the more prompt, numerous and extensive are the markets for those productions; and, by a natural consequence, the more profitable are they to the producers; for price rises with the demand.” Higher prices for producers mean higher wages for their workers.

Say’s law implies “a good harvest is favourable, not only to the agriculturist, but likewise to the dealers in all commodities generally. The greater the crop, the larger the purchases of the growers. A bad harvest, on the contrary, hurts the sale of commodities at large.” In other words, Say concludes, “each individual is interested in the general prosperity of all, and that the success of one branch of industry promotes that of all the others. In fact, whatever profession or line of business a man may devote himself to, he is the better paid and the more readily finds employment, in proportion as he sees others thriving equally around him.” The prosperity of the immigrant not only does not injure the native’s — it aids it.

Say asks whether anyone would be better “in a small deserted and semi-barbarous town.” He writes “Though in no fear of a competitor, he could sell but little, because little was produced; whilst at Paris, Amsterdam, or London, in spite of the competition of a hundred dealers in his own line, he might do business on the largest scale. The reason is obvious: he is surrounded with people who produce largely in an infinity of ways.” Fewer producers means fewer buyers, which means lower wages for everyone — that is, fewer immigrant workers means fewer buyers, which hurts us all.

Naturally, there are other reasons why the simplistic restrictionist analysis doesn’t hold, but Say’s Law is enough to show that it is fundamentally flawed. As Jean-Baptiste Say saw, free-markets benefit everyone, not just a select few. Rather than striving for a “deserted and semi-barbarous town,” America should strive once again to be “the city on the Hill.”

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