It's always fun to apply purely economic utilitarian analyses to social hot-button issues. Fun, because even though the exercise is essentially irrelevant, at least insofar as it matters politically, it still makes for great cocktail party conversation. Take, for instance, "The Economic Logic of Illegal Immigration," an analysis presented by Gordon H. Hanson, director of the Center on Pacific Economies at the University of California, San Diego, and published this month by the Council on Foreign Relations. (Thanks to Mark Thoma and Felix Salmon for their links.)
Hanson's analysis boils down to this: cutting off the flow of illegal immigration to the United States would cost far more, economically speaking -- in terms of paying for the building of a border fence, ramping up enforcement, etc -- than any benefits that otherwise might accrue to the economy, either for legal U.S. citizens who no longer faced the wage pressure of cheaper labor, or for local governments that no longer bore the fiscal burden of providing services to illegal immigrants. .
Hanson effectively dismisses the whole debate over whether illegal immigrants are a net positive for the American economy (because their cheap labor makes businesses more productive) or a net negative (because of the drain on social services) by declaring that the available data indicates that the overall impact is tiny, whether positive or negative. But building a 700-mile border fence and effectively guarding it would be very, very expensive.
This is the kind of argument that one nods one's head at and then ignores. Because even if every word of it is true, it will change absolutely no one's mind. The politics of illegal immigration are so wrapped up in cultural identity and employer vs. labor class dynamics that a strictly utilitarian cost-benefit argument will never make any political headway. One pizza chain offering customers the right to pay in pesos will send infinitely more ripples through the popular culture than a hundred analyses arguing that "Immigration generates extra income for the U.S. economy, even as it pushes down wages for some workers."
Which, in a utterly tragic way, is ironic, because illegal immigration is fundamentally a response to economic realities no amount of political grandstanding can change. As Hanson details, it is mighty difficult to repeal the laws of supply and demand.
Due to steady increases in high school completion rates, native-born U.S. workers with low schooling levels are increasingly hard to find. Yet these workers are an important part of the U.S. economy -- they build homes, prepare food, clean offices, harvest crops, and take unfilled factory jobs. Between 1960 and 2000, the share of working-age native-born U.S. residents with less than twelve years of schooling fell from 50 percent to 12 percent. Abroad, low-skilled workers are more abundant. In Mexico, as of 2000, 74 percent of working-age residents had less than twelve years of education. Migration from Mexico to the United States moves individuals from a country where their relative abundance leaves them with low productivity and low wages to a country where their relative scarcity allows them to command much higher earnings.
The standard response to the theory that low-skilled labor is in increasingly short supply in the United States is that if employers raised wages for strawberry-picking and table-bussing and ditch-digging there would suddenly be an abundance of native-born workers willing to grab spades and start breaking their backs. Putting aside the very real question of what economic impact there would be on the entire nation if prices for strawberries and restaurant food and construction work jumped up, we are still faced with an intractable problem. If wages for low-skilled jobs were raised in the U.S. that would only increase the disparity between what a low-skilled worker could earn in Mexico and what he or she could earn in the United States, which means that the pressure to migrate north would only grow, no matter how high the fence one had to jump or how many armed-and-dangerous Border Patrol agents one had to elude.
Maybe the smartest thing to do would be to take all the billions that are going to be spent on border control, and invest it in building roads and schools and other infrastructure in Mexico. A Marshall Plan for Mexico might seem unworkably utopian to some, but at least it would be a way forward built on hope, rather than exclusion.
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