15 February 2012

It’s No Coincidence

Here’s Paul Krugman:

James Kwak and Larry Mishel, in slightly different ways, make a point I was planning to get to: the rise in safety net spending over the past decade does not reflect an expansion of that safety net. Instead, it reflects two things: rising health care costs, and a terrible economic slump that has put many more people in need.

Basically, the rise in safety net spending is due to increases in qualified recipients, not an expansion of average net benefits.  Here’s the LA Times:

But now, as the economic rebound picks up a bit of steam, Latinos are scoring bigger job gains than most other demographic groups and proving to be a bright spot in the fledgling recovery.
While they make up only 15% of the country's workforce, Latinos have racked up half the employment gains posted since the economy began adding jobs in early 2010, Labor Department data showed.

Expanding the labor pool while simultaneously placing restraints on businesses will have the unfortunate consequence of driving down wages and preventing demand for labor from expanding. Tack on a price floor for labor, the high costs of regulatory compliance, plus the ability to easily escape onerous regulations via free trade agreements, and you have a recipe for high unemployment and low wages for those that remain employed.

Anyhow, one immediate step that can be taken by the government is to kick out illegal immigrants, eliminate the guest worker program, and cut down on legal immigration, particularly of the low-skill variety.  This would reduce the labor pool, helping the currently unemployed have more opportunities to find employment, and eventually reduce safety net dependence, thus cutting government spending.

Also, given that the government is supposed to act in its citizens’ best interest, it should be a no-brainer to put the labor interest of citizens ahead of the labor interests of non-citizens.  Especially since doing so will reduce government spending.

3 comments:

  1. I don't know why these simple facts evade people...wait, they don't - I know a plumber who was saying the same thing the other day, and an 84-year old great-grandmother. And an accountant.

    But those people are just racist and uneducated. Well, except for the accountant, but he's a conservative, and thanks to Yahoo! everyone now knows that being a conservative = dumbsh*t.

    The people who can see this economic fact plain as day will not be taken seriously because it interrupts the narrative of the Coastal Elites. The clamor for less immigration and kicking out the illegals is useful to the Coastal Elites only as a foil to showcase their progressive generosity.

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  2. You (and the supermajority of pundits) labor under the false assumption that everybody needs jobs, that a healthy economy involves 90%+ employment. This simply is not consistent with the reality of automation, it will become less and less consistent in coming decades. Immigration and outsourcing are small factors next to automation. Within a couple generations, almost everything is going to be automated, and a realistically healthy economy would have single-digit EMployment, rather than UNemployment. The proper fix is a completely unconditional universal guaranteed basic income.

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  3. @Cranberry- One key to understanding why economists say dumb things like, "we need more immigration" is because they are paid statist hacks. They say whatever their patrons want them to say, except in fancier, more abstract language.

    @GFM- I'll address your comment in its own post.

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