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Category Archive: Labor and Immigration

  1. 4 Ways Economists Think We’re All Wrong | Econ Chronicles

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    How much does the average person know about economics? How about trade and immigration? Economists claim to know a great deal about these topics, and study them in depth. And while they often disagree with each other, most economists agree a lot more with each other than they do with the public. So why do democratic citizens tend to reject what economists say? Are there certain biases that make democracies choose bad economic policies? Follow this series of videos to find out.

  2. Foreigners Are Our Friends | Econ Chronicles

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    Some people say technology is the driver of innovation, but society often takes great steps in prosperity by trading. Like technological shifts over history, trade is a powerful way of creating wealth for all parties. In one example, Professor of Economics Bryan Caplan imagines a machine that turned agricultural products directly into cars: it would disrupt the way we do business, but the US would be wealthier for it.

    If, however, that machine was nothing but a freighter that exchanges corn for cars with another nation, many people think this is unfair. Whether in dislike for foreign trade or worry about immigration, Prof. Caplan calls this “anti-foreign bias,” and points out that most economists don’t share these concerns. Professional economists think trade and immigration benefit all parties involved – just like innovative technology. As we said before: trade is made of win!

  3. How Much Immigration Is Too Much Immigration?

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    In this clip from the debate, Prof. Ting argues that the risks of trying an open border policy are too great. He points out that the U.S. population is estimated to grow at a fast rate in the next 50 years and through the end of the century if we do nothing. He is concerned that allowing free immigration will overwhelm U.S. infrastructure and cause too much environmental damage.

    Prof. Caplan responds by arguing that the market will ration immigration just as it rations anything else. Indeed, the idea of immigration without quotas is overwhelming if we do not consider how market forces will play a role. He argues that we can have open borders without fear because of the power of the market.

  4. Debate – What Would Happen if America Opened its Borders?

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    In this clip, Prof. Ting argues that open borders would result in an enormous increase in the number of immigrants to the United States. He points out that there are so many opportunities here that people would come in huge numbers from less developed countries. The strain on the United States infrastructure and environment could be enormous.

    In his response, Prof. Caplan argues that the fact people would want to come in such great numbers is, in his mind, an argument favoring open borders. People should be living in places where they can achieve their potential. For many people around the world, this means they need to move. Would this have effects on the U.S. economy? Absolutely. Prof. Caplan argues that in the short run, housing prices would probably increase, for example. In addition, we may see a move to having personal servants, as many of the low-skilled workers in the world have skill sets that fall below the lowest-skilled workers in the United States. To offset pressures on the environment, Prof. Caplan recommends increasing costs for pollution and other environmental hazards.
    What do you think? Do you think the fact that many people would want to immigrate to the United States is an argument in favor or against opening the borders?

  5. Combating Global Poverty with a Cup of Coffee

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    Millions of people in the developing world struggle to survive on just a couple of dollars a day. Fair trade claims that buying fair-trade labeled coffee is a way to help the poor. But is it the best way? Professor Colleen Haight has been researching fair-trade for the past 10 years; she’s also spent time on coffee plantations in Central America talking with the coffee farmers there about their experiences. She says that while fair trade has done a lot to increase consumer awareness, it may not be the best way to actually help the poor.

    Fair-trade coffees cost a little bit more than necessary and the extra profit is returned to the farmer. Fair trade farmers are small landowners, but migrant workers—who are much poorer than any landowner—do not benefit from fair trade. Fair-trade farmers are required to pay migrant workers the minimum wage in their country, but that’s already the law.

    Prof. Haight says there is a better way to help these poor migrant workers. You can help them by buying premium coffees instead of fair trade coffee. Premium coffee beans are harvested with greater care and fetch higher prices at the market. As a result, migrant workers receive higher pay working for farms that produce premium coffees. Premium coffees and fair-trade coffees cost about the same amount, but buying premium coffees does more to help the poor than buying fair-trade labeled coffees. You have a limited amount of money; you should be able to use it in a way that maximizes the benefits to the poor.

  6. Debate – Who Is Harmed Most by Immigration?

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    Economically, native-born high school dropouts are the most likely to lose out from the competition from low-skilled workers that will increase if the United States has open borders. In this clip, Prof. Caplan argues that although these are the most vulnerable Americans, they are some of the wealthiest people in the world. Prof. Ting argues that part of being a country means having greater concern for your fellow citizens than for the world as a whole.

    Prof. Caplan argues that while it is fine to care about fellow Americans more than about the world as a whole, immigration laws are about saying we’re going to take care of Americans no matter what the cost we impose on other people.  Even when you care more about one person or group of people than others, it is still important to treat the others fairly. The clip also brings up interesting questions about how competition and trade affect individuals and society.

  7. Debate – What to Do about Immigration

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    Prof. Caplan’s argues that immigration laws deny basic human rights. All people deserve to have the opportunity for a better life and should not be penalized simply for being born on the wrong side of a border. The supposed negative effects of free immigration are greatly overstated at best and often opposite the truth. Open border policies are estimated to lead to a doubling of global productivity, too. Immigrants pay about as much in tax as they use in benefits. And, he argues, there are cheaper and more humane remedies for dealing with any costs of immigration than preventing people from entering the country.

    Prof. Ting argues that while he has deep respect for immigrants, there are valid reasons for not having complete open borders. He states that the United States has the most generous immigration policy in the world, and that limiting the number of immigrants allowed each year helps immigrants better assimilate. He expresses concern that open borders would create an influx of people too great for our infrastructure and that they may put undue pressure on the environment.

    Is immigration an issue of morality? Can it be reduced to a cost-benefit analysis? Does a cost-benefit analysis even suggest limitations? Watch the video and tell us what you think.

  8. 3 Reasons You Can’t Find a Job

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    Why is it so difficult for young people to find jobs today? Professor Carrie Kerekes offers three reasons.

    1.       Mismatch of skills: Many young people may lack the skills employers desire or require. They may have college degrees but not in fields where jobs are available. Government may help subsidize college costs, but getting a degree does not guarantee that a job will follow.

    2.       Government regulations: Many government regulations add extra expense to the cost of labor or make it more difficult for firms to hire and fire workers. These regulations may cause the number of available positions to be lower than it would be absent such rules.

    3.       General uncertainty: As the economy continues its slow recovery after the financial crisis, many firms feel uncertain about the future, which makes them hesitant to hire new workers. New legislation, such as the Affordable Care Act, can also add to uncertainty when it is unclear how much the new rules will increase the cost of labor.

    The common factor in all of these reasons is government. Prof. Kerekes says, “The unemployed would be better served if government stepped out of the picture and allowed economic growth and a free market to create more jobs and prosperity.”

  9. Does Government Create Jobs?

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    Many people have been talking about job creation lately, especially politicians. But is government the best creator of jobs? And is job creation the best thing for the economy? Professor Steve Horwitz explains that there is a difference between creating jobs and creating wealth. It would be easy to create millions of jobs overnight. For example, we could eliminate all of the machinery and innovation used in agriculture. Then many people would be needed to farm in order to produce sufficient food for society. But no one is suggesting that because it is not practical and it would set our economy back 100 years.

    Creating jobs is relatively easy. The problem is that the most economic progress is made when jobs are eliminated as they become unnecessary. New innovations happen gradually, though, and technological innovation means people will need to learn new skills, and some are likely to lose their jobs in the meantime. That unemployment is a bad thing, but the alternatives are worse. To prevent such labor transitions would halt innovation, growth, and the reduction of poverty.

    Market signals can indicate what kind of skills people should invest in and where the new jobs of the future will be. But the government doesn’t have these signals. Instead, many government job-creation programs are really about meeting the needs of politicians, not the needs of consumers in the marketplace. “The best job-creation program in human history is the free market and the entrepreneurship it generates,” Professor Horwitz says.

  10. Top 3 Ways Sweatshops Help The Poor Escape Poverty

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    Should sweatshops around the world be shut down? What might we say if we looked at sweatshops from the perspective of the world’s poor? While it may be true that sweatshops treat workers unfairly, Professor Matt Zwolinski says there are three points to be made in defense of sweatshops.

    • The exchange between the worker and the employer is mutually beneficial. Sweatshop jobs often pay three to seven times more than wages paid elsewhere in an economy. Workers in the developing world tend to view sweatshop labor as a very attractive option.
    • Even if sweatshop labor is unfair, it’s a bad idea to prohibit it. Taking away sweatshops just takes away an option for the poorest workers of the world. While countries can make it illegal for sweatshops to pay low wages, they cannot prevent sweatshops from shutting down and paying no wages. And when that happens, the workers all lose their jobs.
    • It is better to do something to end the problem of global poverty than it is to do nothing. Sweatshops are doing something to help. They are providing jobs that pay better than other alternatives, and they are contributing to a process of economic development that has the potential to offer dramatic living increases.

    If we look at sweatshops from the perspective of the world’s poor, which looks better: the American company that outsources to a sweatshop and provides jobs in developing countries, or the American company that, because of its high-minded moral principles, hires only U.S. workers?

  11. Does the Minimum Wage Hurt Workers?

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    Some politicians argue that raising the minimum wage helps the poor and disadvantaged. While this may appear to be the case on the surface, economics professor Antony Davies explains that the common view of the minimum wage overlooks one important detail: The minimum wage does not force employers to pay a particular wage to every worker; it forces employers to pay a particular wage to every worker they choose to keep.

    Using an example, Professor Davies shows that minimum wage increases may make the least productive workers too expensive for employers. Minimum wage increases do not help the worker at the expense of the employer; instead they help the most productive workers at the cost of the least productive workers. What’s worse is that over time the more productive worker likely would have been rewarded for productivity anyway.

    The evidence is not just anecdotal. The data show that minimum wage increases have little effect on unemployment among college graduates. Minimum wage increases lead to higher unemployment among high school graduates, though, and significantly increase unemployment for the least skilled, least educated workers. The minimum wage may be a well-intentioned public policy, but it often hurts the workers most in need of help.

  12. The Real “Truth About the Economy:” Have Wages Stagnated?

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    Prof. Don Boudreaux responds to “The Truth About the Economy,” a recent video featuring former Labor Secretary Robert Reich (http://lrnlbty.co/z0ACuH). In the video, one of Reich’s key points is that most people’s wages have barely increased since 1980. However, when Reich’s numbers are examined in greater detail, his claim does not hold up. If you care about this issue, there are three things to consider:

    1. How inflation is calculated
    2. Benefits workers receive other than wages
    3. The distinction between statistics and individuals
    Adjusting for inflation, especially over long periods of time, is as much an art as it is a science. In an attempt to measure inflation, economists have developed several indexes. All of these indexes are considered legitimate, but all of them yield different results. In “The Truth About the Economy” video, Robert Reich uses the consumer price index (CPI) to calculate the average hourly wage, and he finds that wages haven’t risen much over the past 30 years. However, when using other methods of adjusting for inflation, which are no less respected, the average hourly wage rate rises as much at 18% over the same 30 year period.
    Index differences aside, everyone agrees that all forms of compensation must be considered to accurately calculate worker’s compensation. This includes not only wages and salaries, but also benefits like health insurance, retirement benefits, vacation days, sick pay, and more. It’s worth noting that fringe benefits have become a larger share of income over the past 30 years. According to Don Boudreaux’s calculations, which include fringe benefits, average hourly wages have increased up to 26% over the past 30 years.
    Lastly, and most importantly, Robert Reich confuses statistical categories with real people. When Reich says that, since 1980, most people’s wages have barely increased, he gives the impression that most people have enjoyed no economic gains over the past three decades. What he means is that, adjusting for inflation, average wages have not increased. The real flesh and blood people within these statistical categories have actually experienced increased compensation. Some workers are gaining skills, others are retiring, and others are joining the workforce for the first time. Especially noteworthy is the increasing rate at which women and immigrants have entered the workforce in the past 30 years.
    To Boudreaux, Reich is right to claim that a strong economy needs a strong middle class. However, taxing the rich, as Reich suggests, is not the path to a strong middle class. The path to a strong economy and a strong middle class requires the hard work and great entrepreneurial ideas of individual people acting in a free market.