Foreigners Are Our Friends | Econ Chronicles

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!

10 Comments

  1. juliansfree

    I like the analogy of the free market as a form of technology. It reminds me of Isabel Paterson’s analogy of the market as an electrical circuit.

  2. Anonymous

    Free immigration and a welfare state can’t coexist. The welfare state and ultimately the society collapses. We did not have a welfare state during the free immigration period up to the early 1900s. So immigrants knew if they came here they had to assimilate and survive on their own labor. This is not the case today. The El Salvadorian Gardner scenario in this clip is an oversimplification of free immigration in today’s welfare state, and is a dishonest one at that.

  3. asexymind

    In another LL video, economic studies were cited that demonstrated that those areas with high immigration had better outcomes. The idea is that the immigrants who have the pluck to get the USA will have the drive to create a great live for their children/grandchildren (American Dream) rather than a desire to live on the dole (American Hammock).

  4. diamond_max

    It’s like a tasty recipe that everyone benefits from in the end. One person tries the product and it gets across to everyone eventually.

  5. Anonymous

    The video confuses open borders for trade and open borders for immigration and then treats them as if the costs and benefits are the same.

    Open borders for trade IS a good thing for both parties, but that means the citizen of Country A, let’s call him Albert, comes into Country B and enters into a voluntary exchange with the citizen of country B, let’s call him Bob. Albert gives Bob something Bob values and, in exchange, Bob gives Albert something Albert values at a price that is acceptable and open to both. And then Albert goes back to Country A. That is good for everyone.

    But open borders for immigration is something completely different. First, not every immigrant is an Albert Einstein look alike, neither in physical looks nor, more importantly, talent and skill. Let’s take Caplan’s example of “trade in labor” from El Salvador. In a free and open exchange the gardener from El Salvador is trading his labor in exchange for the price agreed to and paid by the homeowner. However, there are costs that are hidden from, and not paid by, the homeowner. It is fine if the gardener returns to El Salvador after mowing the lawn, but that is not what happens. Caplan’s Salvadorian low skilled, low paid gardener has two kids, attending “free” public schools and getting free or reduced lunches, all funded by taxpayers; he and his family will get taxpayer subsidized health care, food stamps, Obama-phones, etc., etc.

    What then is the true cost of the “trade in labor”? Of course, the lazy homeowner is happy, because he is getting his lawn mowed and passing much of the cost on to someone else.

    Some will argue that the Salvadorian gardener is a taxpayer. Fine, but given the wages of unskilled workers and the progressive tax system in the U.S. is he really paying enough in state and federal taxes to even begin to pay for the things just mentioned, plus his share of other, less tangible services, such as roads, police and fire protection, national defense, libraries, parks,and all the other public goods (and welfare) provided to residents? Of course not.

    You can not compare free trade with open borders immigration when a large share of the costs of immigration are borne by persons who are not part of the exchange. Do away with welfare and “free” public schools and then let’s talk.

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